This is a summary of the 2Q16 report published today. The complete 2Q16 report with tables is available at http://investor.cavotec.com/results.cfm. Investors should not rely on summaries only, but should review the complete reports with tables.
- Revenues for the quarter decreased 8.3%, amounting to EUR 53.9 million (2Q15: 58.8).
- Quarterly operating result (EBIT) ended with a profit of EUR 7.5 million (2Q15: 2.3), including non-recurring net income of EUR 3.2 million, corresponding to a margin of 13.9%.
- Net result for the period ended at EUR 6.1 million (2Q15: 0.8).
- Order Intake decreased by 19.5% in the quarter to EUR 50.3 million (2Q15: 62.4).
- Order Book increased 6.9% to EUR 105.2 million (FY15: 98.4).
- Book to bill ratio was at 1.07x compared to 1.30x in 1H15.
CEO’s comments
2Q16 developed in line with our expectations with revenues amounting to EUR 53.9 million, an 8.3% decrease compared to 2Q15. Day-to-day business remained strong, while a number of larger projects were postponed towards year-end. Organic growth was negative at 5.1%, and currency exchange differences had a negative impact on quarterly revenues. Gross margin remained strong quarter-on-quarter. We registered a 19.5% decrease year-over-year in order intake for the period, amounting to EUR 50.3 million. Our order book has grown 6.9% to EUR 105.2 million from year-end.
We have seen continued success for our Alternative Maritime Power supply systems for ships throughout the first half of 2016, with orders totalling more than EUR 8.9 million for the second quarter. In the Airports Market Unit (MU) we received several orders for Ground Support Equipment systems including new PCA/400Hz converters underlining increased market demand for technologies that improve operational efficiency. I see these orders as further affirmation of our strategy to focus on our core technologies and integrated systems in the Ports & Maritime and Airports segments.
Thanks to our strong global network, we are able to fill the gap in our order intake with smaller projects. Innovation continues to play a key role in our business, exemplified by the successful installation of a highly advanced and innovative Cavotec Inet PCA system at a large military aircraft maintenance base in the Middle East. The MoorMaster™ installation at the Port of Ngqura in South Africa has also recently been finalised following a programme of intensive performance tests. We passed these with a 100 per cent success rate over a period of four months dealing with some of the worst weather conditions the port has ever experienced.
As part of our strategic realignment, we made significant progress in resizing various areas of operations during the quarter, most notably in Norway, Germany, and the US.
Given current order intake levels, and the negative outlook for the Norwegian oil and gas segment for the coming two to three years, we have consolidated production of specialised explosion-proof radio remote controls (RRC) to Germany, where all standard RRC units are already manufactured. The result is an optimised production footprint with production of RRC units where market demand is currently strongest. Cavotec Micro-control in Norway will remain as a technology centre, where its team of R&D engineers will continue to focus on the development of new, innovative products.
Parallel to this, we concluded the administrative merger of our companies in Germany, bringing them together under a single legal entity. This new organization will benefit from the synergies in sharing services such as R&D, purchasing, finance, and HR, while also reducing lead-times and costs.
In the US, we have put a comprehensive plan in place focussed on resizing Cavotec INET operations to better match current market requirements. As we continue to identify our opportunities in the US and international markets, and focus on a standardised range of products and systems, we expect that further savings and efficiency gains will be achieved.
Looking ahead
In line with preceding months, 2Q16 has developed as expected in terms of overall performance. The prevailing caution exhibited by customers across our MUs has translated into a lack of larger projects in the first six months of the year, and I expect this to continue in the months ahead.
As set out above, we are maintaining our focus on streamlining operations, and this process will continue to ensure that we operate as efficiently as possible. I am closely monitoring this complex process, together with Cavotec’s Senior Management Team, one that impacts many facets of our organization. We must strike the right balance between proactively reducing costs and positioning the Group for future growth, and I am confident that we will be able to secure further improvements over the coming period.
We also continue to refocus activities towards our two major MUs – Ports & Maritime and Airports – to meet the growing demand for our core technologies in these markets.
Notwithstanding the challenging period ahead, I believe Cavotec is on the right path to become a stronger, more profitable company, and to further build our reputation as one of the world’s leading companies in our markets.
ENDS
For further details, please contact:
Michael Scheepers
Group Chief Communications Officer & IR
+41795024010 or michael . scheepers@cavotec . com
The information in this release is subject to the disclosure requirements of Cavotec SA under the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. This information was publicly communicated on 4 August 2016 at 12:00 CEST.
