© 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.
Good morning, and thank you, ladies and gentlemen, and welcome also from my side, and thank you for joining our today's conference call. Our prepared slides are also available under the Investor Relations section of our website, www.r-stahl.com. A replay of the entire conference will be at the same place shortly after we will have finished. Please be aware of our disclaimer statement, which you find at the beginning of the slide deck.
And now I'll pass on to Dr. Mathias Hallmann, our Group CEO, who will walk you through our presentation.
Good morning, ladies and gentlemen. Very warm welcome to our Q2 2023 Analyst and Investors Conference Call. We can report another positive quarter in Q2 2023. Our orders jumped 16.2% year-on-year to EUR 89.3 million, driven by rising demand from all sectors.
Sales increased with the exception of Americas in all regions at an average of 13.3% to EUR 76.7 million. And our EBITDA pre more than doubled to EUR 8.7 million, resulting in an EBITDA pre margin of 11.3%.
Free cash flow was slightly reduced by EUR 2.2 million to EUR 3.1 million. And net profit increased from a loss last year of minus EUR minus 0.9 million to a profit this year of EUR 1.8 million.
Earnings per share ended at EUR 0.29 per share.
Looking into our sales development, we saw another strong development in Germany, our home market, with an increase to EUR 19.7 million, change of 10.2%. Very nice development in the Central region with -- we ended at EUR 34.3 million, a change of plus 18%. Also a nice development in Asia Pacific, EUR 14.6 million. We ended -- that's also an increase of 18.9%. Only Americas, we had a slight decrease of roughly 5% to a level of EUR 8.1 million. But looking at the orders, we would expect that the year will also end with a positive development in our Americas region.
If we look in our profitability statement, then we see sales increasing from EUR 67.7 million to EUR 76.7 million. Our cost of material ratio remained stable at a level of 34.4%. Prior year was 34.5%. So we are managing well with inflation.
Our personnel costs only slightly increased despite the strong growth on the top line, but we have to expect some increase in the second half of the year from an expansion of our staff and the collective agreements with the unions, which will show significant impact in the second half.
Operating expenses show a raise to 14.4%. EUR 800,000 of that came from the deconsolidation of our subsidiaries in Sweden and Malaysia, which we closed last year. And now we had to swallow the differences in exchange rates from the equity we put in these subsidiaries when we set them up and when we close them. Yes. And then the EBITDA pre shows a doubling more or less to a level of EUR 8.7 million.
Cash flow statement. Yes, cash flow. First, cash flow increased nicely to EUR 6.3 million due to the increased net profit mainly. Then we see a decrease in the cash flow from operating activities as we had to build some working capital in the second quarter in order to cope with the growth.
Last year, we could reduce working capital significantly. So that's driving some change. Cash flow from investing activities was on the same level. So we -- that we end with a slightly decreased free cash flow, which decreased to EUR 3.1 million, and we had EUR 5.3 million last year. Overall, net debt increased to EUR 42.1 million, while we had EUR 29.2 million last year.
Looking in our order and sales development, we saw another very strong quarter on the order side. Actually, it was the second strongest quarter in the last 3.5 years with EUR 89 million. Also the quarter from a working day perspective was much shorter than the first quarter, we ended with a sales volume of EUR 77 million. And yes, the overall development is positive. We would expect to see a slightly higher sales in the third quarter. Orders right now seem to be stable.
So we see continuing strong demand for our products in the near future. The impact from disrupted supply chains are becoming smaller and sales will continue to improve in almost all regions and sectors when we look forward. So we would expect that this nice development will continue in the next quarters.
That brings me to our outlook. We remain with our sales forecast, which will -- we expect to end the year between EUR 305 million and EUR 320 million. We expect to see our EBITDA between EUR 30 million and EUR 36 million. Also, I have to admit that we if the development continues, we would see both numbers ending at the higher -- at the positive end of the range so that we target to come close to the EUR 320 million, and we target to come close to the EUR 36 million.
Free cash flow due to the working capital buildup, we would expect to be a single-digit negative euro million amount. But nevertheless, we think we should reach the top of the working capital buildup in the third quarter and then with the further stabilizing supply chains, we should bring it down towards the end of the year. And overall, we should also see a slight increase in our equity ratio as long as the interest rate level remains stable.
Risk we see are still in the Russia-Ukraine crisis, which is not really predictable. As I said, the supply chain risks are softening more and more. We should have it well under control. What we face right now is really a labor shortage. So in many of our locations, it's really hard to find skilled labor in order to fill empty positions, which is right now a little bit working against our growth expectations.
