R. STAHL, leading supplier of products and systems for explosion protection, today published its results for the first half of 2015:
- Order intake down 1.4% year on year at EUR 166.6 million (previous year: EUR 169.0 million).
- Sales growth of 12.0% to EUR 164.0 million (previous year: EUR 146.5 million).
- Earnings before interest and taxes (EBIT) up 22.8% to EUR 6.8 million (previous year: EUR 5.6 million) with an EBIT margin of 4.2% (previous year: 3.8%).
- Guidance for full year sales and earnings development confirmed.
In the first six months of the current fiscal year, R. STAHL benefited from its high order intake of the previous year to achieve significant revenue growth. However, demand has cooled noticeably in the reporting period and order intake is down on the previous year. The company's CEO Martin Schomaker states: "Persistently low oil prices are affecting the investment behaviour of our customers in the oil production industry. Moreover, the prolongation of economic sanctions against Russia is also dampening our prospects in this region."
Subdued development in Europe - Asian business continues to grow
The development of sales in the first six months varied greatly. In the company's traditional markets of Germany and Europe (excluding Germany), sales fell by 4.2% and 2.0% to EUR 31.8 million (previous year: EUR 33.2 million) and EUR 65.3 million (previous year: EUR 66.6 million), respectively. There were positive developments in certain countries, however, like France and Switzerland. In the Americas, sales of EUR 28.2 million (previous year: EUR 22.5 million) exceeded the prior-year figure by 24.9%. Among other things, this growth was driven by the delivery of products for an oil sands plant in Canada. The strongest growth was once again recorded in the Asia/Pacific region, where revenue was up 60.6% to EUR 38.7 million (previous year: EUR 24.1 million). In the second quarter, the major share of a framework agreement for 21,000 LED linear luminaires was delivered to the Jamnagar complex, an oil refinery and petrochemical plant on the north-west coast of India. All in all, the company generated 80.6% (previous year: 77.4%) of its consolidated sales outside Germany.
In terms of order intake, the only encouraging signs in the first six months came from the Asia/Pacific region - although momentum here also slowed after the first quarter: order intake rose by 5.4% to EUR 40.4 million (previous year: EUR 38.3 million). R. STAHL raised order volumes in Australia, Korea and the Middle East in particular. In Germany, order intake in the six months ending 30 June 2015 was on a par with the previous year at EUR 34.2 million (previous year: EUR 34.1 million). At EUR 65.3 million, orders received in Europe (excluding Germany) were down by 3.8% (previous year: EUR 67.8 million). Low oil prices are placing a burden on business throughout Europe - the profitability of oil producers is suffering above all in Norway. In addition, demand is being hampered by the Ukraine crisis. There has been a significant fall in orders received by German engineering companies whose exports to Russia are affected by the trade embargo. In the Americas, orders picked up slightly compared to the first quarter. At EUR 26.8 million, however, order intake in the first six months was 6.8% down on the same period last year (previous year: EUR 28.8 million). Due to economic and political instability, demand in South America - especially Brazil - remains weak. In North America, however, business once again made encouraging progress.
At EUR 95.4 million, the order backlog on 30 June 2015 was 11.2% higher than on the same date last year (previous year: EUR 85.8 million).
Expansion costs continue to burden earnings
Start-up costs for the expansion of capacity over the past three years continue to place a burden on earnings, as they are not yet covered by sales growth. Investments in buildings, machines, equipment and office fittings as part of the expansion programme resulted in a year-on-year increase in depreciation of 7.6%. The cost of materials ratio based on total performance, however, improved to 33.8% (previous year: 34.6%). The personnel expense ratio rose slightly to 40.4% (previous year: 39.9%). In Brazil, the economic downturn adversely affects our business so that order intake and sales declined significantly. Expenses of the company are not covered by sales. All in all, the drop in earnings of our Brazilian subsidiary burdens Group EBIT with EUR 0.6 million.
At EUR 6.8 million, earnings before interest and taxes (EBIT) were up 22.8% on the previous year (EUR 5.6 million). The EBIT margin for the first six months of 2015 amounted to 4.2% (previous year: 3.8%). Pre-tax earnings (EBT) reached EUR 5.4 million (previous year: EUR 3.9 million), corresponding to an increase of 40.9%. The EBT margin amounted to 3.3% (previous year: 2.6%).
Increase in equity ratio
R. STAHL's equity ratio as of 30 June 2015 rose to 35.4% (31 December 2014: 27.3%). This was mainly due to the sale of 644,000 treasury shares to RAG-Stiftung Beteiligungsgesellschaft in the first quarter. In addition, equity was raised by currency differences, as well as by the fall in the present value of pension obligations. The underlying interest rate for pension provisions increased again for the first time since the end of 2013 and as a result this item fell to EUR 88.2 million (31 December 2014: EUR 93.7 million). Long-term debt remained generally stable at EUR 110.5 million (31 December 2014: EUR 111.4 million), while short-term debt was 10.0% below the prior-year figure at EUR 78.9 million (31 December 2014: EUR 87.6 million).
