Development of Ringmetall Group in the first half of 2019 characterized by notably fluctuating order situation

DGAP-News: Ringmetall Aktiengesellschaft / Key word(s): Half Year Results/Preliminary Results

20.08.2019 / 07:30
The issuer is solely responsible for the content of this announcement.


Development of Ringmetall Group in the first half of 2019 characterized by notably fluctuating order situation

- Development in the second quarter characterized by alternating ups and downs
- Group revenues increased by 7.0 percent to EUR 61.8 million
- EBITDA declined by 10.3 percent to EUR 5.7 million, mainly due to higher personnel costs

München, 20 August 2019 - Ringmetall AG (ISIN: DE0006001902), a leading international specialist in the packaging industry, had to cope with a clearly adverse business climate in the second quarter of 2019, as already communicated. On the basis of the provisional figures available today, Group revenues increased by 7.0 percent to EUR 61.8 million (H1 2018: EUR 57.8 million). This figure also includes the revenues of Nittel Halle GmbH, which has been consolidated since 1 January 2019. Earnings before interest, taxes, depreciation and amortization (EBITDA) declined sharply as a result of a significant increase in the share of personnel costs and, at EUR 5.7 million, was 10.3 percent down on the previous year (H1 2018: EUR 6.4 million). Overall, the second quarter was characterized by a very mixed order situation, which proved to be difficult to predict in the short term, both at the regional level and during the individual months of April to June.

"While a similarly tense sales trend as in the end of the first quarter was still evident in April, May again developed well. In June, however, there was again a decline in the sales trend, after which the situation improved again at the beginning of the third quarter, "explains Christoph Petri, Spokesman of the Management Board of Ringmetall AG. "This very mixed development made it nearly impossible for us to respond cost-effectively in the second quarter. Although we could respond well to recessionary tendencies as a result of a rather high proportion of temporary workers, this was difficult for us in the current economic environment, which resulted in a higher than average proportion of personnel costs in the second quarter and a significant margin reduction. "

Taking into account the effects of steel price development, inorganic and organic growth, the following effects on segment sales were apparent in the first half of 2019:

Industrial Packaging
- Effect of steel price development on segment revenues: +2.2 percent
- Effect of corporate acquisitions on segment revenues: +12.7 percent
- Effect of organic business development on segment revenues: -5.2 percent

Industrial Handling
- Effect of organic business development on segment revenues: -12.9 percent

The key preliminary figures for business development in the first half of 2019 are as follows on a preliminary basis:

in EUR '000 H1 2019(e) H1 2018 ∆ [abs.] ∆ [%]
Group revenues 61,764 57,749 4,015 7.0
Gross profit * 26,667 24,504 2,163 8.8
Gross margin 43.2 % 42.4 %    
EBITDA 5,719** 6,376 -657 -10.3
EBITDA margin 9.3 % 11.0%    
EBIT 3,478 5,348 -1,870 -35.0
EBIT margin 5.6 % 9.3 %    

* Gross profit defined as: revenues including inventory change less expenses for raw materials, consumables and supplies and services purchased
** The first-time application of IFRS 16 resulted in an effect of EUR 0.7 million

The operating performance of the individual business units was, in the Industrial Packaging segment, primarily characterized by a decline in demand on the part of customers from the chemical industry. However, due to the acquisition of Nittel, segment revenues nevertheless increased by 9.7 percent to EUR 55.6 million (H1 2018: EUR 50.7 million), while the segment EBITDA fell at the same time by 4.7 percent to EUR 6.2 million (H1 2018: EUR 6.5 million). In addition to the general economic uncertainties mentioned above, an increased material ratio had a negative impact on earnings in the second quarter. On the one hand, this is still attributable to high steel prices and, on the other hand, production inefficiencies due to the increased employment rate of temporary workers. Ringmetall is currently developing optimized personnel development measures and improved machine technology, which should lead to a sustainable quality improvement as the year progresses. On the other hand, the progress made in the merging of the subsidiaries Nittel and Tesseraux (part of the group since 1 July 2019) in the inliner segment deserves positive mention. The recording of possible synergy potentials has been completed in the meantime and the initiation of the first measures to implement them has begun. In addition, the relocation of the production Sessenhausen was completed, as well as the associated modernization of production facilities in the barrel lid production.

The Industrial Handling division was affected by a significant fall in demand on the part of a material handling equipment manufacturer, which led to a 12.9 percent decline in segment revenues to EUR 6.1 million (H1 2018: EUR 7.0 million) and segment EBITDA by 23.5 percent to EUR 0.7 million (H1 2018: EUR 0.9 million). Here again it was the OEM products that were affected by the postponement of call orders, while sales of in-house developed products continued to increase.

Due to the gloomy market environment, the company's Management Board had already revised down the forecast for the current financial year 2019 on 24 July. "We are currently receiving very different signals from our customer industries and from our individual national companies," explains Co-CEO Christoph Petri. "With our adjusted forecast, we have accordingly priced in the worst-case scenario of a recession as well as a scenario that assumes only a small cyclical downturn in growth. At the same time, however, it has already become apparent that the M&A market is also experiencing a noticeable slowdown so that even in the worst case we can at least partially benefit from the changed market conditions. "

The full interim report for the first half of 2019 will be published as planned on 19.09.2019. Further information on the Ringmetall Group and its affiliated subsidiaries can be found at www.ringmetall.de.


Contact:
Ingo Middelmenne
Investor Relations
Ringmetall AG
Phone: +49 (0)89 45 220 98 12
Mobile: +49 (0)174 90 911 90
Email: middelmenne@ringmetall.de


About Ringmetall Group
Ringmetall is an internationally leading specialist in the packaging industry. The Industrial Packaging business segment offers highly secure gasket and locking systems for the chemical, the petrochemical and the pharmaceutical industry as well as the food industry. The Industrial Handling business segment develops application-optimized vehicle accessory parts for the handling and transport of packaging units. Besides its headquarters in Munich, Ringmetall has worldwide production and sales subsidiaries in Germany, Great Britain, Spain, Italy, Turkey, the Netherlands, as well as in China and the USA. On a global scale, Ringmetall generates revenues of more than EUR 100 million per year.

 

 



20.08.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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