EANS-News: Semperit with profitability boost in the first half of the year: efficiency enhancement, strict corona countermeasures and high market demand in the Medical Sector take effect
--------------------------------------------------------------------------------
Corporate news transmitted by euro adhoc with the aim of a Europe-wide
distribution. The issuer is responsible for the content of this announcement.
--------------------------------------------------------------------------------
Mid Year Results
Vienna/Austria, 14 August 2020 -
* Slight decline in total revenue of 4.2% to EUR 418.9 million
* Revenue increase in the Medical Sector (+14.8%) almost compensated for the
decline in the Industrial Sector (-13.9%) in absolute figures
* EBITDA increased by 47.2% to EUR 57.6 million, EBITDA margin from 9.0% to
13.7%
* EBIT improved many times over to EUR 112.2 million due to impairment reversal
in the Sempermed segment amounting to EUR 88.8 million, EBIT margin from 4.8%
to 26.8%
* Adjusted EBIT more than doubled to EUR 43.4 million
Despite the disruptive external market shock of the corona pandemic and the
subsequent acceleration of the global economic recession, the publicly listed
Semperit Group increased profitability in the first half of the year at both
EBITDA and EBIT level, thus improving the Group's liquidity at the same time:
"We are looking back on a very positive earnings development in the first half
of the year," says Martin Füllenbach, Chairman of the Executive Board of
Semperit AG Holding. "Our comprehensive restructuring and transformation
programme is now also bearing fruit in the Medical Sector: the operating
performance was significantly improved. In addition, the exceptional boom in
medical protective gloves triggered by the corona pandemic and accompanied by
price increases has been a major factor. But the Industrial Sector, which is
sensitive to economic conditions, has also shown remarkable resilience to date."
Successful crisis management
In view of CoViD-19, the protection of the health of employees, customers and
all stakeholders of the Semperit Group remains the top priority. Comprehensive
measures were taken for the employees working in our production facilities.
Since the second half of May, Semperit has implemented a gradual resumption of
office operations - in two separate teams. By the end of the first half of 2020,
only 3 of around 7,000 employees worldwide had fallen ill with the corona virus,
with none of the cases showing a serious course. "At a very early stage, we
quickly introduced measures to protect the health of our employees on the one
hand and to deal with the economic effects of the corona crisis in the best
possible way on the other hand," says Füllenbach, satisfied with Semperit's
crisis management.
Persistent external market shock
The Semperit Group achieved a significant increase in profitability and
liquidity in the historically unprecedented crisis environment of the first half
of 2020. The recessionary developments observed since the second half of 2019
were overlapped by an increasingly severe global economic depression in the wake
of the corona pandemic. The relevant raw material markets were largely in
decline, primarily due to lower industrial demand and the collapse of crude oil
prices in spring 2020. Even though a brief recovery of economic activities and
supply chains began in June-July 2020 after the easing of the global production
freeze and the closure of public life, there were repeated setbacks and, in some
cases, new closures in regional clusters. These market-relevant external factors
will increasingly impact the Semperit Group's business, particularly in the
Industrial Sector, in the second half of 2020, with recent developments in
infection figures pointing to the persistent danger of a renewed strong
intensification or further corona waves in the coming months.
Opposite effects of the corona pandemic on revenue development
The results of the Industrial Sector have been reported in the new structure
since 1 January 2020. The sector now consists of four segments (Semperflex,
Sempertrans, Semperseal and Semperform), after Semperform was split into two
separate segments: Semperseal deals with sealing profiles and elastomer sheets;
Semperform combines the business units handrails, cable car rings, ski foils and
engineered solutions (SES).
The Semperit Group recorded a decrease in revenues of -4.2% to EUR 418.9 million
in the first half of 2020 compared to the same period of the previous year. The
corona pandemic had opposite effects on the Medical and Industrial Sectors.
Revenues in the Industrial Sector fell by -13.9%, while the Medical Sector
recorded an increase of +14.8%.
The Industrial Sector - above all the Semperflex segment - was affected on the
one hand by the economic downturn, which began as early as 2019, and on the
other by the negative effects of the Corona crisis. The increase in revenue in
the Medical Sector (Sempermed segment), is based on two factors: on the one
hand, the increase in production volumes, which was made possible in part by
improved capacity utilisation, and on the other hand, the exceptionally high
demand for gloves as a result of the corona pandemic and the resulting increase
in market prices.
