DGAP-News: Gesco AG
/ Key word(s): 9 Month figures
Continued growth in the third quarter - earnings forecast raised again
- Increases in incoming orders and sales
- EBIT margin sees further improvement
- Positive effects from excellence programmes
- Sales forecast specified upward
- Earnings forecast raised again
Wuppertal, 19 November 2021 - GESCO AG, an industrial group made up of market and technology leading SMEs listed in the Prime Standard, confirms that its business continued to perform well over the first nine months of financial year 2021, has issued a more precise forecast for the full financial year at the upper end of the range for sales and has raised the earnings forecast again.
The high level of demand seen in the first half of 2021 continued unabated in the third quarter of 2021 for the companies of GESCO Group. The positive trend continued thanks to business with stainless steel products, strip steel and tool steel as well as business involving paper sticks in the confectionery and hygiene industries. The sales and earnings contribution from the delivery of machines and equipment designated as capital goods, which is customarily higher in the second half of the year, also had a positive impact. Moreover, UMT Group made a pro rata contribution to the overall development of GESCO Group following its acquisition in the second quarter of 2021. All three segments reported considerably improved sales and earnings figures for the cumulative reporting period.
In the third quarter of 2021, incoming orders were once again higher than in the two previous individual quarters. As a result, incoming orders for GESCO Group totalled € 421.0 million in the first nine months of 2021, 43.3% higher than the previous year's figure (9M 2020 continued, abbreviated in the following as "9M 2020-c": € 293.8 million). At € 351.0 million, Group sales exceeded the level of the previous year's reporting period by 19.2% (9M 2020-c: € 294.4 million). As at the reporting date, the Group's order backlog stood at € 222.4 million as compared to € 124.2 million in 9M 2020-c.
Despite a significant increase in material prices, the ratio of material expenditure, at 56.3%, was virtually unchanged compared to the first nine months of the previous year (56.4%) but rose to 57.5% in the third quarter. Despite the commissioning of a new production site in the US, there was a further decline in the personnel expenditure ratio from 26.6% in 9M 2020-c to 23.9% in the first nine months of 2021 due to better capacity utilisation and adjusted capacity, as well as increases in efficiency from successful OPEX activities.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) reached a total of € 40.7 million in the first nine months of 2021, significantly exceeding the result from the same period in the previous year (9M 2020-c: € 22.6 million). At € 27.8 million, EBIT in the first nine months of 2021 was nearly triple the amount seen in the weak comparable period of the previous year (9M 2020-c: € 10.0 million). Looking at the third quarter alone, EBIT reached € 12.5 million in the third quarter of 2021. The EBIT margin in the cumulative reporting period improved significantly, amounting to 7.9% or 10.2% in the third quarter of 2021 (compared to 3.4% in 9M 2020-c and 8.7% in Q3 2020-c). Group net income for the year after minority interest stood at € 15.2 million in the first nine months of 2021 (9M 2020-c: € 4.5 million), € 6.9 million of which was attributable to the third quarter of 2021. Earnings per share for continuing business operations amounted to € 1.40 in the cumulative reporting period (9M 2020-c: € 0.41).
The equity ratio stood at 55.5% as at the reporting date (compared to 58.3% as at 31 December 2020), thereby remaining at a comfortable level. At € 48.9 million, liquid assets reflected a similarly strong cash position as compared to 31 December 2020. Cash flow from ongoing business activities improved from € 37.5 million (9M 2020-c) to € 41.2 million in the first nine months of 2021.
The Production Process Technology segment nearly doubled its incoming orders in the first nine months of 2021 compared to the same period of the previous year, with the second and third quarters making a substantial contribution to the positive development. Corresponding positive effects made themselves felt in sales and earnings in the third quarter of 2021. The EBIT margin came to 9.6% in the cumulative reporting period following a negative margin in the previous year, buoyed by 16.8% in the third quarter of 2021. The positive contribution was generated by both the stainless steel technology and capital goods businesses.
The companies in the Resource Technology segment recorded an ongoing recovery in demand, sales and earnings in the first nine months of 2021. The EBIT margin increased from 4.8% (9M 2020-c) to 11.6% in the cumulative reporting period. The above-average earnings contribution in the third quarter of 2021 (EBIT margin of 15.4%) is mainly attributable to positive economic developments and the supporting material price effects.
In the Healthcare and Infrastructure Technology segment, incoming orders for the third quarter of 2021 exceeded the same period in the previous year by 59.1%, once again outperforming the previous two quarters. The EBIT margin came to 10.3% in the cumulative reporting period, slightly below the 10.6% seen in the same period of the previous year. The commissioning of a new production site in the US, in particular, had a dampening effect in the third quarter of 2021.
In light of the positive business development, GESCO raised the outlook for financial year 2021 in August of 2021 to Group sales of between € 465 million and € 485 million (previously € 445 million and € 465 million), along with Group net income after minority interest of € 20 million to € 22 million (previously € 16.5 million to € 18.5 million) - both target ranges are stated before M&A activities and without changes to the scope of consolidation. Given the expectations for the remainder of the year, the Executive Board now anticipates Group sales at the upper end of the unchanged range of between € 465 million and € 485 million, along with Group net income for the year after minority interest of between € 22 million to € 24 million for financial year 2021.
In this context, Ralph Rumberg, CEO of GESCO AG, says: "Our companies were able to continuously expand their business in the current year, simultaneously improving margins in many areas. The raft of measures within the scope of the NEXT LEVEL strategy that we have initiated and will continue to enhance going forward are making a valuable contribution to that end. Furthermore, the portfolio balancing through the discontinuation of the Mobility Technology segment is having a positive effect. Since the start of the year, we have once again been able to focus on our core competencies. We at GESCO AG will support our subsidiaries as an important source of advice and guidance in strategic and operational questions. We are on the right track - there is still tremendous potential on the path ahead of us."
The complete interim statement for the first nine months of 2021 is available at https://www.gesco.de/en/investor-relations/financial-reports/.
1) After minority interest. 2) XETRA closing price as at the balance sheet date. 3) Number as at the balance sheet date.
19.11.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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