Sales target exceeded, EBIT at the upper end of the forecast
Proposed dividend of 0.44 Euro per share
Management Board initiates strategic realignment
Thanks to a strong fourth quarter, technotrans exceeded the revenue target last set for the 2019 financial year despite non-recurring effects. Consolidated revenue fell moderately by 3.9 percent compared with the previous year to EUR 207.9 million. Despite the sluggish economy and non-recurring charges, the group achieved a positive result (EBIT) at the upper end of the forecast range, equivalent to half the previous year's result, at EUR 8.3 million. The Executive Board and Supervisory Board propose a dividend of EUR 0.44 per share for the past fiscal year. Under the guiding principle "Shaping the future through development", the Executive Board is initiating a strategic realignment throughout the Group.
"Cyclical sales losses and unexpected productivity restrictions at our Group company gwk following the ERP conversion led to significant declines in sales and earnings. We therefore had to adjust our forecast twice. Thanks to gratifying business transactions in the fourth quarter, we ultimately exceeded our sales target and EBIT was at the upper end of the range of expectations. We are nevertheless not satisfied with the business progress overall," says Dirk Engel, Spokesman of the Board of Management of technotrans SE, commenting on the presentation of the audited figures for 2019.
The technotrans Group posted consolidated revenue of EUR 207.9 million and a consolidated operating result (EBIT) of EUR 8.3 million for the 2019 financial year. The group has consequently exceeded the adjusted revenue forecast of EUR 205 million and achieved EBIT at the upper end of the expected range of EUR 7.6 to 8.4 million.
Compared to the previous year, sales declined by 3.9 percent. EBIT halved, mainly due to negative one-off effects. Accordingly, the EBIT margin fell from 8.0 to 4.0 percent. Net income for the year of EUR 6.1 million was around 51 percent below the previous year's figure. "At the end of the year, we had to cope with unexpected charges amounting to 1.4 million. Adjusted for these effects, the Group EBIT margin would have been 4.7 percent", Engel explained.
The Technology segment accounted for EUR 148.4 million of consolidated revenue. This represents a share of 71 percent. Following EUR 8.1 million in the previous year, only a break-even result for the segment was achieved in the 2019 financial year. The Services segment posted revenue of EUR 59.5 million, virtually on a par with the previous year. The Technical Documentation unit based there also made a positive contribution. The lower susceptibility to economic cycles is reflected in the segment EBIT of EUR 8.3 million.
Growth markets defy economic weaknesses
In the price-sensitive and highly competitive markets for laser and machine tools, technotrans was able to maintain revenue at the previous year's level by gaining market shares. The printing industry, however, faced a headwind. The subdued state of the economy and continuing consolidation in end customer markets led to a slight fall in revenue. The downturn was more pronounced in the plastics processing industry. The structural declines in the market for automotive-related injection moulding technology were largely offset during the course of the year by focusing on other technologies and application areas and the positive sales contribution of Reisner 3 Cooling Solutions GmbH. However, this was not sufficient to offset the economic effects of the unplanned ERP implementation at gwk Gesellschaft Wärme Kältetechnik mbH. The result was a significant decline in sales combined with a one-off negative earnings contribution from this division. Once again, the growth markets proved to be unimpressed by the weakening economy. With double-digit growth rates, these now account for 12 percent of consolidated sales. The service business also developed satisfactorily in fiscal year 2019.
Solid economic conditions
The balance sheet ratios of the technotrans Group remain sound. The balance sheet total has risen by 7.3 percent as a result of capital expenditure. Shareholders' equity was on a par with the previous year at EUR 75.1 million. The equity ratio reached 51.4 percent. Net debt rose by EUR 4.8 million to EUR 24.2 million as a result of taking up low-interest, long-term loans and the first-time recognition of lease liabilities pursuant to IFRS 16.
The net cash inflow from operating activities of EUR 16.8 million was EUR 10.5 million higher than in the previous year. This was due to positive working capital effects and lower tax payments. After deducting investment-related cash outflows, a clearly positive free cash flow of EUR 7.6 million was thus realized (previous year: EUR -3.8 million). The financial position is accordingly structured with a comfortable gearing ratio of 1.5 (net debt/EBITDA).
Strategic realignment
technotrans will again have to assert itself in a challenging environment in the 2020 financial year. In order to give the group an even stronger position over the next five years, the Board of Management has initiated a process of strategic realignment under the guiding principle "Shaping the future through development". This process includes focusing sales activities on specific industries, expanding location-specific competence profiles, leveraging additional synergies and expanding the Group's development and innovation power. The Management Board expects the package of measures to have a positive effect on earnings in the mid-single-digit million range as early as the 2021 financial year.
Outlook
Leading forecasting institutes expect global economic growth to slow down in 2020. The Board of Management believes that technotrans must continue to hold its own in a challenging environment. The Board of Management believes that the positive trend in the growth markets will continue. On the other hand, it does not expect any economic impetus in the other markets and anticipates that business development will be muted or even slightly down. The forecast derived from this is for consolidated sales in a range of EUR 204 to 214 million and consolidated operating profit (EBIT) between EUR 6.0 and 10.7 million. It also includes the costs of the strategic realignment. Possible economic consequences in connection with the coronavirus epidemic are not taken into account here. In view of the current economic forecasts, the Management Board is cautiously entering the new financial year. In terms of the technotrans Group's performance and potential, it is optimistic about the future and is adhering to its medium-term targets of consolidated revenue of EUR 250-300 million and a double-digit EBIT margin.
The Board of Management and Supervisory Board will again propose to the Shareholders' Meeting on May 20, 2019 that a dividend amounting to half of the consolidated net income be paid out. This corresponds to a dividend of EUR 0.44 per share.
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