Outlook: R. STAHL upholds guidance for 2015 - measures initiated for short-term capacity adjustments
Persistently low oil prices have led to a deterioration in the propensity of companies to invest in oil production equipment. At its June meeting, OPEC (under the leadership of Saudi Arabia) confirmed its output volumes. The opening of the Iranian market for oil exports puts the price of a barrel of Brent crude under further pressure. Since the agreement in the nuclear dispute in July 2015, the oil price fell by 15%. At the same time, China's weak economy is strengthening the oil industry's current downward trend. Increase of the oil prices in the short term is not in sight. For 2016, we expect a sideways trend. Additionally, the crisis in the Ukraine still burdens our business. After the EU states prolonged their economic sanctions against Russia in June, no relief for the economic and political situation there is currently in sight. "During the first half of 2015, the company could still profit from the good order situation in the previous year and the associated high order backlog, however, weaker business development is generally expected for the second half," explained Bernd Marx, CFO. "The weak order situation makes it difficult for us to fully utilize the newly created capacities. This is putting pressure on margins, above all at our main base in Waldenburg - the largest manufacturing site of the R. STAHL Group."
The underutilization of production capacities has led to an increase in relative fixed costs. In order to counteract this development, measures have been initiated which will quickly reduce expenses. A substantial component is the temporary reduction of the weekly working hours to 30 hours at the Waldenburg facility. At the same time, R. STAHL reduces the capacity of temporary workers on short notice.
In terms of sales activities, the company will focus more strongly on measures for the chemical and pharmaceutical industry. In the oil and gas industry, greater emphasis will be placed on regions with low production costs.
For fiscal year 2015, the company is upholding its forecast on order intake and sales revenues between EUR 320 million and EUR 330 million. Against the backdrop of the cost reduction programmes already initiated, the company expects to reach the lower end of its EBIT forecast of EUR 16 million to EUR 20 million.
The development in the recent months significantly impaired expectations for R. STAHL for a recovery of the market conditions in 2016. Against the background of the continuation of the expansionary policy of the OPEC, the weak economy in China and a possible opening of the Iranian oil market, the company sees no opportunities that the oil price will rise crucially in the near future. An improvement of the economic and political situation between Russia and the EU, as well as the macro-economic conditions in Brazil is not foreseeable as well. That is why the Executive Board of R. STAHL is reducing its medium-term expectations for the fiscal year 2016. In view of the fact that several negative external influencing factors have deteriorated, the targeted revenue of EUR 380 million to EUR 390 million with an EBIT margin of 11% to 12% is no longer achievable until 2016. The Executive Board is still convinced that an EBIT margin between 11% and 12% may be achieved as soon as the market environment will improve.
R. STAHL AG is pleased to invite all interested analysts, investors and media to participate in the quarterly results conference call to be held on 6 August 2015 at 10:00 a.m. (CET). The telephone conference will be held in English language. Please dial the following number to join the call: +49 69 247503443. Additionally to the call, we will provide a presentation online. Please log on as a participant entering eventmanager.meetyoo.de, insert your full name and the following PIN: 72497359 . An audio cast of the call will be available thereafter on the company's website: http://www.r-stahl.com/investor-relations/presentationsrecordings.html
Key figures of R. STAHL Group
according to IFRS
| ||H1 2015 in EUR million||H1 2014 in EUR million||Change in %|
|Europe excluding Germany||65.3||66.6||- 2.0|
|Asia Pacific||38.7||24.1||+ 60.6|
|Order intake||166.6||169.0||- 1.4|
|Order backlog||95.4||85.8||+ 11.2|
|EBITDA-margin (%)||8.2||8.0|| |
|EBIT-margin (%)||4.2||3.8|| |
|EBT-margin (%)||3.3||2.6|| |
|Net Earnings||3.6||2.5||+ 46.7|
|Earnings per share (EUR)||0.56||0.42||+ 33.3|
|Cash flow from operations||0.5||- 8.5|| |
|Employees as of 30.06. (excl. apprentices)||1,973||1,914||+ 3.1|
| || || || |
| ||30.06.2015||31.12.2014|| |
| || || || |
|Cash and equivalents||16.1||15.8||+ 1.8|
|Equity ratio (%)||35.4||27.3|| |
The full report for H1 2015 is available for download on the company's website www.stahl.de.
Financial calendar 2015
5 November Q3 report
About R. STAHL
R. STAHL is one of the world's leading suppliers of electrical and electronic products and systems for explosion protection. These products and systems prevent explosions in hazardous areas and contribute to the safety of people, machines and the environment. The portfolio ranges from products used in switching/distributing, installing, operating/monitoring, lighting and signalling/alarming, up to automation. Typical customers operate in industries, such as the oil & gas industry, the chemical and pharmaceutical industry and the food industry. In 2014, global sales amounting to EUR 308.5 million were generated with about 1,942 employees. The shares of R. STAHL AG are traded on the Regulated Market/Prime Standard of Deutsche Boerse (ISIN DE000A1PHBB5).
R. STAHL AG
Am Bahnhof 30, 74638 Waldenburg (Württ.)
Bernd Marx (CFO)
Phone: +49 7942 943 1271
Nathalie Kamm (Investor Relations)
Phone: +49 7942 943 1395
E-mail: [email protected]