Semperit with strong increase in operating results, but considerable one-off effects in the first half of 2018

23.08.2018 (Press information)

  • Total revenue of EUR 448.5 million, down by 2.8% on the previous year
  • 13.4% revenue decrease in the Medical Sector due to competitive and price pressures
  • Earnings impacted by negative one-off effects: depreciation of EUR 55.2 million in Sempermed with impact on EBIT and shutdown in China: effect of EUR 3.9 million on EBITDA and EUR 7.9 million on EBIT
  • EBITDA, adjusted for negative one-off effects, increased by 45.3% to EUR 32.7 million, while EBITDA margin rose from 4.9% to 7.3%
  • EBIT, adjusted for one-off effects, at EUR 13.2 million more than double, while adjusted EBIT margin rose from 1.3% to 2.9%
  • Industrial Sector is increasingly gaining momentum, adjusted EBITDA margin increases from 11.8% to 14.3%

Vienna/Austria, 23 August 2018 – The publicly listed Semperit Group significantly increased its operating results (adjusted EBIT) in the first six months of 2018 despite a slight revenue decline: “In the first half of the year, we strongly improved our operating results,” says Martin Füllenbach, Chairman of the Management Board of Semperit AG Holding. “We have significantly intensified our restructuring and transformation programme in the past months. A consolidated view on the Industrial Sector shows that the increasingly visible success of measures already taken confirms our course. Here, the most visible results are the already completed closings of plants in France and China as well as the currently ongoing shutdown and sales process at two more sites in Germany and Italy. The Medical Sector remains our most demanding challenge and we continue working on it with utmost concentration and focus.”

The business development was characterised by continuous global growth dynamics and favourable economic conditions in the first half of 2018. However, the escalating trade war between the USA and China, rising inflation and massive currency devaluations in some of the large emerging economies caused increasing uncertainties in the raw material and financial markets.

In the Medical Sector and in the Sempertrans segment, lower sales volumes and decreases in revenue were recorded. However, Semperflex and Semperform performed well in global sales and achieved an increase in revenue. At the same time, the restructuring and transformation measures on corporate level were enhanced: This caused an improvement of the operating performance. In the context of the complexity reduction in the production footprint, the Semperform site in Dalheim is currently integrated into the Hückelhoven site (both in Germany); and sales of the Semperflex site Roiter (Italy) is being examined. The positive developments are up against high restructuring costs and the development of the Medical Sector which had to put up with a depreciation amounting to EUR 55.2 million.

At EUR 448.5 million, total revenue in the first half of 2018 was 2.8% below the previous year’s value. The Industrial Sector achieved an increase in revenue of 4.0%, while in the Medical Sector, revenue was declining by 13.4%. EBITDA, adjusted for the shutdown costs in China, increased from EUR 22.5 million to EUR 32.7 million, while the adjusted EBITDA margin rose from 4.9% to 7.3%. The reported EBITDA was EUR 28.9 million in the first half of 2018 after EUR 97.3 million in the first half of 2017 (increased by the one-off effect from the joint venture transaction).

Correspondingly, adjusted EBIT also developed positively and increased from EUR 6.2 million in the first half of 2017 to EUR 13.2 million in the same period of 2018, while the adjusted EBIT margin rose from 1.3% to 2.9%. The reported EBIT was EUR –49.8 million in the first half of 2018 after EUR 54.3 million in the first half of 2017. The reported earnings after tax for the first half of 2018 amounted to EUR –67.4 million after EUR 21.2 million in the first half of 2017. Earnings per share were EUR –3.33 in the first half of 2018 after EUR 1.03 in the first half of 2017.

At EUR 42.1 million, cash-relevant investments in tangible and intangible assets in the first half of 2018 were higher than the previous year’s level of EUR 35.8 million. The investment priorities were on expansion and optimisation in the segments Semperflex (expansion of the hydraulic hose production at the site in Odry, Czech Republic) and Sempertrans (primarily for the expansion of mixing in Bełchatów, Poland).

With an equity ratio of 39.4% (end of 2017: 32.6%) Semperit continues to have solid capital resources on the balance sheet date, which were strengthened by the hybrid capital. Under accounting law, the Hybrid capital is classified as equity according to IFRS provisions. In March 2018, EUR 130.0 million were drawn from the hybrid capital. Cash and cash equivalents were EUR 201.1 million at the end of June 2018 and were therefore significantly above the level of the end of 2017 (EUR 165.5 million).

