Concludes second quarter with positive result
The lockdowns in key markets linked to the Covid 19 pandemic have also affected the sales performance of Surteco Group. As a result, half-yearly sales of EUR 297.1 million were 16 percent below the previous year's figure (EUR 352.7 million). Adjusted for currency effects and the impregnation business sold in July 2019, the comparable decline was 11 percent. In view of falling raw material prices and a high degree of cost flexibility, e.g. through the use of short-time working, the Group was able to achieve earnings before interest, taxes, depreciation and amortization (EBITDA) of EUR 35.2 million (Q2- 2020: EUR 11.4 million) and an operating result (EBIT) of EUR 14.4 million (Q2-2020: EUR 1.0 million) in the first half of the year.
Despite the crisis-related burdens, Surteco reported a positive free cash flow of EUR 8.6 million (H1-2019: EUR 16.4 million) at the half-year stage. The cash flow from investing activities of minus EUR 20.0 million (H1-2019: minus EUR 17.5 million) also includes the acquisition of the remaining 15 percent stake in Nenplas Group and the sale of the shares in Canplast Mexico. Demand is expected to pick up again in the second half of the year, but is likely to remain below pre-crisis levels. Thanks to the high quality of its balance sheet and liquidity of over EUR 100 million, the company considers itself well equipped for the future.
"Surteco has successfully implemented all necessary measures both to protect its workforce from the Covid-19 pandemic and to maintain its financial solidity. As a result, we were able to continue to report solid earnings and free cash flow development at the half-year stage. If the situation does not worsen again, we hope that business will gradually pick up again in the second half of the year," comments Wolfgang Moyses, CEO of Surteco Group, on the situation.
Different development in the segments
Covid-19 led to a noticeable decrease in revenues in the Decoratives segment from EUR 253.7 million to EUR 214.6 million. Segment EBIT decreased from 17.3 million Euro to 10.4 million Euro. By contrast, the Profiles segment was able to defy the crisis and increase its revenues by five percent to EUR 49.6 million (H1-2019: EUR 47.2 million). EBIT also increased from 5.0 million Euro to 5.1 million Euro. Sales in the Technicals segment fell from € 51.8 million to € 32.9 million. This is attributable to the pandemic-related decline in demand and to the divested impregnation business (previous year's contribution to sales of € 15.3 million). Thanks to improved cost efficiency, however, the segment result rose from € 1.1 million to € 1.8 million.
countermeasures taken early on, a slightly positive operating result was
achieved in the second quarter despite the effects of the Covid 19 pandemic.
Since demand is expected to gradually pick up in the second half of the year,
but is unlikely to reach pre-crisis levels, the Company continues to assume
that, as already announced at the end of April, sales and operating result for
the year as a whole will be significantly below the original targets of EUR 675
to 700 million and EUR 40 to 45 million respectively.