Technology leader continues growth path: R. STAHL order intake rises to record high in the first quarter of 2014

R. Stahl AG / Key word(s): Quarter Results 08.05.2014 / 08:20 Technology leader continues growth path: R. STAHL order intake rises to record high in the first quarter of 2014- Order intake increases by 7.1 % to record level of EUR 88.4 million- Sales of EUR 67.6 million reflect slowing dynamic in the

R. Stahl AG / Key word(s): Quarter Results

08.05.2014 / 08:20

Technology leader continues growth path: R. STAHL order intake rises to record high in the first quarter of 2014

- Order intake increases by 7.1 % to record level of EUR 88.4 million

- Sales of EUR 67.6 million reflect slowing dynamic in the second half of 2013

- Earnings before interest and taxes (EBIT) at EUR 1.8 million reflect investments in strategic growth projects in Germany and internationally

- Confirmation of outlook for 2014 and continued growth strategy

- Mid-term targets for 2016 announced for the first time

Waldenburg, 8 May 2014 - R. STAHL, the technology leader in explosion protection, is continuing its growth path with order intake at an all-time high in the first quarter of 2014. New orders increased by 7.1 % to EUR 88.4 million (previous year EUR 82.6 million), mainly driven by increased demand from the oil and gas sector as well as the specialty shipbuilding sector. Regionally, R. STAHL profited from the dynamic growth in Asia/Pacific and the Americas. In addition, R. STAHL received a highly competitive bulk order for explosion-protected LED strip lights in India during the first quarter.

"R. STAHL is entering a dynamic growth phase in 2014 as our strategic investments in internationalization and the development of innovative new products and solutions begin to pay off," said Martin Schomaker, CEO of
R. STAHL AG. "With this good start into the year, we will be able to move forward strongly in the coming months. We will consistently take advantage of market opportunities and leverage our technology leadership and international position to continue our profitable growth. We have laid a strong foundation with our investment program."

Schomaker continued: "Accordingly, for the first time we are announcing our mid-term targets that underpin this profitable growth. By 2016, among other goals, we are aiming for sales in the order of EUR 380 million to EUR 390 million and an EBIT margin of 11 % to 12 %".

In the first quarter of 2014, the strongest growth in order intake stemmed from the Asia/Pacific region, with an increase of 43.8 % to EUR 17.9 million (previous year: EUR 12.5 million). The company was awarded several major projects in the region and saw good demand in the Gulf Region as well as in Australia. Especially important was the order from the Indian conglomerate Reliance Industries Ltd. (RIL) to supply explosion-protected LED lights for the Jamnagar Complex, one of the world's largest refineries. This order has a value of EUR 2.7 million and includes significant potential for recurring business. In addition, as part of this project R. STAHL received orders for several thousand installation and control devices. The second strongest region were the Americas, where order intake increased by 10.1 % to EUR 17.4 million (previous year: EUR 15.8 million). Demand developed especially well in the U.S. and Brazil, mainly driven by the oil and gas industry. In Europe, order intake totaling EUR 35.0 million was slightly below the year-ago quarter (previous year: EUR 36.1 million). R. STAHL benefited from maintenance and follow-up orders from the oil and marine industries. However, this could not fully offset the slightly weaker dynamics in individual markets. In Germany, the order situation remained stable at EUR 18.1 million (previous year: EUR 18.2 million).

Sales at EUR 67.6 million - double-digit sales growth in Germany

The increase in new orders did not result in higher sales for the first quarter. Instead, the sales figures still reflected the weaker ordering behavior of customers in the second half of 2013. In addition, customers placed fewer short-term orders, meaning that sales are being deferred to later in the year. Due to the desire of some customers to postpone deliveries, there was an inventory build-up valued at EUR 5.9 million, which in turn led to a delay in revenue recognition. Because of these three factors, R. STAHL recorded first-quarter sales of EUR 67.6 million (previous year: EUR 72.1 million).

The company's strongest regional sales growth occurred in Germany, where sales rose 11.3 % to EUR 16.9 million (previous year: EUR 15.2 million). Thus, Germany accounted for about a quarter of total sales. In the rest of Europe, sales declined by 6.3 % to EUR 32.2 million (previous year: EUR 34.3 million), mainly due to the postponement of deliveries. In the Americas, sales decreased by 18.1 % to
EUR 9.2 million (previous year: EUR 11.2 million), indicating that customers were less willing to make investments in the second half of 2013, especially in Canada and Brazil. The restrained capital spending at that time also weakened the business in the Asia/Pacific region. Accordingly, sales were down by 17.9 % to EUR 9.3 million (previous year: EUR 11.3 million).

The improved sentiment within our customers' industries and the significant increase in new orders in the first quarter will, however, have a positive impact on R. STAHL's sales and earnings for the full year of 2014.

