Vossloh remains on growth track in the first half of 2022 – rising profitability expected in the second half of the year
Vossloh, a long-established and world-leading supplier of rail infrastructure products and services, was able to seamlessly continue its successful start to the year in the second quarter of 2022. Orders received increased in all divisions in the second quarter of 2022. At €314.8 million, it significantly exceeded the figure for the quarter of the previous year by €115.4 million. Overall, orders received in the first half of 2022 totaled €693.0 million. This corresponds to a 50.9 percent increase over the previous year’s period (€459.4 million) and marks a new record in Vossloh’s history. The order backlog also developed extremely positive, reaching €827.9 million as of June 30, 2022, up 41.6 percent over the previous year’s level of €584.6 million. Two major orders from China and one from Egypt for rail fastening systems for the construction of new high-speed lines with a total volume of around €130 million contributed to the remarkable order situation. A framework agreement with a volume of around €90 million was also concluded with the state railway company ARTC in Australia for the delivery of concrete ties. This is one of the biggest infrastructure contract wins in the history of the company.
Group sales exceeded the high level of the previous year by 3.0 percent, reaching €476.4 million during the first six months of 2022. The increase was mainly due to higher sales in the Customized Modules division. While the Lifecycle Solutions division also achieved a noticeable increase in sales, revenues in the Core Components division remained below the high figure of the previous year. This was as expected since the same period of the previous year benefited from pandemic-related catch-up effects from 2020.
The Vossloh Group’s EBIT reached €28.9 million in the reporting period. The EBIT margin was 6.1 percent following 9.2 percent in the previous year. Compared with the previous year, earnings were affected in particular by significantly higher procurement prices for materials and energy. In addition, the first half of 2021 was characterized by particularly strong business in rail fastening systems in China. In the current year, the focus of the corresponding deliveries is on the second half of the year.
The Vossloh Group’s net assets and financial position remain strong. On the reporting date of June 30, 2022, equity amounted to €596.0 million. The increase compared with the end of 2021 is mainly due to the net income of €17.3 million. The equity ratio also remained at a high level of 43.4 percent at the end of the first half of the year. The Vossloh Group’s net financial debt including lease liabilities increased by €39.9 million compared to the figure at the end of the first half of 2021, reaching €281.2 million. The primary driver of this development was an increase in working capital against the backdrop of higher procurement prices and stockpiling of materials to prevent supply bottlenecks. A noticeable decrease in net financial debt is expected by the end of the year.
“Despite the challenging conditions, we succeeded in generating extremely respectable half-year results. Our outstanding order situation reflects Vossloh’s excellent position in the future-oriented rail infrastructure market. Our customers appreciate Vossloh for the quality of its products and services as well as its unique understanding of the rail track,” says Oliver Schuster, CEO of Vossloh AG, adding: “Due to our very good and close relationships that span decades, most of our contractual partners are cooperative when it comes to the issue of fairly distributing the burden from rising material and energy prices. Despite the difficult economic situation, we expect a significant increase in earnings contributions in the second half of the current fiscal year compared to both the previous year and the first half of 2022. Notwithstanding the current special situation, the market for rail infrastructure will grow steadily over the coming decades in the course of the inevitable shift from traffic to rail, and Vossloh will profit substantially from this.”
Core Components division reports orders at record levels
At €359.8 million, orders received in the Core Components division in the first half of 2022 was significantly higher than the result for the previous year’s period of €201.7 million. The enormous increase was primarily due to significant higher orders received in the Fastening Systems business unit. The volume of new orders more than doubled from €125.0 million in the first half of 2021 to €274.1 million. In the division’s second business unit, Tie Technologies, orders received increased from €76.9 million in the previous year to €94.6 million. As of June 30, 2022, the order backlog of the Core Components division amounted to €367.6 million, which is significantly higher than the previous year (June 30, 2021: €212.6 million). Sales revenues of the division reached €212.9 million in the reporting period, thereby falling short of the previous year’s level of €230.4 million. Sales revenues in the Fastening Systems business unit fell slightly year on year to €148.9 million (previous year: €156.4 million). Lower revenues in the Chinese market, which had benefited from catch-up effects from the Covid-19 pandemic in the same period last year, could not be fully offset. Sales in the Tie Technologies business unit amounted to €67.4 million (previous year: €77.2 million) due to lower project-related sales in the USA and Australia. In the first six months of the current year, the Core Components division’s EBIT of €17.3 million was significantly below the previous year’s level of €35.2 million. In addition to drastically higher material and energy prices, this was mainly due to exceptionally strong business in China in the Fastening Systems business unit in the previous year as a result of pandemic-related catch-up effects. The EBIT margin totaled 8.1 percent (previous year: 15.3 percent).
