• 2018/2019 operatively strong year with favourable economic environment
• Dividend set to increase by 50 % to EUR 0.90 per share
• GESCO AG financial year to be changed to the calendar year
• Slight sales growth and a decline in earnings expected for the new financial year
• NEXT LEVEL strategy marks the start of a new chapter

Wuppertal/Bretten, 27 June 2019 - GESCO Group, an association of industrial SMEs, reports on a successful financial year 2018/2019 (1 April 2018 to 31 March 2019) from an operating perspective at its annual accounts press conference today and expects a slight increase in sales as well as lower earnings in the new financial year.

In financial year 2018/2019, which encompasses the operating months January to December 2018 in the case of the subsidiaries, GESCO Group was able to translate the continued positive market environment in the capital goods industry into brisk business activity, grew faster than the market and achieved record values for incoming orders, sales and earnings. Sommer & Strassburger GmbH & Co. KG, which was acquired in August 2018, was included in the consolidated income statement on a pro rata basis for a period of four months and is allocated to the Production Process Technology segment. All told, GESCO Group increased its incoming orders by 7.8 % from EUR 552.4 million to EUR 595.2 million. Group sales exceeded the previous-year figure of EUR 547.2 million by 5.0 %, reaching EUR 574.5 million.

Earnings increased in all segments. As in the previous year, earnings in the Resource Technology segment benefited considerably from a favourable economic environment due to strong demand and rising material prices. Overall, earnings before interest and taxes (EBIT) rose more strongly than sales, increasing by 41.0 % from EUR 33.8 million to EUR 47.6 million. Group net income after minority interest grew by 65.2 % to EUR 26.6 million. The previous year's figure of EUR 16.1 million included a one-off expense of EUR 7.5 million for a fine.

The significant rise in earnings is to be reflected in a higher dividend. The Executive Board and Supervisory Board will propose to the Annual General Meeting on 29 August 2019 that the dividend be increased by 50 % from EUR 0.60 to EUR 0.90 per share.

The German Financial Reporting Enforcement Panel (FREP) has conducted a random audit of the financial statements for financial year 2017/2018. At the end of May, the FREP informed GESCO AG that it had found the consolidated financial statements to be deficient, as the reporting dates of GESCO AG deviate from the reporting dates of the subsidiaries by three months without there being any clear reasons why the same reporting dates cannot be used. It will be proposed to the Annual General Meeting on 29 August 2019 that the financial year of GESCO AG be adjusted to match the calendar year so as to synchronise the reporting dates. GESCO AG will therefore report an abbreviated financial year running from 1 April to 31 December 2019, resulting in the operating subsidiaries of the GESCO Group entering financial year 2019 with a full calendar year, with GESCO AG only reporting nine months.

The general economic conditions for the new financial year have deteriorated noticeably. The German Mechanical Engineering Industry Association (VDMA) halved its production growth forecast for 2019 from 2 % to 1 % at Hannover Messe. GESCO Group currently sees stable development for the most part, whereas the automotive sector faces a very difficult environment. All told, the Executive Board expects Group sales to increase slightly to between EUR 585 million and EUR 605 million. Margins will normalise due to the absence of the favourable environment in Resource Technology. The company also expects a decline in earnings in Mobility Technology. Overall, GESCO anticipates Group net income after minority interest of between EUR 22.5 million and EUR 24.5 million. The forecasts refer to the abbreviated financial year of only nine months for GESCO AG. Based on a full financial year for GESCO AG, the company expects to see Group net income after minority interest of between EUR 21 million and EUR 23 million.

The first quarter of the new financial year, which encmpasses the operating months January to March 2019 of the subsidiaries, saw stable demand. According to preliminary figures, incoming orders stood at around EUR 156 million with sales of around EUR 147 million. These figures were higher than the previous year's figures thanks to the addition of Sommer & Strassburger; in organic terms, they were on par with the previous year. However, earnings for the first quarter will be significantly lower than in the previous year for the aforementioned reasons.

During the annual accounts press conference, the company also presents details on its NEXT LEVEL strategy. The strategy marks a new chapter in GESCO's development in its 30th year of existence. The strategy calls for a more balanced and resilient target portfolio with three major core investments and a series of base investments. In addition, excellence programmes will be launched to promote the growth of the Group's companies and increase their efficiency with the aim of transforming them into hidden champions. As a result, the companies' earnings should grow 3 % faster than their respective markets and their sales per employee should increase by 3 % a year. GESCO envisions a target EBIT margin of 8 % to 10 % throughout the economic cycle. The programmes are being rolled out, and the first workshops have already started.

The complete Annual Report is available at www.gesco.de.

Key figures for GESCO Group pursuant to IFRS

 

Financial year 1 April - 31 March		2018/2019	2017/2018	Change
Incoming orders	(EUR'000)	595,229	552,404	7.8 %
Sales	(EUR'000)	574,532	547,193	5.0 %
Attributable to international business	(%)	39 %	39 %	-
EBITDA	(EUR'000)	73,498	57,404	28.0 %
EBIT	(EUR'000)	47,646	33,789	41.0 %
Earnings before tax	(EUR'000)	45,420	31,861	42.6 %
Group net income after minority interest	(EUR'000)	26,598	16,099	65.2 %
Earnings per share pursuant to IFRS	(EUR)	2.46	1.49	65.2 %
Investments	(EUR'000)	24,862	25,478	-2.4 %
Depreciation on property, plant and equipment	(EUR'000)	19,081	17,989	6.1 %
Total assets	(EUR'000)	509,513	456,256	11.7 %
Equity	(EUR'000)	244,261	224,265	8.9 %
Equity ratio	(%)	47.9 %	49.2 %	-
Employees (as at 31 Dec)	(No.)	2,662	2,489	7.0 %
Share price 31 March	(EUR)	22.75	28.50	-20.2 %
Dividend per share	(EUR)	0.90	0.60	50.0 %

 

About GESCO
GESCO AG is an industrial group made up of market and technology leading companies in the capital goods industry. Its focus is on production process technology, resource technology, healthcare and infrastructure technology and mobility technology. As a stock company listed in the Prime Standard, GESCO AG offers private and institutional investors access to a portfolio of hidden champions among Germany's industrial SMEs.
Investor Relations - Oliver Vollbrecht
Tel. +49 (0) 202 24820-18 - E-mail: info@gesco.de - Website: www.gesco.de