GESCO with mixed picture so far this year


- Subdued business performance in the first half of the year
- Incoming orders and sales at high level in third quarter
- Sales forecast confirmed, earnings guidance adjusted slightly downward
- Investment programme for further growth to be continued


Wuppertal, 12 November 2013 – In the first half (01.04.-30.09.2013) of financial year 2013/2014 (01.04.2013-31.03.2014), business at GESCO Group continued to be shaped by the subdued economic climate. Lower rates of capacity utilization at many of our companies have pressured margins and processes have become less efficient due to customers placing orders at short notice. But in the subsequent third quarter, incoming orders and sales both came in at satisfactory high levels.

In the reporting period, all companies acquired in 2012 were included in the consolidated income statement for the first time for the full period. Incoming orders stood at € 211.9 million in the first half of the year, compared to € 225.1 million in the previous year’s period. Group sales came to € 217.8 million (previous year’s period: € 220.7 million). Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell from € 26.5 million to € 23.7 million. Due to increased depreciation and amortisation as a result of increased investment volume and the effects of the initial consolidation of new companies, EBIT fell more significantly than EBITDA and stood at € 15.3 million (€ 20.2 million). Net income after minority interest came to € 8.6 million (€ 11.7 million). This equates to earnings per share pursuant to IFRS of € 2.60 (€ 3.51). Order backlog at the close of the first half of the year totalled € 193.3 million.

The first half of the year encompasses the months of April to September at GESCO AG and the months of January to June at subsidiaries. In the following third quarter, which accounts for the months July to September in the case of the subsidiaries, Group incoming orders amounted to approximately € 113 million (previous year’s period: € 112 million) and Group sales came to approximately € 119 million (€ 114 million). Both key figures not only increased year on year, they also exceeded first- and second-quarter figures from the current financial year. This means that business activities are at a satisfactory high level. Order backlog at the end of the third quarter stood at approximately € 187 million.

Based on the figures available, the company has confirmed the recent full-year sales guidance of around € 435 million. Net income for the year after minority interest is likely to come in at or just under € 18 million, following the company’s guidance of € 18.5 million. This is due to a number of one-off effects that had not been planned for, such as increased due diligence expenses, unexpected technical problems in two complex projects and obstructions to operating business as a result of building work. None of these factors constitutes a material item by itself, but added together they have ensured planned earnings targets aren’t likely to be fully achieved.

The strategic investment programme announced at the annual accounts press conference to strengthen GESCO Group companies with concrete growth potential is being systematically implemented. Delays to individual projects mean that the company expects to offset around € 27 million of the planned € 30 million in the current financial year. In the first half of the year, GESCO Group companies invested € 14.9 million in fixed assets.

GESCO Executive Board member Dr. Hans-Gert Mayrose on GESCO Group’s business performance: “All in all, financial year 2013/2014 hasn’t been an easy ride so far. We may be miles away from the collapse of 2009, but there is simply a lack of economic impetus. It remains to be seen whether the positive development in the third quarter can be seen as a first sign that things are looking up. That being said, we remain upbeat moving forward. Any predictions on economic development in 2014 would be premature at this stage, but with our strategic investments in the current financial year, we should be in the position to generate growth in the short term. In addition, the lack of negative effects on Group earnings from initial consolidation will have a positive impact in the next financial year. If the economy can regain momentum, we have the necessary technical resources and a qualified workforce in place to take full advantage of an upturn.”

Complete Interim report

Video commentary by Dr. Hans-Gert Mayrose, member of the Executive Board