We target this with our strong education programs with automation activities, but this labor shortage is definitely something which is -- which has to be managed in the near and midterm future and is softening a little bit the growth line, but we will work through that.
This is it from our side yes, that was -- it was a positive quarter. We would expect another positive third quarter and we are overall positive in our expectations towards the end of the year.
Thank you very much, and now I'm open for questions.
The first question is from Klaus Schlote from Solventis Wertpapierhandelsbank.
I've got a question concerning the personnel costs was in H1 was about EUR 65 million. And you said that the number will go up in the second half due to higher labor and wage increases. What's your expectation regarding this figure for H2? Will it go to EUR 70 million?
We are not 100% sure how we can fill empty positions. This is the biggest uncertainty. The collective labor agreements, we closed all over the place amount up to an increase of 6% roughly. So that was in Germany, but that was also in the rest of the world. And then there will be some impact from additional positions. So I would expect an increase and some of these effects were already there in the second quarter, not only some. So I would expect an increase between 5% and 7% maybe.
So will come close to EUR 70 million about...
We would come close to EUR 70 million, but I would also expect some growth in the second half of the year as we ended the first half with an order backlog of EUR 137 million. In the meantime, we should have an order backlog of close to EUR 140 million. We are expanding capacities here and there. So we should be able to compensate.
Then I've got a question regarding the ZAVOD Goreltex participation as the ruble was weak during the first half of this year. So yes, at the beginning of the year, it was about RUB 75 million, now it's about RUB 90 million, but there was no depreciation of the participation. Why is that?
Yes. Because the organization is developing strongly. We see another -- we see potentially another growth of Goreltex of roughly 20%. It's highly profitable. We have made -- we have decided about dividend payments and dividends are coming. So from all angles, we were looking at this investment. We had no good reason for any depreciation.
Could you please remind us what is the running number for the dividend payment?
RUB 10 million per month, which is the limit given by the Russian state, which will -- and we have -- the dividends which were decided up to now will run until February, but we will most likely put another dividend decision in place next week, which would then cover the next following 18 months.
The dividend most likely will not be lower than the running one?
This is the crystal ball I have to look into now. I don't know what our friend, Putin is planning to do.
We have a follow-up question from Klaus Schlote.
Somehow I got lost in the space. The Americas was kind of flattish business, and you said we will be better in the second half of this year. Why was it flattish? Is this kind of jumps to your eyes compared to the other regions. Was there some specific reason why Americas was holding back in H1?
Yes. I mean, first, we have to see that we had 40% increase last year in the Americas. And we see further increase on the order side. But there is some project business with longer lead times where we need to have a clarification with customers, engineering so that we would expect another increase in the second half. But we also have to admit that the oil and gas...
I am sorry I cannot -- the line is disturbed.
Okay. Can you hear me now?
You are back now, yes.
Okay. Then we have good orders. Many of them have some -- have longer lead times because of customer clarification and engineering, which is involved. That's one reason. And the other reason is there was some softness in the chemical industry and the pharmaceutical industry in the first half of the year, while LNG and oil was strong. And now we would expect also there a recovery in the second half. Overall, we have the orders. Order backlog is good, and we will definitely see a growth over the year.
Is there any news regarding the credit side of the business?
We are coming close to renewing our financing with our bank consortia with an increased volume. We are well on track, and I would expect that we close it in the third quarter.
Okay. And then I was reading in the half year's report about this company, you have got strategic partnership, I.safe MOBILE. What is going on there? What is this all about?
I.safe MOBILE is a pretty young company, and they are -- as the name says, I.safe MOBILE, they are concentrating on mobile devices like phones, tablets in the EX area. And our product ranges are very complementary to each other, and that led us to this strategic collaboration. I would expect that collaboration in the near future will also move in other directions like R&D collaboration, maybe support in manufacturing and in other spaces. But the logic behind is that it's very complementary to what we do.
Do you see any turnover out of -- coming out of that already or any time soon?
There will be turnover in the next quarters. It will not have a huge impact in the first step that needs to be built up because we were not -- we are not known as a player in this space. But definitely, it gives us the opportunity to have a full complete offer for some customers where we couldn't offer the full range in the past.
Okay. Well, thank you very much.
Welcome.
There are no further questions at this time. I hand back to Dr. Mathias Hallmann for closing comments.
Yes. Thank you very much, ladies and gentlemen, for participating in this call. You may have heard that we changed the date for our Q3 conference call, which is now on the 7th of November instead of the 9th of November. That's just for personal reasons, no business background. So if you haven't noticed that, please be aware that we will be 2 days earlier for our Q3 publication and conference call.
So again, thank you very much, and hope to have you in the call in November then.