© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, a warm welcome also from my side. It's my great pleasure to have with me today Dr. Mathias Hallmann, our Group CEO, who will walk you through our presentation in a minute. The slide deck is also available under the Investor Relations section of our website, www.r-stahl.com. Before we begin, allow me to point you to our safe harbor statement, which you will find at the beginning of the slide deck. And with this, I hand the call right over to Dr. Hallmann.
Yes. Good morning, ladies and gentlemen. Welcome to this Q2 2021 investors call. Yes. I think the overall message for this call is that after a very difficult 2019 and also a difficult first quarter, which was heavily impacted from low orders in the end of 2020. We are starting to gain momentum. Our sales are 8% up year-on-year, reaching the level of EUR 64.5 million. That was due to higher shipments of finished goods we already produced the quarters before, but also a pickup of the daily business. We continue to control our cost and improve operating leverage that resulted in a year-on-year improvement of our EBITDA of roughly 17% and it improved up to EUR 4.5 million. And in the bottom line, we had a net profit increase to minus EUR 1.2 million. Orders -- or order intake grew 7.5% year-on-year, reaching a level of EUR 65.2 million and order backlog stabilized on a level of EUR 68 million at the end of Q2. Net profit and continuous investments in R&D led to a temporary quarter-on-quarter increase of net debt to a level of EUR 13.2 million, which given the profitability of the business isn't an issue at all. And our guidance remains unchanged. We see sales between EUR 254 million and EUR 260 million and an EBITDA pre between EUR 17 million and EUR 19 million at this point of time. If we look into the regional -- in the regional pattern of our sales, we see a good development in Germany, which already remains strong during the whole crisis. So very good position in the German market with another year-on-year change of plus 9.6%. We see a very strong development in Asia Pacific, with a growth rate of almost 35% stable business in the Central region and also somewhat stable, a little minus in Americas. And if we look into that in detail, it clearly indicates what's still the problem. It's problems we have in the regions where we have high exposure to oil and gas business. And that is reflected in the Americas numbers. This is partly reflected in the Central region with high exposure in oil and gas in Norway and the U.K. and especially in Germany with good exposure to chemicals, pharmaceutical industry. And Asia Pacific, we more and more get into gas and LNG, there we see these favorable development. Yes, looking at overall development on the next page. We see that after 3 very difficult quarters in 2020 with order intake between low 60s and low 50s, we now had a 20% jump more or less in the first 2 quarters, reaching a level of around EUR 65 million and the stabilized backlog. We are somewhat cautious when we think that this should improve quickly in the next quarters because what we see that large investment projects are still kept on hold, mainly in the oil and gas business, but also in some other areas. This is due to the fact that we still have lots of uncertainties around COVID-19, especially in Asia Pacific. Singapore, for example, closed down the offices. All people are working from home. It's almost impossible to interact face-to-face with customers. We see rising numbers in Korea and China. So there is more and more uncertainty in Asia Pacific. And what we also see is due to the broken supply chain and especially due to major demand shifts in the electronics industry, our customers anticipate procurement risks, but this is also what we anticipate for the second half of the year. Looking into the numbers a little bit more in detail. We see what I said before, sales are up due to the fact that we could ship finished goods, which we produced before, but also total operating performance is up. We have improved cost of material ratio. It improved by 100 basis points to 32.8%. We had 33.8% in the quarter 2 2020, and that's demonstrating our favorable product mix. Nevertheless, also here, looking forward, we will face challenging times because we are all aware of sometimes dramatic price increases in the raw materials market and also high cost, high internal costs, which are sometimes necessary to take just to make sure that we get the materials. We continue to manage our personnel costs pretty tight. The slight increase is heavily or somewhat driven by a year-on-year increase of EUR 400,000 in severance costs. And our other operating income is slightly up, driven by software licenses and certification services, and both is very much related to the continuing execution of our strategy. Next slide is pretty -- there's not much to say. Restructuring costs are under control. They are slightly up with respect to last year, but are not critical for a company like ours, EUR 600,000 in 6 months, I think that's in line. If we -- when we look in our key cash flow data, we see some differences from equity valuation. We had a good dividend payments in Q2 2020 from our ZAVOD Goreltex share. That's our Russian joint venture we have. These dividend payments didn't rise. This year, we are expecting it for the second half of the year. We have better cash flow from higher net profit. We have an improved tendency in our working capital. We are benefiting from working capital reductions. And what goes in the other direction is higher CapEx. And that's again linked to the execution of our strategy with higher investments in R&D and higher investments in plant, property and equipment. So that all then results in a net debt level of EUR 13.2 million. Coming to the outlook. I already mentioned that we keep -- we don't change our outlook. We still expect sales between EUR 254 million and EUR 260 million. We expect EBITDA pre between EUR 17 million and EUR 19 million, free cash flow of around EUR 6 million and stable net debt year-on-year. The risks we clearly see, and this is a risk we are sharing with everybody is that we need to tightly manage raw material supplies. Sometimes the suppliers give notice 24 hours before they just don't deliver confirmed deliveries. So this is nothing where we have a good foresight into, we manage it tightly. Right now, we have no major impact. We could solve all critical situations. We expect that we can solve most situations coming in the second half, but there is some uncertainty from this side and also from the further development of the COVID crisis, which we think will keep us busy at least this year and also partly in 2022. So that's my presentation. Thanks for listening, and we are happy to take questions.
