Cavotec SA - 3Q17 Report
Transformation in progress
One-time charges hurting profitability
Third quarter 2017
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Order intake reached EUR 39.1 million (3Q16: 46.5), a decrease of 15.8% compared to previous year.
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Order book decreased 2.9% to EUR 97.5 million (3Q16: 100.4).
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Revenues for the quarter totaled EUR 52.2 million, an increase of 1.9% compared to previous year (3Q16: 51.3).
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EBIT excluding non-recurring items amounted to EUR 0.8 million (3Q16: 1.5), corresponding to a margin of 1.6% (3Q16: 3.0%).
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Non-recurring items amounted EUR -7.5 million mainly due to operational write-downs.
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Net result for the period was a loss of EUR -7.6 million (3Q16: -0.6). Earnings per share basic and diluted decreased to EUR -0.097 (3Q16: 0.008).
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Operating cash flow was EUR -2.7 million (3Q16: 7.3).
Nine months 2017
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Order intake reached EUR 150.1 million (9M16: 153.3), a decrease of 2.1% compared to previous year.
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Revenues for the nine months totaled EUR 155.8 million, an increase of 3.0% compared previous year (9M16: 151.3).
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EBIT excluding non-recurring items amounted to EUR 2.7 million (9M16: 3.6), corresponding to a margin of 1.7% (9M16: 2.4%). Figures include non-recurring items EUR -8.2 million due to operational write-downs.
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Net result for the period was a loss of EUR -11.4 million (9M16: 1.6). Earnings per share basic and diluted decreased to EUR -0.145.
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Operating cash flow was EUR -5.0 million (9M16: 2.4).
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Net debt increased to EUR 37.2 million (9M16: 30.5).
Comment from the CEO
A New Organizational Structure to Tackle Internal Challenges
It’s been an intense few months for me since taking on the role as CEO at the start of July. After meeting with our business units, employees and many of our customers, I have a much better view of our strengths and weaknesses. I’m confident Cavotec’s innovative products are uniquely positioned to support our customers’ drive to become greener and more automated. I also now know there is more internal work to be done to make sure we operate more efficiently and effectively and we have begun taking decisive action to address these areas.
Our third-quarter revenue amounted to EUR 52.2 million, putting our revenue for the first nine months at EUR 155.8 million. This represents a 3 per cent increase compared to last year’s first nine months. Cavotec recorded an EBIT loss of EUR 6.7 million during this quarter. This includes operational write downs of EUR 7.5 million related to our ongoing review of our businesses. The loss for the quarter is clearly disappointing, but the write-downs are needed as we take on the challenge of transforming Cavotec.
As Cavotec has grown over the years we have become a true global player in our segments. With our focus on innovation and product development, our customers expect us to play an ever increasing part in supplying them with complete solutions. At the same time our internal processes haven’t kept pace. With this in mind we have launched an internal transformation plan consisting of a multitude of projects focused on every aspect of how we operate.
A critical step to transforming the company is to have a clear understanding of where each business is in terms of its opportunities and challenges. That starts with clarity around responsibility, authority and accountability.
Today, we are announcing our plan to streamline and simplify decision making by creating an organisation with three business divisions. You’re already familiar with the first two – Ports & Maritime and Airport & Industry. We are also creating a third business division called Services. This new Services division will be tasked with developing an after-market business, something our customers view as a key area. Breaking out Services will ensure focus and the attention this potential deserves. The new organizational structure also gives each business division clear profit and loss ownership, from product development to sales to delivery, by moving the supply chain in under their responsibility. The new organization will increase transparency around operational performance and ensure optimum capital allocation. Together with the transformation plan it will provide us with a much-needed structure on which to build for the future.
Even though our review of the operations continues we wanted to be as transparent as possible. We are moving forward with urgency, speed and purpose. Transforming Cavotec won’t happen overnight, but we are committed to having open communications along the way.
Cavotec is making these changes from a position of strength. As our customers push to reduce their carbon emissions and work more efficiently they are increasingly turning to us for innovative solutions. The steps we’re taking now will make sure we are better able to serve them for years to come.
Looking Forward
We are in the process of transforming Cavotec and we continue to see 2017 as a transitional year. I still expect modest revenue growth for 2017 overall compared with last year.
ENDS
This is a summary of the 3Q17 published today. The complete 3Q17 report and full year summary with tables is available at http://investor.cavotec.com/financials.cfm. Investors should not rely on summaries only, but should review the complete reports with tables.
For further details, please contact:
Kristiina Leppänen
Group Chief Financial Officer & Investor Relations
Telephone: +41 91 911 40 11 — Email: investor@cavotec.com
The information in this release is subject to the disclosure requirements of Cavotec SA under the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. This information was publicly communicated on 31 October 2017, 12:00 CET.
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