Customized Modules division increases orders received, sales and EBIT
Orders received in the Customized Modules division increased by 36.7 percent compared with the previous year, reaching €267.0 million (previous year: €195.3 million). At €435.2 million, the order backlog as of June 30, 2022, also significantly exceeded the previous year’s level (€341.4 million). Sales revenues in the Customized Modules division grew by 12.3 percent to €216.0 million during the reporting period (previous year: €192.3 million). Sales revenue growth was particularly strong in Sweden, France and the Netherlands. EBIT rose to €15.2 million (previous year: €14.6 million) despite the impact of higher material and energy prices. This was made possible in particular by higher earnings contributions in France, Australia and Sweden. Due to higher procurement costs, the EBIT margin was 7.0 percent, slightly below the previous year’s figure of 7.6 percent.
Lifecycle Solutions division with higher sales revenues and EBIT-margin
Orders received in the Lifecycle Solutions division of €78.8 million in the first half of 2022 significantly exceeded the previous year’s figure of €71.1 million. As of June 30, 2022, the order backlog of €35.1 million was also significantly higher than the €32.4 million on the previous year’s reporting date. Sales of the Lifecycle Solutions division amounted to €56.5 million and increased significantly compared with the previous year (€47.8 million). This was mainly due to the sales revenue contributions of the Dutch company Vossloh ETS, which was acquired in July 2021. This was partly offset by lower revenues from the sale of maintenance machines. The division’s EBIT of €1.6 million was above the previous year’s level of €1.1 million. The EBIT margin was 2.8 percent in the first half of 2022, up from 2.2 percent in the previous year’s period.
As of June 30, 2022, the Vossloh Group had 3,762 employees worldwide. The number of employees thus increased by 186, or 5.2 percent, in the past twelve months. The increase is mainly due to a company in Portugal in the Customized Modules division, which was fully consolidated for the first time in the final quarter of 2021.
Outlook for 2022
Vossloh AG made a slight adjustment to its original sales revenues and earnings forecast in May 2022. From today’s perspective, the company expects to achieve sales revenues of between €0.95 billion and €1.05 billion in the current fiscal year. The expected increase in sales revenues is partly due to higher procurement prices for materials and energy being partially passed on to customers. However, this sales revenues do not generate additional EBIT and, in conjunction with cost increases that are not fully passed on or are passed on with a time lag, the Group’s profitability will be impaired. Vossloh thus expects an EBITDA margin of 11.5 percent to 13.5 percent and an EBIT margin between 6 percent and 8 percent. The forecast corridor of two percentage points takes into account the uncertainties due to the ongoing war in Ukraine and the further development of the Covid-19 pandemic as well as the resulting impacts on procurement markets.
|Orders received||€ mill.||693.0||459.4|
|Order backlog as of 6/30/||€ mill.||827.9||584.6|
|Sales revenues||€ mill.||476.4||462.6|
|Net income||€ mill.||17.3||20.6|
|Earnings per share||€||0.63||0.70|
|Value added||€ mill.||(3.7)||11.1|
|Net financial debt (including leasing) as of 6/30||€ mill.||281.2||241.3|
|Equity ratio as of 6/30/||%||43.4||44.6|
Vossloh is a globally active technology Group dedicated for over 135 years to quality, safety, reliability, innovation and a focus on the customer. Vossloh’s comprehensive range of track-related products and services make the company a leader in the global market in this area. Vossloh provides a uniquely wide range of services: rail fastening systems, concrete ties, switch systems and crossings as well as innovative and increasingly digital-based services for the entire lifecycle of rails and switches. Vossloh uses its extensive understanding of rail infrastructure to meet the key customer need of track network availability.
Vossloh products are in use in more than 85 countries. With close to 80 Group companies in around 30 countries and over 35 production sites, Vossloh is a global company with a local presence. Vossloh is committed to sustainable governance and climate protection and makes an important contribution to sustainable passenger and freight mobility with its products and services.
The Group activities are organized into the three divisions of Core Components, Customized Modules and Lifecycle Solutions. In the 2021 fiscal year, Vossloh achieved sales of €942.8 million with approximately 3,600 employees.