Strategic investments into growth to continue

The strategy of R. STAHL is to accelerate profitable growth through investment in strategic growth initiatives. The investment program for 2012-2014 comprises a volume of more than EUR 70 million and includes the expansion of the systems business, the expansion of capacities and locations in Germany and abroad, the expansion of research and development and the introduction of product innovations. The third phase of the investment program, amounting to about
EUR 25 million, will be implemented during the current fiscal year.

During the first quarter, R. STAHL moved into its new location in Malaysia and brought on line new machinery and equipment in Norway, India and the Netherlands to produce the usual high quality in the expanded production facilities. Investments in the first quarter amounted to EUR 4.4 million (previous year:
EUR 4.0 million). Furthermore, the company increased the number of skilled workers in order to handle the increased volume of new orders. Due to the below-average sales growth, the ratio of personnel expenses to total output rose to
40.9 % in the first quarter of 2014 from 36.3 % in the year-ago quarter.

The investments in future growth are reflected in earnings. Earnings before interest and taxes (EBIT) declined to EUR 1.8 million (previous year:
EUR 5.6 million). The EBIT margin amounted to 2.7 % (previous year: 7.7 %). Earnings before taxes (EBT) amounted to EUR 1.0 million (previous year:
EUR 4.7 million). The EBT margin was 1.4 % (previous year: 6.6 %).

"You must seed before you can harvest. R. STAHL made investments of
EUR 45 million over the last two years that will pay off in the long term. The strong order situation in the first quarter confirms our strategy and demonstrates our great potential. We will work diligently in the coming quarters to take advantage of market opportunities, continue to fill our order book and utilize our newly created capacity as much as possible. In addition, we will further optimize our processes. We are convinced that this approach will have a significant impact on our earnings and profitability," said Bernd Marx, CFO of R. STAHL AG.

Outlook for 2014 confirmed - mid-term goals announced for first time

In light of the positive order momentum in the first quarter of 2014, the Executive Board confirmed its previous published forecast for 2014. R. STAHL expects orders with a total value of EUR 325 million to EUR 335 million. For the full year, the company expects sales of EUR 315 million to EUR 325 million. The earnings situation in 2014 will be influenced by the finalization of the investment program. Accordingly, the company anticipates EBIT to develop moderately to between EUR 24 million and EUR 26 million.

For the first time, R. STAHL is also announcing its mid-term goals, which extend to the end of fiscal year 2016 and underpin the strategic expansion investments and growth potential. The company is aiming for sales to increase to EUR 380 million to EUR 390 million by 2016. This represents an average annual sales growth (CAGR 2013-2016) of 7.7 % to 8.6 %. R. STAHL's goal is to grow profitably. The EBITDA margin is expected to be in a range between 15 % and 16 % and the EBIT margin is expected to lie within a range of 11 % to 12 %.

To implement these objectives, R. STAHL is pursuing four strategic measures: The accelerated development of innovative products and systems for explosion protection is part of this strategic program, as is the expansion of its presence in consumer industries and growth regions. Moreover, the company is constantly working to strengthen its position as a technology leader. In addition, R. STAHL is taking measures to improve processes and optimize costs by focusing on continuous improvements in efficiency.

Key Figures of R. STAHL Group according to IFRS

in EUR million
Q1 2014Q1 2013Change
Sales, total67.672.1(6.2) %
Germany16.915.2+ 11.3 %
Europe, excl. Germany32.234.3(6.3) %
Americas9.211.2(18.1) %
Asia/Pacific9.311.3(17.9) %
Order intake88.482.6+ 7.1 %
Order backlog84.880.0+ 6.0 %
EBITDA4.98.5(42.8) %
EBITDA-margin (in %)7.2 %11.8 % 
EBIT1.85.6(67.5) %
EBIT margin (in %)2.7 %7.7 % 
EBT (earnings before taxes)1.04.7(79.6) %
EBT margin (in %)1.4 %6.6 % 
Net earnings for the period0.73.2(79.2) %
Earnings per share (in EUR)0.110.54(79.6) %
Cashflow from operations-1.91.2(252.1) %
Employees as of March 31 (excluding apprentices)1,8711,696+ 10.3 %
Cash and cash equivalents16.925.0(32.5) %
Equity ratio (in %)35.8 %37.1 % 

The full report for the first quarter of 2014 is available on the company's website as a download.

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 risk 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 growth industries, such as the oil & gas industry, the chemical and pharmaceutical industries, and the food industry. Approximately 1,870 employees generated worldwide sales in 2013 of EUR 304 million. R. STAHL AG shares are traded on the Regulated Market/Prime Standard of Deutsche Boerse (ISIN DE000A1PHBB5).

For further information:
Am Bahnhof 30, 74638 Waldenburg (Württ. )

Bernd Marx (CFO)
Phone: +49 7942 943-1271

Nathalie Dirian (Investor Relations)
Phone: +49 7942 943-1395

e-mail: [email protected]

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