DGAP-News: R. Stahl AG

PRESS RELEASE

R. STAHL publishes figures for Q3 2017: Further increasing order backlog, sales and earnings still weak

• Order intake grows 7.4 percent to EUR 70.1 million, pushing order backlog to EUR 102.1 million
• Sales reach EUR 66.0 million, a decline of 6.8 percent year-on-year
• Slow sales recognition lowers earnings before interests and taxes (EBIT) pre exceptionals to EUR -0,2 million
• Free Cashflow benefits from improved working capital
• Guidance updated

Waldenburg, November 09, 2017 - R. STAHL, leading supplier of products and systems for explosion protection, today publishes figures for the third quarter 2017.

Consistent demand for explosion protection products in the third quarter 2017 led to an increase of order intake of 7.4 percent compared to previous year, reaching EUR 70.1 million (Q3 2016: EUR 65.3 million). Main drivers were project orders and a healthy development in Europe. Demand for LED luminaires and automation technology made particularly good progress, and targeted initiatives within the chemical and pharmaceutical industry also paid off. Especially the order backlog benefited from the good demand, climbing 12.1 percent to a high of EUR 102.1 million at the end of the reporting period (September 30, 2016: EUR 91.1 million). As in the first six months of the current year, this encouraging demand situation did not yet impact sales in the reporting period. With EUR 66.0 million, sales in Q3 2017 were 6.8 percent behind the previous year (Q3 2016: EUR 70.8 million). The more stable order position is opposed by comparatively long lead times until order completion. These have lengthened considerably over the last twelve months. The resulting weak sales trend in the reporting period also led to a year-on-year decline in earnings, yielding an EBIT of EUR -1.2 million (Q3 2016: EUR 1.5 million) that was also impacted by exceptionals of EUR 1.0 million.
 

Increase in order intake driven by Central region
From a regional perspective, development of order intake showed a mixed picture. In Germany, orders worth EUR 14.2 million were 5.8 percent down on the previous year (Q3 2016: EUR 15.1 million). In the previous year, order intake still included smaller project orders - these were much lower in the reporting period. In contrast, there was a strong increase in order intake in the Central region - comprising Africa and Europe without Germany - which posted growth of 20.0 percent to EUR 33.2 million (Q3 2016: EUR 27.7 million). This region benefited above all from final project orders for an LNG plant still being constructed in Russia, as well as initial orders for an oil production facility in Kazakhstan. In the Americas and Asia, order intake was on a par with the previous year. A slight decline of 0.3 percent resulted in orders received in the Americas of EUR 6.7 million (Q3 2016: EUR 6.7 million), while orders in Asia rose by 1.0 percent to EUR 16.0 million (Q3 2016: EUR 15.8 million).

In the first nine months of the reporting year, order intake rose by 3.2 percent year on year to EUR 222.4 million (9M 2016: EUR 215.5 million).
 

Sales development impacted by a sharp drop in the Americas
Whereas the regions Germany and Asia succeeded in maintaining or expanding sales year on year, they fell in the Central region and the Americas. In Germany, sales were increased to EUR 15.3 million (Q3 2016: EUR 14.7 million), corresponding to year-on-year growth of 3.8 percent. This trend was mainly driven by project deliveries and healthy OEM business. The Central region generated sales of EUR 30.7 million in the third quarter of 2017. This corresponds to a decline of 3.2 percent compared to the same period last year, which had still benefited from higher project deliveries (Q3 2016: EUR 31.7 million). There was a much stronger decline in business in the Americas, where sales were down by 40.3% year on year to EUR 6.5 million (Q3 2016: EUR 11.0 million). This trend reflects the late cyclical nature of our business, i.e. weak order intake resulting from the oil and gas industry's self-imposed curb on investment in the previous year did not impact sales until a few quarters later. In Asia, there was a slight upturn in sales of 0.5 percent to EUR 13.4 million (Q3 2016: EUR 13.4 million).

