Vossloh increases profitability and reduces net financial debt
Vossloh not only continued the positive trend from the first three months of the current financial year, it was even further strengthened. EBIT in the Group increased to €19.3 million in the first half of 2016 (previous year: €12.3 million), thus improving by a substantial 57.3% as compared to the previous year, although sales revenues of €522.7 million were 7.6% below the level of the prior-year period (previous year: €566.0 million). The sustainable focus on high margin business accompanied by a strict cost management and comprehensive programs for efficiency enhancements are increasingly making measurable contributions to the success. In the first six months, the Vossloh Group’s orders received amounted to €521.9 million (previous year: €585.7 million).
With Vossloh AG’s successfully-concluded capital increase in June of this year, the sound foundation that the Vossloh Group has been standing on after two years of intensive repositioning has been further strengthened. With effect from June 17, 2016, 2.6 million new Vossloh shares were introduced into trading on the stock market. Vossloh AG’s share capital thus increased to €45,325,167.47, the number of Vossloh shares outstanding increased to 15,967,437. The equity ratio at the June 30, 2016 reporting date was 39.3%. In addition to the positive net income, the equity increased as compared to the previous year, also due to the net cash inflow from the capital increase and due to the book profit from the sale of the Rail Vehicles business unit. The equity ratio at the end of 2015 had been at 31.2% and on June 30, 2015 at 21.7%. At the same time, net financial debt of the Group declined significantly to €125.1 million on June 30, 2016. At the end of the year 2015 it was €200.1 million and on the previous year reporting date it was €328.9 million.
In the Core Components division, sales in the amount of €106.1 million were achieved in the first half of the year (previous year: €133.0 million), which was 20.2% less than in the prior year. The decrease is primarily attributable to project delays in Argentina. The sales level in Saudi Arabia was also below that of the previous year, even though there was a significant sales increase in the second quarter from the order for the Metro in Riyadh which was won in the first quarter. By contrast, the positive sales development in Qatar continued. EBIT of the division in the first half of the year amounted to €12.8 million (previous year: €14.2 million). The EBIT margin rose thanks to a higher-margin project mix in China and comprehensive cost reduction programs from 10.7% in the previous year to 12.0% in the reporting period. Orders received reached €115.8 million (previous year: €194.0 million) and the order backlog on June 30, 2016 amounted to €187.2 million after €243.7 million on the prior year reporting date. After the half-year reporting date, the division also announced a further major order for fastening systems for a new high speed railway line in China with a volume of approximately €50 million.
Sales in the Customized Modules division in the first half of the year of €246.7 million were held nearly stable at a high level (previous year: €253.1 million). A decreasing business development, especially in the USA and expiring projects in Poland were countered primarily by pleasing sales growth in France and Italy. EBIT of €15.7 million in the first half of the year slightly exceeded the previous year level (previous year: €15.5 million). The EBIT margin improved compared to the previous year from 6.1% to 6.4%. Orders received decreased slightly to €269.8 million (previous year: €281.0 million). At the end of the first half of the year, order backlog in the division totaled €321.3 million (previous year: €337.1 million).
Sales as well as earnings in the Lifecycle Solutions division both continued to in-crease noticeably. Sales of €39.7 million were 38.0% above the prior year’s figure (previous year: €28.7 million). The increase was primarily attributable to pleasing growth in Sweden and Finland. But it was also possible to increase sales in Germany. EBIT was at a figure of zero in the previous year but was significantly positive at €3.2 million in the current reporting period. The EBIT margin increased accordingly to 8.1% (previous year: 0.1%). Orders received at Lifecycle Solutions also grew to €51.8 million (previous year: €35.2 million). At the end of June 2016, the order backlog in the division was at a figure of €19.9 million as compared to €16.9 million on the prior year reporting date.
In the Transportation division, which currently consists of the Vossloh Electrical Systems and Vossloh Locomotives business units, sales of €136.2 million were generated in the first six months of 2016 (previous year: €155.6 million). The main reasons behind this development are project delays at Vossloh Electrical Systems as well as the switch in accounting to the completed contract method at Vossloh Locomotives that was necessary in large parts of the business. EBIT nevertheless improved to -€5.7 million (previous year: -€10.1 million). Orders received in the division exceeded the prior year figure of €79.7 million, reaching €91.6 million for the half-year. On the other hand, order backlog on the reporting date of June 30, 2016 decreased with the processing of major orders at Electrical Systems from €565.3 million in the previous year to €503.3 million.
Intensive efforts continue with regard to the sale of the Transportation division. The Executive Board continues to expect that this step in the implementation of the Group’s strategy will be completed by the end of 2017. In November of this year, Vossloh Locomotives will begin its move to the new location in Kiel. Production is expected to begin in the first half of 2017. The new plant will then be one of the most modern and efficient in Europe and will form a stable foundation for the future success of Vossloh Locomotives.
On June 30, 2016, a total of 4,804 people were employed in the Vossloh Group, which was 73 employees less than on the reporting date of the previous year (4,877 employees). At Core Components, there were 636 employees, which meant that 24 people more were employed than on the reporting date of the previous year (612 employees). The increase is attributable to the first-time consolidation in 2016 of a subsidiary in India. At Lifecycle Solutions, too, the number of employees increased in the course of business expansion as well as the consolidation of the Finnish sub-sidiary by 70 to 456 employees (previous year: 386 employees). The number of em-ployees at Customized Modules on June 30, 2016 of 2,536 was 48 employees fewer as compared to the previous year (2,584 employees). The largest change took place at Transportation – and here with a reduction of 99 employees primarily at the Elec-trical Systems business unit. In total, the number of employees in the division de-creased by 118 individuals.
Due to the reserved sales development in the first half year 2016, Vossloh now ex-pects to generate revenues in the current financial year at about the prior-year level of €1.2 billion. The main reasons for the slight decline in the sales forecast are a significant weakening of sales expectations in the USA – primarily due to lower in-vestments of class 1 railway operators related to the economic situation – as well as delays in order awards and in individual major projects in the Electrical Systems business unit. Despite the somewhat lower sales expectations for full-year 2016, Vossloh continues to expect an EBIT margin of between 4.0% and 4.5%. In 2017, the EBIT margin should be between 5.5% and 6.0% on the basis of the current Group structure. In a future portfolio structure without the Transportation division, significantly higher profitability is to be expected.
Overview of the most important key figures of Vossloh Group
|Vossloh Group||H1 2016||H1 2015||Δ %||Q2/2016||Q2/2015||Δ %|
|Orders received*||€ million||521.9||585.7||-10.9||232.3||320.2||-27.4|
|Order backlog*||€ million||1,030.4||1,161.8||-11.3|
|Value added*||€ million||-16.5||-28.3||-||-1.1||-6.1||-|
|Net income||€ million||14.6||4.8||-||10.9||5.8||-|
|Earnings per share||€||0.92||0.12||-||0.71||0.31||-|
* Prior year figures adjusted due to the sale of the former Rail Vehicles business unit.
Werdohl, July 27, 2016
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Vossloh is a global player in the rail technology markets. Our core business is rail infrastructure. In addition, the Group is active in the areas of rolling stock and electric buses. Since January 1, 2015, the activities of the Group have been divided into the four divisions Core Components, Customized Modules, Lifecycle Solutions and Transportation. In the financial year 2015, Vossloh generated sales of €1.2 billion with approximately 4,900 employees.