Due to negative earnings after tax in 2017 and the continued restructuring and transformation process, a majority at the Annual General Meeting on 25 April 2018 decided to pay out no dividend for 2017 (2016: EUR 0.70 per share).

INDUSTRIAL SECTOR: HIGHER SALES AND SIGNIFICANTLY INCREASING EARNINGS

Restructuring and transformation in the Industrial Sector (Semperflex, Sempertrans and Semperform segments) has gained momentum, although the individual segments continue to develop in a very different way. Revenues in Semperflex and Semperform increased. In contrast, revenue at Sempertrans declined due to a shift of the product mix towards high-margin products as well as the shutdown of the plant in France and low production in China in the first half of 2018. In total, revenue in the Industrial Sector increased by 4.0% to EUR 291.4 million with the largest share of increase being attributable to the Semperflex segment. Adjusted EBITDA improved by 26.0% to EUR 41.8 million compared with the previous year, while adjusted EBIT rose by 30.4% to EUR 30.5 million. Accordingly, the EBITDA margin increased by 2.5% to 14.3% and the EBIT margin rose by 2.1% to 10.5%.

MEDICAL SECTOR: DECLINING SALES DUE TO COMPETITIVE AND PRICE PRESSURES

The development of the Sempermed segment in the Medical Sector was primarily characterised by an increasing competitive and price pressures, which was reflected in a revenue development declining by 13.4%. In addition, the earnings development was influenced by limited availability of synthetic latex as well as inefficiencies in production. Earnings of the first half of 2018 include a depreciation of EUR 55.2 million (only relevant for EBIT).

In comparison with the previous year it should be noted that in the first half of 2018 a positive one-off effect of around EUR 78 million was recorded as a result of the termination of the joint venture for the glove production in Thailand as well as the negative one-off effect from the depreciation of EUR 26.0 million (only relevant for EBIT). Adjusted EBITDA for the first half of 2017 amounted to EUR 1.7 million, while adjusted EBIT was EUR –4.0 million. In comparison to the adjusted values of the first half of 2017, adjusted EBITDA and adjusted EBIT at EUR 0.1 million and EUR –7.3 million, respectively, in the first half of 2018 were below the previous year’s values.

OUTLOOK 2018

In the course of the restructuring and transformation process, the Management Board will decide step by step whether there will be changes in the portfolio of the existing segments as well as further adaptations in the manufacturing footprint. Continuous and potentially new measures to increase profitability remain right at the top of the Management Board’s agenda. Further considerable one-off charges can therefore not be excluded in the coming quarters. Therefore, we should continue to see 2018 as a transition year. Due to the above-mentioned developments, the outlook remains suspended for the coming quarters.

Initially, Semperit will focus on organic growth, particularly in the Industrial Sector. In addition to the ongoing optimisation measures in the Sempermed segment, Semperit has started further implementation steps for Sempertrans and Semperform. Semperflex is also part of the transformation process. In the Semperflex segment, as it does in Mixing, the focus is on accelerating the profitable implementation of still necessary investment projects and the related organic growth course. Investments in the expansion of capacities will therefore be continued. Total capital expenditures (CAPEX) of around EUR 80 million (2017: EUR 74.5 million) have been planned for 2018.

Since the beginning of the analysis and transformation process in autumn 2017, the Management Board has identified significant potentials for earnings improvement and initiated appropriate implementation measures. The conclusion of the transformation of the Semperit Group is scheduled for the end of 2020. From this point onwards, the Semperit Group aims to achieve an EBITDA margin of 10% as central performance indicator.

Contact:

Monika Riedel
Director Group Communications & Sustainability
+43 676 8715 8620

Stefan Marin
Head of Investor Relations
+43 676 8715 8210

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About Semperit
The publicly listed company Semperit AG Holding is an internationally-oriented group that develops, produces, and sells highly specialised rubber and plastic products in more than 100 countries for the medical and industrial sectors: examination and surgical gloves, hydraulic and industrial hoses, conveyor belts, escalator handrails, construction profiles, cable car rings, and products for railway superstructures. The headquarters of this traditional Austrian company, which was founded in 1824, are located in Vienna. The Semperit Group employs around 6,800 people worldwide, including around 3,700 in Asia and more than 800 in Austria (Vienna and production site in Wimpassing, Lower Austria). The group has 15 manufacturing facilities worldwide and numerous sales offices in Europe, Asia, Australia, and America. In 2017, the group generated sales of EUR 874.2 million and an adjusted EBITDA (without one-off effects) of EUR 35.8 million.


Contact

Monika Riedel
Director Group Communications and Sustainability
T +43 1 79777-620