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VERTAILULUVUT PRO FORMA1
6.8.2020Acting President and CEO Sasu Koivumäki & CFO Päivi Lindqvist
GLASTON CORPORATION’S HALF-YEAR FINANCIAL REPORT 1 JANUARY – 30 JUNE 2020:
COVID-19 PANDEMIC IMPACTED ORDERS AND NET SALES, TIMELY COST-SAVINGS SUPPORTED HEALTHY COMPARABLE EBITA
VERTAILULUVUT PRO FORMA2GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020 2
This half year financial report provides estimates on future prospects involving risk and uncertainty factors, and other factors as a result of which the performance, operation or achievements of Glaston may substantially deviate from the estimates. Forward-looking statements relating to future prospects are subject to risks, uncertainties and assumptions, the implementation of which depends on the future business environment and other circumstances, such as the development of the COVID-19 pandemic.
VERTAILULUVUT PRO FORMA3
▪ Orders received EUR 24.0 (44.5) million
▪ Net sales EUR 48.9 (58.4) million
▪ Comparable EBITA EUR 2.3 (3.6) million, i.e. 4.8 (6.2)% of net sales
▪ Order book EUR 49.1 (78.9) million at end of June
▪ Cash flow from operating activities EUR -0.3 (-5.4) million
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
Q2/20 in brief
3
VERTAILULUVUT PRO FORMA4
▪ All production operations maintained throughout the pandemic.
▪ Orders received declined significantly, market activity clearly picked up towards end of the quarter.
▪ The majority of trade fairs, including the entire industry’s most important bi-annual event Glasstec in Düsseldorf, has been postponed until 2021.
▪ opportunity to renew and remodel sales and marketing efforts.
▪ Glaston continues to implement additional measures, such as temporary layoffs of employees in various locations and strict cost management. Glaston’s fixed costs were significantly lower in the review period, compared to the corresponding period 2019, due to
▪ organizational streamlining,▪ temporary lay-offs,▪ additional synergy benefits from the Bystronic glass integration,▪ lower marketing and travelling costs than normal
▪ Glaston closely monitors and manages its liquidity and financial position. At the end of the second quarter 2020, cash and cash equivalents totaled EUR 20.6 million. Additionally, Glaston has committed revolving credit facilities, which enable further debt financing for EUR 7.5 million euros and guarantees for 10.2 million euros.
▪ As a measure to ensure adherence to the terms of its external financing Glaston has agreed with its financing banks on increased covenant levels and postponement of debt repayments for the remainder of 2020.
▪ No orders in the order book have been cancelled.
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
COVID-19 IMPACTS AND MITIGATING UNCERTAINTIES
4
VERTAILULUVUT PRO FORMA5GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020 5
CHINA AND REST OF ASIA• In China market activity recovered in
the second quarter, but competition remained strong.
• The situation varied across South-East Asia with the lockdowns of mostcountries’ being lifted during the second quarter but investment decisions remaining slow or on hold.
EMEA • General market uncertainty,
government mitigation measures as well as travel and meeting restrictions slowed or postponed customers’ decision-making and ordering as well as installations and field service
• Towards the end of the second quarter some recovery was noted.
AMERICAS• In North America market activity
ceased. Investments were frozen during April and May. In June activity picked up with positive signs of increasing investments.
• US architectural glass manufacturers continued to run their operations almost at normal level throughout the quarter, although COVID-19 infections were rapidly increasing.
• COVID-19 could still significantly impact the US economy, particularly in the Southern states.
ARCHITECTURAL GLASS
OPERATING ENVIRONMENT Q2/2020In the second quarter the COVID-19 pandemic changed the market situation significantly from the stable first quarter
VERTAILULUVUT PRO FORMA6GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020 6
OPERATING ENVIRONMENT Q2/2020
• The low activity level in the automotive glass market continued in the second quarter. During the peak of the first COVID-19-wave, production activities at most car factories ceased. Thus, the subcontractor production was also considerably reduced or stopped, which led to very low machinery order intake and service activities.