In the first nine months of 2017, sales of EUR 198.2 million were 7.1 percent below the prior-year figure (9M 2016: EUR 213.3 million). These diverging sales and order intake trends illustrate that our current orders have longer average lead times for production and delivery compared to previous years.
 

Declininig sales and exceptionals weigh on earnings
Weak sales and exceptionals continued to dampen earnings in the third quarter of 2017. As a result of lower sales, material expenses also fell by 3.7 percent to EUR 25.4 million (Q3 2016: EUR 26.3 million). Personnel expenses rose by 1.6 percent to EUR 29.4 million (Q3 2016: EUR 28.9 million), including exceptionals of EUR 0.7 million (Q3 2016: EUR 0 million) in connection with severance pay. Without exceptionals, personnel expenses were thus down slightly at EUR 28.6 million. Other operating income increased by 40.2 percent to EUR 1.9 million (Q3 2016: EUR 1.4 million), mainly as a result of favourable changes in the exchange rates of foreign currencies. Both in the previous year and the reporting period, other operating income included exceptionals in the form of payments for impaired receivables amounting to EUR 0.4 million. Other operating expenses of EUR 12.6 million in the reporting period were 3.3 percnet lower than in the previous year (Q3 2016: EUR 13.0 million), in spite of exceptionals of EUR 0.6 million (Q3 2016: EUR 0.1 million) mainly connected with value adjustments to receivables. As a consequence of weaker sales and the burden of exceptionals, EBIT fell to EUR -1.2 million in the third quarter of 2017 (Q3 2016: EUR 1.5 million). There was a corresponding decrease in EBIT pre exceptionals to EUR -0.2 million (Q3 2016: EUR 2.2 million). The year-on-year improvement in the financial result of 24.8 percent to EUR -0.6 million (Q3 2016: EUR -0.8 million) is due to earnings of EUR 0.2 million from the investments in ZAVOD Goreltex and ESACO Pty. Ltd. This resulted in pre-tax earnings (EBT) of EUR -1.8 million (Q3 2016: EUR 0.7 million) and net profit for the period of EUR -1.5 million (Q3 2016: EUR 0.4 million) with earnings per share of EUR -0.24 (Q3 2016: EUR 0.06).

Compared to the previous year, EBIT in the first nine months of 2017 fell to EUR -8.5 million (9M 2016: EUR 6.7 million) and EBIT pre exceptionals to EUR -5.2 million (9M 2016: EUR 6.1 million). This resulted in EBT of EUR -9.9 million for the reporting period (9M 2016: EUR 4.5 million) with a net profit for the period of EUR -7.6 million (9M 2016: EUR 3.0 million) and earnings per share of EUR -1.18 (9M 2016: EUR 0.45).
 

Strong year-on-year improvement in free cash flow
As a result of the decline in net profit, cash flow in the third quarter of 2017 fell by EUR 1.9 million to EUR 1.1 million (Q3 2016: EUR 3.0 million). The decrease in receivables and increase in trade payables led to a significant reduction in working capital of EUR 10.6 million. As a result, cash flow from operating activities improved to EUR 11.7 million in the reporting quarter (Q3 2016: EUR 0.9 million). At EUR -2.5 million, cash flow from investing activities was up slightly by EUR 0.5 million compared to the same quarter last year (Q3 2016: EUR -2.0 million). This resulted in an increase in free cash flow to EUR 9.2 million (Q3 2016: EUR 1.8 million).

In the first nine months of 2017, cash flow fell to EUR -0.9 million due to the lower net profit (9M 2016: EUR 11.2 million). The reduction in working capital of EUR 17.6 million resulted in cash flow from operating activities of EUR 16.7 million (9M 2016: EUR 5.1 million). Capital expenditures fell to EUR -7.5 million in the reporting period (9M 2016: EUR -9.5 million). Based on a cash flow from investing activities of EUR -8.7 million in the reporting period (9M 2016: EUR -7.7 million), free cash flow came in at EUR 8.0 million (9M 2016: EUR -2.6 million).
 