Continued strong increase in profitability combined with higher liquidity
EBITDA rose from EUR 39.1 million in the first half of 2019 to EUR 57.6 million
in the first half of 2020 due to good results in the Medical Sector. In addition
to the increases in sales volumes and market prices, the restructuring and
transformation measures, now also successful at Sempermed, had a positive
effect. The EBITDA margin rose accordingly from 9.0% to 13.7%.
In the context of the corona pandemic and the global economic slowdown, it was
necessary to examine the segments of the Semperit Group for indications of a
change in the value of segment assets. In the Sempermed and Sempertrans
segments, this examination resulted in the need of an impairment reversal (of
EUR 88.8 million) and an impairment loss (of EUR 20.0 million) respectively.
Accordingly, EBIT jumped to EUR 112.2 million in the first half of 2020 compared
to EUR 20.9 million in the first half of 2019, while the EBIT margin increased
from 4.8% to 26.8%. At EUR 43.4 million, EBIT adjusted for impairment losses was
nevertheless more than twice as high as in the first half of 2019, while the
adjusted EBIT margin was 10.4% - also more than twice as high as in the same
period of the previous year.
At EUR 11.9 million, cash-relevant investments in tangible and intangible assets
in the first half of 2020 were below the previous year's level of EUR 21.4
million. The focus was mainly on capacity-maintaining investments. As of 30 June
2020, cash and cash equivalents amounted to EUR 166.8 million, which was above
the level of EUR 141.4 million at the end of 2019. This was, among other things,
due to a higher operating result, and the reduction of investments in tangible
and intangible assets.
Economic downturn and corona reduce results in the Industrial Sector
The Industrial Sector was hit by both the economic downturn that has been
apparent since 2019 and the effects of corona. The fact that the Industrial
Sector is in a solid position thanks to the measures from the restructuring and
transformation programme had a supportive effect in this context. Strict cost
management and close customer contact made it possible to partially offset the
negative effects of the crisis. In total, revenue in the sector fell by -13.9%
from EUR 289.5 million to EUR 249.2 million.
Thanks to the countermeasures taken in time during the corona crisis,
profitability was only slightly below the previous year's level. Although EBITDA
declined by -14,9% to EUR 44.8 million due to the decline in revenues, the
EBITDA margin remained almost unchanged at 18.0% in the first half of 2020
(after 18.2% in the first half of 2019). Due to current market developments, an
impairment loss of EUR 20.0 million had to be recognised in the Sempertrans
segment. EBIT thus declined by -69.1% to EUR 12.2 million and the EBIT margin
from 13.6% to 4.9%. The adjusted EBIT was EUR 32.2 million and the EBIT margin
was 12.9%.
Medical Sector on the rise after restructuring and positive corona effects
The development of the Sempermed segment in the first half of 2020 was
characterised by two main factors. On the one hand, production volumes and
operating efficiency were increased as a result of the successful restructuring
measures. On the other hand, the significant increase in demand for medical
protective gloves resulting from the corona pandemic - particularly in the
second quarter - coupled with a market-driven rise in price levels was the main
reason for the positive result.
Volumes rose significantly, contributing to the 14.8% year-on-year increase in
revenue. Due to the changed market situation, a reversal of an impairment loss
of EUR 88.8 million was also recognised in the Sempermed segment.
In addition to the sales boost due to corona, the measures of the restructuring
and transformation process had a positive impact on the medical business not
only in terms of production volume and revenue growth, but also in terms of
productivity and profitability: EBITDA was EUR 23.0 million in the first half of
2020 after EUR -0.3 million in the first half of 2019. EBIT amounted to EUR
110.7 million after EUR -4.2 million in the first half of 2019. EBIT adjusted
for the impairment reversal also improved significantly to EUR 21.9 million, the
adjusted EBIT margin was above the level of the previous year at 12.9% (first
half of 2019:
-2,9%).