[Operator Instructions] And the first question is coming from Christian Sandherr at Hauck & Aufhäuser.
I'm going to start with a bit more macro question now. Have you seen in the beginning of the third quarter, the first 6 weeks now, have you seen any material changes of the trends that you've seen in the second quarter to the positive or to the negative?
What we see on a macro level is really what I just pointed out that now these supply issues are reaching everybody. I mean we all hear it from the automotive industry that they stopped production. And it's -- we have some waves with supply issues with on the plastic side and with -- on the steel side, and we could manage very well. But now we are really facing this wave from the electronics side that we really struggled with deliveries that we have many internal teams running which do nothing else than securing supplies. And this is impacting everything. Besides that, we still see a recovery in our industries. I mean, pharmaceutical industry remains strong during the whole crisis. It's continuing to be strong. The chemical industry is getting stronger and stronger. There is a strong shift from oil to gas, which is also favorable for us when we think about our long-term strategy and hydrogen is a big issue. Also we are not expecting that, that will impact top line and bottom line in the next 1, 2 years. The macroeconomic issue is really global supplies and the next wave of COVID.
Right. And then you just mentioned the whole topic of the supply chain issues with electronics being as good. Will you be able to pass on some of the higher input costs on to your customers? Or are you largely limited when it comes to pricing? How does that look?
No, we are not limited at all. We announced the price increase of 4.9% in -- a general price increase on 4.9% for July and 2.9% on stock articles and the customer reaction was, I would not say positive, but there was a lot of understanding in the market. We don't had too much headwind when we started to implement. So that was well accepted in the market. And we will most likely have another price increase at the end of the year.
Okay. So the overall impact on your gross margin should be rather limited.
We should be able to compensate, yes.
Yes. And what have you -- have you gotten any indications from your oil customers in North America or in Norway, U.K. as to when they would be willing to revitalize projects that have been postponed?
If you look -- I mean, where we really have very good data is Norway. And when you look into the Norwegian data, you clearly see the oil business will not come back. The oil business in Norway will not come back and the Norwegian government is heavily investing in renewables and in hydrogen and bridging technology in -- somewhat into the LNG business or also hydrogen where we use natural gas and carbon capture. So this is the -- what's going to happen in Norway. And definitely in Norway, this oil business will not come back. We will not see major investments. We will see automation investments again because they still have the strategy in place to run oil and gas pretty much unmanned from onshore control, let's say, facilities and only fly out if necessary. But the big investments in oil and gas in the Norwegian area are over and they will not come back. For oil, somewhat in gas, but not in oil and they will move to hydrogen. In the U.S., the situation is much more unclear following the strategy of Biden. I would say we will see something similar. But we don't have those insights. Where we will see a recovery is definitely in the Middle East because these countries are so heavily depending on the income of the oil business, they can just not afford to change rapidly.
[Operator Instructions]The next question is coming from Ulrich Sachse at UniCredit.
Ulrich Sachse, UniCredit. Just let me take a closer look to your P&L. You showed us a recovery in revenue and sales. When do you think you reached the breakeven point in Q3, Q4? Could you give us a little better a view on this.
I would expect that we can reach the breakeven in Q3 if we don't have supply issues. And this is really the question here. Because if we can't deliver EUR 2 million, EUR 3 million a month because we are missing parts, and we need to shift that to the next quarter, then we will not reach breakeven. If we can manage the situation, we should be able to reach breakeven or come very close to breakeven. The -- our expectation and our forecast clearly indicates that breakeven should be reached in the next 2 quarters, if we don't see major supply, supplies not arriving at our site, yes.
There seems to be no further questions for the moment. For closing remarks, I give back to the speakers.
Ladies and gentlemen, thank you for joining our today's conference call. We look very much forward to staying in touch with you. As a reminder, our next event will be the third quarter earnings release 2021 on November 10. Have a great day and a nice and healthy summer break. Goodbye.