- In the first quarter big increase in incoming orders, sales on par with previous year, earnings considerably strained- In the second quarter stable sales, decline in incoming orders- Sales and earnings for the full year expected at the lower end of the forecast ranges- Geopolitical risks negatively impact overall business climate
Wuppertal, 15 August 2014 – GESCO Group recorded stable sales development and an encouragingly high level of incoming orders in the first quarter (1 April to 30 June 2014) of financial year 2014/2015. As announced and explained in detail at the annual accounts press conference, however, the performance of two subsidiaries was responsible for putting strain on Group earnings; these companies are facing considerable challenges at the moment on account of strong growth, which makes structural adjustments necessary.
The financial year of GESCO AG and GESCO Group runs from 1 April to 31 March of the following year, while the financial years of the subsidiaries coincide with the calendar year. The interim report for the first three months of financial year 2014/2015 therefore encompasses the operating months January to March 2014 of the Group’s subsidiaries. Incoming orders amounted to € 126.7 million during this period, and as a result were up 14.7 % year on year (previous year’s period: € 110.4 million). Group sales stood at € 109.5 million, which was slightly higher year on year (€ 108.9 million). Earnings were negatively impacted by the difficult situation of two subsidiaries as already mentioned, which caused earnings before interest, taxes, depreciation and amortisation (EBITDA) to fall to € 11.4 million (€ 11.9 million). The considerable investments made in previous years meant that depreciation and amortisation rose considerably. As a result, earnings before interest and taxes (EBIT) fell more sharply than EBITDA to € 6.9 million (€ 7.9 million). Group net income after minority interest came to € 3.7 million (€ 4.5 million). This equates to earnings per share pursuant to IFRS of € 1.13 (€ 1.35). Order backlog amounted to € 205.0 million at the end of the first quarter (€ 203.3 million).
At approximately € 110 million, sales in the second quarter, which comprises the subsidiaries’ operating business from April to June 2014, were up slightly on the previous year’s figure and approximately on par with that of the first quarter of the current financial year. After a strong increase in the first quarter, incoming orders fell by a substantial margin to approximately € 100 million. The effects explained above put a strain on earnings in the second quarter as well.
At the annual accounts press conference on 26 June 2014, GESCO forecast Group sales for financial year 2014/2015 of between € 470 million and € 480 million and Group net income after minority interest of between € 17.5 million and € 18.5 million. From the present perspective, the company anticipates that sales and earnings will be at the lower end of these ranges. The structural adjustments at the two subsidiaries have not been completed yet, and Frank Walz- und Schmiedetechnik GmbH, which produces wear parts for the agriculture market, is particularly suffering from the effects of the crisis in Ukraine. In addition, the deterioration of the overall business climate in recent weeks and months can be felt. The crisis in Ukraine, the consequent confrontation with Russia and the many other geopolitical hot spots are all having a noticeable negative impact on the overall business climate and the willingness of customers to invest.
GESCO AG has been experiencing a certain cool-down in the M&A market in terms of the offering to well-positioned industrial SMEs from the relevant sectors. This could be attributed on the one hand to the rather subdued economic situation of many industrial companies. On the other hand, entrepreneurs who are willing to divest see very few attractive investment opportunities for their sales proceeds. GESCO AG is nevertheless looking into two companies at the moment for purchase.
Complete I. quarterly report available at www.gesco.de/en/investor-relations/financial-reports/