DGAP-News: Gesco AG
/ Key word(s): Annual Results/Forecast
28.04.2020 / 07:15
The issuer is solely responsible for the content of this announcement.
Wuppertal, 28 April 2020 - The GESCO Group, an association of industrial SMEs, draws a line under financial year 2019 and explains its outlook for financial year 2020 in its annual accounts press conference. The financial year was abbreviated from 1 April to 31 December 2019 due to the change in financial year of GESCO AG to the calendar year. The prior-year figures have been adjusted to establish consistency in the reporting periods of GESCO AG and the subsidiaries.
The GESCO Group reported a decline in demand in the reporting period. Customers in the automotive industry were particularly reluctant in terms of their investments, which affected the Mobility Technology and Production Process Technology segments above all. Business in the Resource Technology segment was comparatively stable in terms of sales, while margins were down on the previous-year period due to the weak development of the capital goods industry. By contrast, the Healthcare and Infrastructure Technology segment proved to be relative resistant to economic development again.
In total, incoming orders at the GESCO Group came to € 403.2 million in the nine-month abbreviated financial year (twelve-month adjusted previous year: € 602.9 million) and Group sales reached € 439.6 million (€ 580.3 million). Margins came under pressure on account of the subdued economic development. Earnings before interest, taxes, depreciation and amortisation (EBITDA) over the nine-month period came to € 44.0 million (€ 68.4 million). Earnings before interest and taxes (EBIT) in the nine-month period stood at € 23.5 million (€ 42.1 million), putting the EBIT margin at 5.3 % (7.3 %). Group net income after minority interest came to € 12.4 million in the nine-month abbreviated financial year, down from € 22.6 million in the twelve-month previous year. The final figures are equivalent to the preliminary figures published on 30 March 2020.
The dividend policy of GESCO AG has been adjusted, as communicated as part of the ad-hoc notification on 30 March 2020. Instead of distributing approximately 40 % of the net income after minority interest, future distributions are to be in a range between 20 % and 60 %. This gives the company greater flexibility, particularly when it comes to the acquisitions associated with the NEXT LEVEL strategy. Given the huge amount of uncertainty created by the Corona crisis, the Executive Board has brought the new dividend policy forward and is basing its distribution for the abbreviated financial year 2019 at the lower end of the range in order to strengthen the company's liquidity reserves. This results in a dividend proposal of € 0.23 per share. This proposal will be adjusted if necessary until the Annual General Meeting is convened in light of further developments in the Corona crisis. The Annual General Meeting is to be held as a virtual Annual General Meeting on the scheduled date of 18 June 2020.
On an annualised basis the Executive Board originally anticipated stable sales and a slight improvement in margins in financial year 2020. However, coronavirus pandemic is exacerbating the already challenging conditions in the automotive and capital goods industries. The state-ordered shutdown of GESCO companies, first in China and now in the USA, as well as plant closures by customers are hampering business operations and are leading, among other things, to delays in machine deliveries. Based on information available at the current time, the Executive Board expects total Group sales of € 540 million to € 560 million and Group net income for the year after minority interest of € 8 million to € 11 million in the new financial year. Forecasts may change significantly at short notice in light of the dynamic development of the Corona pandemic.
According to preliminary figures, incoming orders in the first quarter of 2020 came to roughly € 136 million (adjusted previous-year period: € 156.9 million) while sales stood at approximately € 129 million (€ 145.8 million). At roughly € 0.4 million, Group net income after minority interest was significantly down on the adjusted prior-year figure of € 4.0 million. The Healthcare and Infrastructure Technology segment reported stable results in the first quarter, whereas the order and earnings situation in the Mobility Technology segment deteriorated further. The latter's EBIT is negative for the first quarter and is set to be negative for the year as a whole. In Production Process Technology, as usual work has begun on the construction of machinery and plant and equipment that will only have an impact on sales and earnings later on in the year. EBIT in this segment was therefore negative in the first quarter, but will be significantly positive over the year as a whole. Margins were down in the Resource Technology segment, with orders in project business only having an impact on sales and earnings later in the year. For these reasons, the Group EBIT is disproportionately weak in the first quarter, a factor that has been taken into account in the full-year forecast. The full statement for the first quarter will be published on 29 May 2020.
The NEXT LEVEL strategy was pursued on a wide-reaching basis in the abbreviated financial year. CANVAS workshops for business model analysis were conducted at the majority of companies, and multiple programmes for operational excellence (OPEX) and market and product excellence (MAPEX) were launched. The programmes are aimed at boosting efficiency and therefore margins as well as expanding business volume.
"No-one can predict what impact the Corona crisis will have," said CEO Ralph Rumberg. "From today's point of view the crisis is affecting us significantly, but it is manageable. We are making every effort to protect our employees and be a reliable partner for our customers. Our aim is to strengthen customer and supplier relationsships and come out of this crisis in stronger shape than we were before. With NEXT LEVEL, we are certainly moving in the right direction."
The full annual report is available at www.gesco.de.
The Executive Board's presentation at the annual accounts press conference/analyst conference will be broadcast live as a video webcast on 28 April 2020 at 11:00 am (in German only). It will be available for viewing at any time on demand for a period of one year.
GESCO AG is an industrial group made up of market and technology leading companies in the capital goods industry with a focus 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: firstname.lastname@example.org - Website: www.gesco.de
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