Orders received and order backlog significantly above previous year, implementation of performance program on track
Group sales at Vossloh AG increased from €418.1 million in the previous year to €437.1 million in the first six months of 2019. The Core Components division particularly contributed to this growth of 4.6 %, following the completion of an acquisition in Australia at the end of 2018. In connection with the performance program announced on April 23, 2019, an adjusted EBIT is reported for the first time in the half-year report, which is adjusted for negative one-time effects arising from the performance program. These amounted to €6.9 million in the first half of 2019 and related almost exclusively to the workforce reduction component. The Vossloh Group's EBIT adjusted for these effects was €20.5 million in the first half of the current fiscal year (previous year: €22.8 million). The corresponding adjusted EBIT margin therefore came to 4.7 %, compared to reported 5.4 % in the comparable period of 2018.
The positive development in orders received so far continued in the second quarter of 2019. Orders received in the Vossloh Group increased very significantly in the first six months of 2019 to €568.9 million (previous year: €479.7 million). This corresponds to an increase of 18.6 %. As of June 30, 2019, the Vossloh Group's order backlog was €726.9 million (previous year: €543.5 million).
Core Components division
The main driver of the higher number of orders received in the Vossloh Group was the Core Components division. In the first six months of 2019, orders received increased significantly by 34.4 % to €243.9 million (previous year: €181.6 million). Of this amount, €152.4 million (previous year: €148.6 million) was attributable to the Fastening Systems business unit. In the Tie Technologies business unit, orders received stood at a high €94.5 million in the first half of the current year (previous year: €33.9 million). In addition to a major order from the customer Rio Tinto for the delivery of concrete ties for a mine project in Australia, orders received in North America also developed positively. As of June 30, 2019, the order backlog of the entire Core Components division amounted to €316.5 million (previous year: €177.2 million). Sales revenues in the Core Components division increased to a consolidated €164.8 million in the first six months of the current year (previous year: €141.0 million). While revenues of Vossloh Fastening Systems with €109.3 million were almost at the previous year's level of €110.6 million, sales from Vossloh Tie Technologies rose to €61.0 million, also due to an acquisition (previous year: €31.1 million). The adjusted EBIT of the Core Components division was €19.2 million (previous year: €16.1 million). This resulted in an adjusted EBIT margin of 11.7 % (previous year: 11.4 %). The EBIT including negative one-time effects from the performance program was €18.4 million.
Customized Modules division
In the Customized Modules division, important framework agreements were signed in the the first half of 2019. For example, during the coming years, Vossloh will supply switch components to Trafikverket, the Swedish Transport Administration. A sales volume of more than €75 million including options has been agreed upon with Trafikverket. Another larger framework agreement was signed with the Italian state-owned rail company Rete Ferroviaria Italiana (RFI) for €25 million for the next two years. The volumes are only reported as orders received when requested. Therefore, the values are only partially included under the reported orders received. In total, orders received in the Customized Modules division were €273.4 million in the first half of 2019 (previous year: €247.8 million). The order backlog as of June 30, 2019, amounted to €387.4 million (previous year: €340.4 million). At €231.7 million, sales in the Customized Modules division in the first six months of 2019 were just short of the previous year's figure of €234.1 million. Adjusted EBIT amounted to €7.7 million and was thus below the reported figure of the previous year of €12.6 million. The decline was due in particular to lower earnings contributions from the United Kingdom, the USA, Poland and Finland. In contrast, higher earnings contributions were achieved in Sweden. The adjusted EBIT margin thus amounted to 3.3 % (previous year: 5.4 %). The reported EBIT, which takes into account the negative one-time effects incurred for the performance program, was €6.0 million.
Lifecycle Solutions division
Orders received in the Lifecycle Solutions division also developed positively. In the first half of 2019 orders received rose by 14.2 % to €60.7 million (previos year: €53.1 million). The division's order backlog was €24.7 million as of June 30, 2019, following €29.1 million as of June 30, 2018. Sales revenues for the first six months of 2019 were €48.8 million, up 5.9 % from €46.1 million in the same period of the previous year. EBIT fell from €3.1 million in the previous year to €1.5 million after adjustment. The EBIT margin’s adjusted value of 3.2 % was thus below the previous year’s level of 6.8 %. An important reason of the decline were lower earnings contributions from the sale of vehicles. The division's reported EBIT for the first half of 2019 was €(1.9) million.
In the first half of 2019, the average number of employees in the Vossloh Group was 3,918. The average number of employees increased by 183 compared to 3,735 in the first half of 2018, partly as a result of acquisitions. Compared to the end of 2018 with 3,937 employees, a total decrease of 27 employees is evident. As a consequence of the performance program, a noticeable reduction in the number of employees is expected by the end of 2019.
The performance program for achieving a sustainable increase in profitability and an improvement in self-financing capability, which was announced on April 23, 2019, includes a reduction in the number of employees by 5 % compared to the end of 2018. The reported one-time effects in the first half of 2019 were almost exclusively incurred for workforce reduction, and comprise about one-third of the planned employee layoffs. Another focus of the program is a thorough review of unprofitable or disadvantageous activities. For these activities, various alternatives are being examined, including a possible sale. This particularly affects global locations of the largest division, Customized Modules. A significant amount of negative one-time effects in this context cannot be ruled out. In addition to these two components, the performance program aims to reduce overhead costs, focus on major investments, and intensify measures to reduce working capital. All measures are to be implemented to the greatest extent possible in 2019.
For the operational business in fiscal year 2019, management continues to assume Group sales of €900 million to €1 billion and adjusted EBIT between €50 million and €60 million. Effects on earnings due to the performance program cannot yet be conclusively quantified for the 2019 fiscal year, with the exception of the reported effects in the first half of 2019. Due to the good order situation in China among other things, Vossloh continues to expect Group sales of between €950 million and €1.05 billion and an EBIT of between €65 million and €80 million for fiscal year 2020.
The most important key figures at a glance
|Orders received||€ mill.||568.9||479.7
|Order backlog||€ mill.||726.9||543.5
|Adjusted EBIT||€ mill.||20.5||–
|EBIT margin (2019 adjusted)||%||4.7||5.4
|Value added||€ mill.||(21.0)||(6.3)
|Net income||€ mill.||(23.4)||11.2
|Earnings per share||€||(1.58)||0.53|
Werdohl, July 25, 2019
Contact information for media:
Gundolf Moritz (Mirnock Consulting)
Phone: (+49-23 92) 52-608
Contact information for investors:
Dr. Daniel Gavranovic
Phone: (+49-23 92) 52-609
Vossloh is active in rail technology markets worldwide. The Company’s core business is rail infrastructure. The Group activities are organized into the three divisions of Core Components, Customized Modules and Lifecycle Solutions. In the 2018 fiscal year, Vossloh achieved sales of €865 million with approximately 3,800 employees.