Guidance updated
Encouraging order intake in the first nine months of the year once again confirms R. STAHL's expectations for the year as a whole and the slight recovery in the oil and gas industry, which is of great importance for the business of R. STAHL. As a result, order intake so far this year has been much more stable than in the second half of last year and led to a further increase in order backlog as of the end of the reporting period. However, the awarding of orders in the project business, which contributes around one third to sales, remains sluggish. In addition, customers need significantly more time than anticipated to finalize all details that are necessary to start processing of existing orders, increasingly leading to a postponement of sales recognition into FY 2018. This risk has been flagged already along with the last outlook update, however, a full quantitative assessment was not yet possible at that time. Against this backdrop, R. STAHL adapts the guidance for FY 2017 as follows: Order intake is now expected to come in between EUR 290 million and EUR 300 million (previously: EUR 295 million and EUR 305 million), sales between EUR 262 million and EUR 267 million (previously: EUR 270 million and EUR 280 million) and EBIT pre exceptionals between EUR -8 million and EUR -4 million (previously: EUR -4 million and EUR 0 million). The preparation of a comprehensive program to improve earnings is in progress. R. STAHL will release respective details in the first quarter 2018. In the third quarter 2017, first cost reductions have already been implemented, and additional measures are under way.

* exceptionals: non-scheduled depreciation, impairment reversals, proceeds from the sale of non-current assets, restructuring charges, costs from portfolio activities

 

Key figures of R. STAHL Group pursuant to IFRS

** Central region: Africa and Europe excl. Germany

Invitation to the investors' and analysts' conference call of R. STAHL AG for Q3 2017
Waldenburg, October 25, 2017 - On the occasion of the publication of its interim report for the third quarter 2017, R. STAHL AG is pleased to invite all interested investors and analysts to participate in a conference call to be held on November 09, 2017 at 14:00 CET.

The Chief Financial Officer of R. STAHL AG, Mr. Bernd Marx, will explain the results of Q3 2017 and will be available for questions and discussions afterwards. The conference call will be held in English language.

Please dial the following number to join the call and provide the following PIN as well as your full name and company when prompted:

DE: +4969222229043
UK: +442030092452
USA: +18554027766

PIN: 16790194#

Along with the conference call we will provide an online presentation via the internet simultaneously. Please log on as a participant with your full name and company under the following website:

Website: www.audio-webcast.com
Password: rstahl1117
Direct link: http://www.audio-webcast.com/cgi-bin/login.ssp?fn=verify_user&curPassword=rstahl1117

Financial Calendar 2018
March, 07 Preliminary figures FY 2017
April, 27 Annual Report FY 2017
May, 17 Interim Report Q1 2018
June, 08 Annual General Meeting, Neuenstein
August, 09 Interim Report Q2 2018
November, 08 Interim Report Q3 2018

About R. STAHL - www.stahl.de
R. STAHL is the world's leading supplier of electrical and electronic products and systems for explosion protection. These products and systems prevent explosions in hazardous areas and contribute to the safety of people, machines and the environment. The portfolio ranges from products used in switching/distributing, installing, operating/monitoring, lighting and signalling/alarming up to automation. Typical customers operate in the oil & gas industry, the chemical and pharmaceutical industry and the food industry. In FY 2016, global sales amounting to EUR 286.6 million were generated with about 1,788 employees.

The shares of R. STAHL AG are traded on the Regulated Market/Prime Standard of Deutsche Boerse (ISIN DE000A1PHBB5).

Contact:
R. STAHL AG
Am Bahnhof 30, 74638 Waldenburg (Wuertt.)
Dr. Thomas Kornek
Head of Investor Relations & Corporate Communications
P: +49 7942 943-1395
E: investornews@stahl.de