• Signs of a gradual increase in production was noted during the quarter. • Going forward, market activity and investment readiness is expected to remain low.
AUTOMOTIVE GLASS
The already fragile investment-intensive automotive industry is facing an economic crisis due to COVID-19.
VERTAILULUVUT PRO FORMA7
Heat Treatment ▪ Orders received declined sharply due to the uncertainty in the market.▪ Net sales impacted by postponements of deliveries and low services
volume actions. ▪ Fixed cost savings and other adaptation measures slowed down the
decline in the comparable EBITA.
Insulating Glass▪ The Insulating glass market was clearly impacted by the COVID-19
pandemic and new orders declined significantly. ▪ Some larger Insulating Glass projects were accepted and delivered,
and net sales grew by 9%. ▪ Profitability declined as project margins were below the previous
year’s exceptionally high level and the relative share of services revenue declined.
Automotive and Emerging Technologies
▪ The automotive glass market was subdued and customer operations shutdown during the quarter. A slow ramp up started towards the end of the quarter.
▪ Some smaller Automotive and Display orders were received, Emerging Technologies activity was dormant due to market uncertainty.
▪ Net sales and profitability were impacted by very low demand in the previous quarters.
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
SEGMENT DEVELOPMENT Q2 IN BRIEF
7
VERTAILULUVUT PRO FORMA8
CUSTOMER OPERATIONS PICKING UPHeat Treatment machines
March-April
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020 8
Source: Glaston database
VERTAILULUVUT PRO FORMA9
▪ In 2020, integration has continued but due to the uncertainty caused by the coronavirus, certain long-term integration projects, i.e. integration of ERP systems) are postponed
▪ Annual cost savings from all measures undertaken since the acquisition are estimated to reach close to EUR 6 million (in connection with the acquisition, Glaston’s estimate was approximately EUR 4 million)
INTEGRATION
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020 2019 AND Q1/20 COMP. FIGURES PRO FORMA 9
VERTAILULUVUT PRO FORMA10GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
FINANCIAL DEVELOPMENT JANUARY-JUNE 2020
102019 AND Q1/20 COMP. FIGURES PRO FORMA
VERTAILULUVUT PRO FORMA11
56,2
52,8
44,2
63,4
45,3 44,5 45,6
49,2
45,6
24,0
0
10
20
30
40
50
60
70
Q1/18 Q2/18Q3/18Q4/18Q1/19 Q2/19Q3/19Q4/19Q1/20Q2/20
Orders received
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
Group orders received
5,4 (9,5)
6,7 (14,9)
1,7 (0,7)
9,9 (17,9)
0,2 (1,5)
Heat Treatment Technologies
Insulating Glass Technologies
Auto & ET
Services
Unallocated and eliminations
Orders received by product areaQ2/20 (MEUR)
2019 AND Q1/20 COMP. FIGURES PRO FORMA 11
VERTAILULUVUT PRO FORMA12
26,2 (26,9)
15,7 (27,9)
5,2 (20,4)1,8 (3,1)
Heat Treatment Technologies
Insulating Glass Technologies
Auto & ET
Services
Unallocated and eliminations
88,8 87,0 84,5
99,9104,2
78,9 79,1 79,576,4
49,1
0
20
40
60
80
100
120
03/18 06/18 09/18 12/18 03/19 06/19 09/19 12/19 03/20 06/20
Orderbook at the end of the period, MEUR
Group order book at the end of the period
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
Order book by product area 30 June 2020 (MEUR)
2019 AND Q1/20 COMP. FIGURES PRO FORMA 12
Group order book
VERTAILULUVUT PRO FORMA13
54,2 55,4
47,344,9 44,3
58,4
54,5
47,3 46,948,9
