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Semperit Group with stable operational development in H1 2016
Revenue with EUR 438.7 million (-2.7%) slightly below previous year’s level despite market weakness
Improved EBITDA (+4.8%) and stable EBIT (+/-0.0%)
Persistently challenging market environment expected for the second half of 2016
The publicly listed Semperit Group generated a stable operational development in the ongoing difficult market environment of the first half of 2016. Despite the weak economy, Semperit generated a further increase in revenue with high profitability in the Industrial Sector. This allowed for largely offsetting the weaker development of the Medical Sector. Group revenue amounted to EUR 438.7 million in the first half of 2016 and was slightly below the previous year’s figure of EUR 450.8 million. Semperit improved the group’s EBITDA by 4.8% to EUR 52.8 million (after EUR 50.3 million). EBIT was stable in comparison with the previous year at EUR 36.2 million (after EUR 36.2 million). The EBITDA margin and the EBIT margin improved slightly to 12.0% (after 11.2%) and 8.3% (after 8.0%) respectively.
“Due to our strong sales performance, a capacity utilisation above the industry average and new capacities in the Industrial Sector, we showed a stable operational development in the first half of 2016. However, the low demand in economically sensitive fields and the cost pressure due to rising energy and raw material prices combined with weak sales prices in the glove business are beyond our influence. We are taking countermeasures by using a focused sales strategy and programmes for optimisation and efficiency enhancement as well as by opening up new markets. This and our new highly efficient production sites make us well prepared to perform better than the market even in the current environment,” CEO Thomas Fahnemann comments on the half-year results.
In the second quarter of 2016, the Industrial Sector achieved further revenue growth as opposed to a decrease in revenue and earnings in the Medical Sector. Corporate revenue decreased to EUR 219.2 million (after EUR 233.4 million) in the second quarter of 2016. EBITDA declined to EUR 26.1 million (after EUR 28.5 million) and EBIT to EUR 17.6 million (after EUR 21.0 million).
Semperit boasted a sound capital basis as reflected by its equity ratio of 36.7% at the reporting date of June 30, 2016 (December 31, 2015: 38.7%). Cash and cash equivalents amounted to EUR 133.0 million on June 30, 2016 compared to EUR 126.4 million at the end of 2015. “Our cash balance has increased again, although we currently run the largest investment programme in corporate history and we have paid an attractive dividend in the second quarter. This positive development shows our high ability to generate cash even in a difficult environment,” states Semperit CFO Johannes Schmidt-Schultes.
Industrial Sector: Increase in revenue and earnings
The Industrial Sector (Semperflex, Sempertrans and Semperform segments) showed a very satisfying development contrary to the market trend.
The Semperflex segment generated continuing high profitability thanks to excellent production and sales performances in a declining market. The Sempertrans segment was able to defend its positioning in core markets and expand its market position in new regions and market segments. In a weak market environment, the Semperform segment profited from the successful integration of the German profile manufacturer Leeser, as well as the increase in market share in the handrail business.
Revenue of the Industrial Sector rose 3.7% to EUR 269.0 million in the first half of 2016. EBITDA climbed 2.3% to EUR 52.3 million.
Medical Sector: Difficult market environment
The Medical Sector (Sempermed segment) was impacted by a difficult market environment. During the reporting period, increased energy and raw material prices could not be passed on to the market yet due to high competitive and price pressures. The burdening influences of the cooperation with the joint venture partner in Thailand continued and increasingly have a negative effect on the earnings situation of the segment. Additionally, non-recurring costs related to the ongoing capacity expansion in Malaysia were experienced and more low-margin trade items were sold.
Revenue of the Medical Sector decreased by 11.4% to EUR 169.7 million in the first half of 2016 due to heavy price pressure and the focus on high-margin customer relationships. EBITDA decreased to EUR 7.9 million (after EUR 11.6 million).
Compared to the first half of 2015, when Semperit still entered exceptionally high foreign currency gains, the foreign currency effects were overall negative in the first half of 2016. Moreover, interest expenses and income taxes due to non-recurring effects had increased. In summary, the Semperit Group generated earnings after taxes amounting to EUR 17.9 million (after EUR 25.3 million) in the first half of 2016 despite the stable operational results.
Semperit expects no significant changes of the market conditions for the second half of 2016. The generally low demand in the Industrial Sector is expected to continue due to the current economic situation. Demand in the economically insensitive Medical Sector is expected to develop steadily with higher raw material and energy costs and continuing price pressure.
From the current perspective, the Semperit Group is not capable of achieving the operational results of 2015 due to the unsatisfactory income contribution of the Sempermed segment. In the Industrial Sector, Semperit refers to a good order situation for the next months, even though a slowdown is possible in some business segments. In the Medical Sector, the focus will be on the implementation of further production capacities in Malaysia. The profitability shall be improved by continuing process optimisations and efficiency enhancements as well as realising a cost reduction programme. The burdens due to the Thai joint venture will probably persist.
The Semperit Group will continue its growth strategy consistently despite challenging conditions. The focus will be on entering into new markets in the Industrial Sector and on the expansion and optimisation of existing production capacities. In the Medical Sector, the focus will be set on the expansion of the glove production in Malaysia in addition to further production and sales optimisations as well as efficiency enhancements. Altogether, capital investments (CAPEX) of approximately EUR 60 million are planned for 2016.
As of now, the report on the first half of 2016 is available at www.semperitgroup.com/ir.
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