- The highest sales after nine months in the company’s history: €246.6 million
- Consolidated EBITDA margin within the planned target corridor at 6.2%
- New orders total €250.5 million, slightly up on the good figure for the previous year
- Equity ratio remains strong at around 40%
euromicron AG, a leading provider of complete infrastructure solutions for communications, transport, data and security networks, continues to grow after the first nine months of 2014. The company has managed to post the highest consolidated sales in the first nine month in its history. The consolidated EBITDA was within the anticipated corridor, as integration costs continued to fall. This positive business performance is all the more remarkable in view of the uncertainties on the market due to geopolitical developments in Middle East and given the economic sanctions against Russia.
The company has also laid the strategic groundwork for the next stage in its growth. As planned, the euromicron Group pressed ahead with integrating and optimizing its existing structures and with the performance program “Agenda 500” in the period under review. Thomas Hoffmann, member of the Executive Board, comments: “We’ve achieved important organizational and structural milestones since the beginning of the year. Given the sales figures after 9 months and profitability as planned, I believe euromicron is well positioned for the future.”
The objective of the “Agenda 500” is to get the company ready for the next stage in its growth in terms of personnel, structures and finance. Apart from further organic growth, euromicron aims to increase its sales volume to €500 million by the planned acquisition of one or more production companies by 2016. The goal of that is to further strengthen its earnings power through the effects of the Agenda 500 and organic growth.
The euromicron Group achieved further important stages on its path to that in the period under review: Apart from relocating the servers and data centers of the individual companies to a highly available, central tier 3 data center, the company also adapted its financial structure and placed a borrower’s note loan for €20 million, among other things. As a result, the company’s basis for financing was broadened and long-term funding increased to a ratio of around 50%.
Consolidated sales
The euromicron Group increased its sales to €246.6 million after nine months, around 6% up on the good figure of €233.3 million for the previous year.
Consolidated income
In the first nine months of 2014, euromicron AG generated consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) of €15.2 million (previous year: €18.0 million). The EBITDA margin was 6.2%, meaning the Group’s profitability was within the envisaged target corridor of between 6% and 8% for the year as a whole. The Group’s operating income (EBIT before holding costs) was €12.6 million compared with €16.6 million the year before. After integration and structural costs of around €3.6 million, the consolidated EBIT in the first nine months of 2014 was €7.7 million compared with €11.7 million in the previous year. This figure includes the expenses for expanding the Group’s specialist and central functions, such as for IT, human resources, legal affairs and marketing. These are important to the success of the next stage of growth.
The net income for the period after minority interests at September 30, 2014, was €3.3 million compared with €5.9 million in the previous year. Undiluted earnings per share were €0.46 versus €0.89 in the previous year.
Order situation at the Group
The euromicron Group’s new orders at September 30, 2014, were €250.5 million, slightly up on the good figure of the previous year (€249.2 million). While there were higher new orders and a year-on-year increase in sales of €13.3 million, order books were around €130.4 million, down on the previous year’s €141.1 million.
Balance sheet structure
The euromicron Group’s total assets were €316.6 million at September 30, 2014, a drop of €12.3 million over the figure at December 31, 2013 (€328.9 million).
Personnel
In the period under review, the euromicron Group employed an average of 1,777 employees, including 79 trainees. Personnel costs at September 30, 2014, were around €75.7 million (previous year: €70.9 million). This change is mainly due to conversion and expansion measures as part of professionalizing and qualifying the company’s workforce. It was also impacted by pro-rata personnel structure costs aimed at ensuring that the additional requirements entailed by the planned growth can be managed.
Equity
Equity at September 30, 2014, was €126.0 million, €3.4 million above the level at December 31, 2013. The equity ratio of almost 40% compared with 37% at December 31, 2013, thus continues to form one of the long-term strategic pillars in the company’s financing.
Financial position
The euromicron Group’s net debt (noncurrent and current) at September 30, 2014, fell sharply to €87.2 million (previous year: €94.8 million). Despite an increase in business activity and higher up-front financing of projects, the lower net debt is attributable to the further improvement in working capital as part of the Agenda 500 and sustained cash optimization at the operating companies. In addition, factoring ensures quicker receipt of payments.
In October 2014, euromicron AG implemented as planned the first stage of expanding and converting its financing structure under the Agenda 500 by successfully placing a borrower’s note loan for €20 million. As a result, the goal of a financing structure consisting of around 50% plannable medium- and long-term financing and 50% short-term financing for operating business was almost achieved again.
Outlook
“We aim to keep on controlling our operating business successfully in the remainder of the year and prepare our company for the next planned stage of its growth,” says Thomas Hoffmann. In the eyes of the Executive Board Member, that not only includes a stable course of business, but also successful completion of further Agenda 500 projects. They are then to be transitioned to a continuous improvement processes at the beginning of 2015.
In addition, euromicron AG constantly examines the possibility of taking over companies. The focus here is on companies that are leaders in their special markets and would complement the Group’s portfolio with their skills, including with regard to current developments in industrial cloud applications. Moreover, a Group-wide cost-cutting program, coupled with optimization of processes and structures, is helping to lastingly secure the company’s positive business performance.
The company is sticking to its forecast for 2014, despite the fact that the overall economic climate is proving to be increasingly challenging and volatile as a result of geopolitical developments and weaker investment. “Implementation of the Agenda 500 and our comfortable order books lead us to expect that we will achieve our sales forecast of €340 to €360 million,” states Chief Executive Officer Dr. Willibald Späth. “In our results, we see a certain margin of risk as a result of the increasing exogenous uncertainties, which are mainly impacting our high-margin delivery business in the Euro-Asian region, an aspect that we are observing with the very greatest attention. As things stand at present, however, we still stick by our assumption that we will achieve an EBITDA within the planned target corridor of 6% to 8% at the end of the year.”
You can find the Q3/2014 Interim Report as of November 7, 2014, on our homepage at http://www.euromicron.de/en/financial-reports.
euromicron AG (www.euromicron.de) is an all-round solution provider for communications, transport, data and security. euromicron’s network infrastructures integrate voice, video and data transport wirelessly, via copper cable and by means of fiber-optic technologies. euromicron builds leading applications, such as security, control, healthcare or surveillance systems, on the basis of these cutting-edge network infrastructures.
Founded on its expertise as a developer and producer of fiber-optic components, euromicron AG is a strongly growing, highly profitable group that is listed on the stock market, has a medium-sized character and focuses on operational growth, integration and further market penetration, internationalization and expansion.