Vossloh: Seasonally typical slow start to 2018 as expected
As expected, Vossloh experienced a seasonally typical slow start to the 2018 fiscal year in all of its core divisions. Group sales totaled €178.3 million in the period under review (previous year: €196.2 million), while earnings before interest and taxes (EBIT) came in at €1.6 million (previous year: €9.6 million).
For several years the first quarter have been the weakest of the year. In addition to the lack of a one-time effect seen in the previous year the actual situation was further impacted by demand in the high-margin business in China falling well short of the strong level seen in the same quarter of the previous year, as anticipated. The one-time effect was included in the EBIT of the first quarter of 2017 as investment income from a non-consolidated company. The volume of orders received by the Vossloh Group improved to €211.4 million in the first quarter of 2018 (previous year: €201.9 million). The Group figures stated for 2017 have been adjusted for comparison purposes and do not include the Transportation division, which is classified as discontinued operations as its sale is expected to be concluded in the 2018 fiscal year.
Vossloh achieved sales of €58.5 million in the Core Components division in the first quarter of 2018 (previous year: €78.2 million). This decline in sales was attributable to both of the division’s business units. In the case of Vossloh Fastening Systems, mainly the previous year’s high level of sales in the high-margin business in China could not be matched, as expected. In total, Vossloh Fastening Systems posted sales of €43.4 million (previous year: €59.1 million). Sales generated by Vossloh Tie Technologies came to €15.1 million in the first quarter of this year (previous year: €19.5 million), with negative effects of currency translation making a considerable contribution to this decline. The Core Components division’s EBIT amounted to €5.6 million in the first quarter of 2018 (previous year: €11.6 million), while its EBIT margin was 9.6 percent (previous year: 14.8 percent). The above mentioned investment income had a positive impact on the first quarter of 2017. Nevertheless, the declines in EBIT and the EBIT margin were first and foremost due to the lower volume of business with rail fastening systems in China. The division’s volume of orders received and order backlog were below the levels seen in the previous year. The orders received by the Core Components division totaled €42.9 million in the first three months of 2018 (previous year: €71.5 million) and the order backlog as of March 31, 2018, amounted to €121.0 million (previous year: €210.9 million). Vossloh Fastening Systems recorded new orders totaling €35.3 million in the first quarter of 2018 (previous year: €46.6 million). Furthermore, another important major order was secured in China in April. The order is worth the equivalent of approximately €30 million, underscoring the continued strong market position of the business unit in the high-speed segment in the focus market China. The Tie Technologies business unit received orders in the amount of €7.6 million (previous year: €25.3 million). As seen in the previous year, the volume of orders received by Vossloh Tie Technologies fluctuates to major extent in the course of the year as the customers award their contracts at irregular intervals and for several months at a time.
Sales in the Customized Modules division amounted to €106.4 million in the first three months of 2018 (previous year: €101.9 million). The division’s EBIT fell marginally to €2.3 million (previous year: €2.7 million), causing the EBIT margin to fall to 2.1 percent in the quarter under review (previous year: 2.6 percent). The volume of orders received by the division increased significantly to €143.7 million (previous year: €109.0 million). Increases in orders received in France, Poland and Sweden are especially noteworthy. Despite the generally positive incoming orders situation, the Customized Modules division continues to suffer from the reluctance of the major U.S. freight operators, the Class-I railroads, to make investments. The Customized Modules division’s order backlog of €362.3 million as of March 31, 2018, was well above the previous year’s level (€286.5 million).
Likewise in the Lifecycle Solutions division, sales in the first quarter of 2018 were slightly lower year-over-year as expected, at €15.3 million (previous year: €17.3 million). This was primarily attributable to lower sales contributions from Sweden and China, while higher sales were achieved in Denmark. As in the last few years, the division’s EBIT was slightly negative at the beginning of the year at €(1.9) million (previous year: €(0.9) million). Accordingly, the EBIT margin was lower year-over-year at (12.1) percent (previous year: (5.0) percent). Business performance at the welding plants is expected to improve in the course of the 2018 fiscal year, resulting in an improved earnings situation. Orders received by the Lifecycle Solutions division increased to €25.6 million in the first three months of 2018 (previous year: €22.6 million). The order backlog as of the reporting date amounted to €32.4 million (previous year: €34.7 million).
The average number of employees in the Vossloh Group in the first three months of 2018 was 3,702. This compares with 3,909 in the first quarter of 2017 and 3,934 for 2017 as a whole. The decline in comparison to these two reporting periods is essentially attributable to two companies within the Customized Modules division that, as of December 2017, are no longer fully consolidated.
Vossloh is still expecting Group sales for 2018 as a whole at the level of the 2017 fiscal year. EBIT and therefore the EBIT margin are expected to fall short of the previous year’s figures. A key reason for this is the very strong business performance in the high-margin focus market China in the 2017 fiscal year, which is partially to the detriment of business performance in the current year as customers brought forward deliveries originally scheduled for 2018. These project-related fluctuations will result in a temporarily weaker performance of the Core Components division and of the Group in 2018 as a whole. From today’s perspective, the anticipated higher earnings in the other divisions will not be able to fully offset this development. In sum, Vossloh is expecting Group sales of between €875 million and €950 million and an EBIT margin of between 6.0 percent and 7.0 percent in 2018. In 2019, there are signs of an increase in the business activities of the Fastening Systems business unit in China and a tangible revival in demand from major U.S. freight operators is also expected – therefore driving a corresponding improvement in profitability.
An Overview of Key Figures for the Vossloh Group
|Orders received||€ million||211.4||201.9|
|Order backlog as of 3/31||€ million||513.2||531.2|
|Sales revenues||€ million||178.3||196.2|
|Value added||€ million||(12.8)||(5.1)|
|Net income||€ million||1.4||4.7|
|Earnings per share||€||0.04||0.18|
Werdohl, April 26, 2018
Contact information for media:
Dr. Thomas Triska
Phone: +49 (0) 2392 52-608
Contact information for investors:
Dr. Daniel Gavranovic
Phone: +49 (0) 2392 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 2017 fiscal year, Vossloh achieved sales of about €920 million with over 3,900 employees.