Executive Board mandate of Dr Felix Fremerey expires as planned
The Executive Board mandate of Dr Felix Fremerey is scheduled to expire on 30
November 2020. Dr Fremerey has informed the Supervisory Board that he is not
available for an extension. Since Dr Fremerey joined the Executive Board in
September 2018 and under his leadership, the performance of the medical sector
has improved significantly in all areas. This has laid the foundation for this
year's outstanding earnings performance of the medical business. The operational
restructuring has thus largely been successfully completed and a competent
management team has been established for the division. Dr Felix Fremerey is
therefore resigning from his position on the Executive Board of Semperit AG
Holding as of today in order to devote himself to new professional challenges.
The Supervisory Board and colleagues on the Executive Board thank Felix Fremerey
for his outstanding performance, the extremely focused and pleasant personal
cooperation and wish him all the best for his future career. CEO Martin
Füllenbach (Business Medical Sector), COO Kristian Brok (Production Operations
Medical Sector) and CFO Petra Preining (IT) will assume his responsibilities at
Semperit.
Outlook
The recessive economic development and the effects of the corona crisis lead to
opposing developments in the Industrial and Medical Sectors: In the medical
protective gloves business, a significant increase in demand and a sharp rise in
prices have been observed since the outbreak of the corona crisis. Against this
background and also in view of the improved operational performance, the results
of the Medical Sector in the current financial year will be significantly above
the previous year's level.
The emerging effects of the global pandemic are considered to be of limited
sustainability. For this reason, the fundamental strategic decision of 28
January 2020, according to which Semperit will focus on the industrial rubber
business in the future and separate from the medical business, is still valid,
regardless of the developments recently observed in the wake of the corona
crisis. The implementation of the separation from the medical business will be
delayed.
The Industrial Sector was hit by the global recession, which has worsened in
recent months due to the global lockdown. The results of the Industrial Sector
in the current year will therefore be noticeably below the previous year's
level. The positive effects from the medical business for the foreseeable future
will, however, more than compensate for this decline.
Overall, based on the current figures, EBITDA of the Semperit Group is currently
expected to be significantly higher than in the previous year (2019: EUR 67.8
million) for the full year. However, the currently unpredictable duration of the
corona crisis and its consequences for the global economy make it difficult to
reliably forecast the financial effects on the Semperit Group.
In view of the developments described above, indications were examined and a
reversal of an impairment loss in the Sempermed segment and an impairment in the
Sempertrans segment were determined at the end of the second quarter of 2020.
Taking this into account, EBIT of the Semperit Group of EUR 110 to 160 million
(2019: EUR -16.5 million) is expected for 2020 as a whole - particularly
depending on the further development of the price level for medical protective
gloves and the sufficient availability of raw materials for their production.
These expectations were already communicated in the ad-hoc mailing of the
Semperit Group on 3 July 2020.
Against this background, Semperit expects the second half of the year to be
characterised by significant challenges. This will be reflected in visibly lower
results in the Industrial Sector: the corona crisis and the resulting
intensified economic downturn are expected to have a slightly delayed effect on
the Semperit Group. However, significant declines in revenues and earnings are
expected particularly from the second half of the year. In contrast, the result
in the Medical Sector will be positively influenced by the significantly higher
demand and price increases in the market.
The restructuring and transformation process initiated by the Semperit Group at
the beginning of 2018, which has led to significant improvements at various
levels, has been further accelerated by the corona crisis and will continue in
the future: In this context, the focus on cost-cutting measures will be
sharpened again in the coming months.
Further inquiry note:
Monika Riedel
Director Group Brand Management, Corporate Spokesperson
+43 676 8715 8620
monika.riedel@semperitgroup.com
Judit Helenyi
Director Investor Relations
+43 676 8715 8310
judit.helenyi@semperitgroup.comwww.semperitgroup.com
end of announcement euro adhoc
--------------------------------------------------------------------------------
issuer: Semperit AG Holding
Modecenterstrasse 22
A-1030 Wien
phone: +43 1 79 777-310
FAX: +43 1 79 777-602
mail: judit.helenyi@semperitgroup.com
WWW: www.semperitgroup.com
ISIN: AT0000785555
indexes: ATX GP, WBI, ATX PRIME
stockmarkets: Wien
language: English