0
10
20
30
40
50
60
70
Q1/18 Q2/18Q3/18Q4/18Q1/19 Q2/19Q3/19Q4/19Q1/20Q2/20
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
Q2/20 net sales at reasonable level compared to peaking Q2/19
10,7
(17,1)
19,4
(17.4)
7,9 (8,3)
11,2
(14,9)
-0,2 (0,7)
Heat Treatment Technologies
Insulating Glass Technologies
Auto & ET
Services
Unallocated and eliminations
Net Sales by product area
2019 AND Q1/20 COMP. FIGURES PRO FORMA 13
VERTAILULUVUT PRO FORMA14
60,1%
EMEA29.4 MEUR
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
Geographical distribution of net sales Q2/2020
20,4%
Americas10.0 MEUR
19,5%
APAC9.5 MEUR
(54 %)
(27 %)
142019 AND Q1/20 COMP. FIGURES PRO FORMA
VERTAILULUVUT PRO FORMA15
Quarterly net sales by segment
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
20,8 20,1 19,6 19,2 22,114,9
14,5
21,4
15,1
22,422,9
24,1
11,9
11,2
8,5
4,3
12,3
9,7
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
Q4/19 Q3/19 Q1/19 Q1/20 Q2/19 Q2/20
Heat Treatment Insulating Glass Auto & ET Unallocated and eliminations
The segment net sales totaled EUR 48.9 (58.4) million
• HT net sales decreased by 33%, mainly due to lower preceding quarters’ order intake and a clear decline in spare parts and field service revenue. The segment’s sales were particularly high Q2/19 due to the delivery of several orders placed at the Glasstec fair in 2018.
• IG net sales grew by 5% to EUR 24.1 (22.9) million. Several larger projects received their final acceptance.
• Auto & ET, one major project received acceptance and was fully recognized in revenue.
2019 AND Q1/20 COMP. FIGURES PRO FORMA 15
VERTAILULUVUT PRO FORMA16
Comparable EBITA by segment
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
1,3 1,20,7 0,7
0,10,6
0,7
1,6
1,4
2,4
2,4 2,01,2
-0,2
0,6
-1,1
1,0
-0,3
-2,0
-1,0
0,0
1,0
2,0
3,0
4,0
Q3/19 Q4/19 Q1/19 Q1/20 Q2/19 Q2/20
Heat Treatment Insulating Glass Auto & ET Unallocated and eliminations
Segment Machines ServicesFixed costs
HT
IG
Auto & ET
Profitability development Q2/20
Comparable EBITA EUR Q2/20 2.3 (3.6) million.
2019 AND Q1/20 COMP. FIGURES PRO FORMA 16
VERTAILULUVUT PRO FORMA17GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020
Net debt and cash flow
17
48%51%
54%
38%
17%
55%53%
45%
51% 52%
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 Q120 Q220
Cash, M€ Debt, M€ Net debt, M€ Net gearing %
Debt, net debt [M€] and gearing [%]
• Cash and cash equivalents were EUR 20.6 million at the end of the period.
• Committed revolving credit facilities enable further financing of EUR 7.5 million and guarantees for EUR 10.2 million.
Operating cash flow by quarter [M€]
2019 AND Q1/20 COMP. FIGURES PRO FORMA
VERTAILULUVUT PRO FORMA18
▪ Glaston Corporation estimates that comparable EBITA for 2020 will decline from the 2019 level.
▪ The company’s current assessment is that the market will recover gradually and that third- and fourth-quarter orders will improve from the second quarter but stay below the previous year’s levels.
▪ The lower than 2019 order intake and slower than normal volume in services business impacts the development of net sales and earnings in 2020.
▪ The uncertainty surrounding the assessment remains, and the situation might change quickly depending on the development of the COVID-19 pandemic and the general economic climate.
GLASTON’S OUTLOOK FOR 2020 UNCHANGED
GLASTON CORPORATION 6.8.2020 Half-year financial report 1 January – 30 June 2020 18