Ringmetall returns to pre-crisis levels in core business in third quarter and expands margins

DGAP-News: Ringmetall Aktiengesellschaft / Key word(s): Quarter Results/Forecast
05.11.2020 / 07:00
The issuer is solely responsible for the content of this announcement.

Ringmetall returns to pre-crisis levels in core business in third quarter and expands margins

- Group revenues of EUR 89.9 million in the first nine months slightly down due to steel prices
- EBITDA increases significantly by 8.3 percent to EUR 9.0 million, EBITDA margin improves to 10.0 percent
- Order situation for the rest of the year characterized by consistently positive trends
- Revenue forecast concretized due to steel prices, earnings forecast confirmed

Munich, 5 November 2020 - Ringmetall (ISIN: DE0006001902), a leading international specialist supplier in the packaging industry, is increasingly performing better in its core business despite the economic environment characterized by COVID-19 and is already returning to pre-pandemic levels in the third quarter. The company's performance does not yet make up for the shortfall in sales in the first half of the year in comparison to the previous year. However, the order situation is showing increasingly positive trends for the year-end business.

In the first nine months of the fiscal year, consolidated revenues totaled EUR 89.9 million, a decrease of 2.3 percent year-on-year (9M 2019: EUR 92.0 million). The sales development received headwinds from significantly declining steel prices, which weighed more heavily than the acquisition-related sales growth or the more positive organic business development. At the same time, however, the continued systematic cost management and noticeable efficiency improvements in clamping ring production led to an 8.3 percent increase in earnings before interest, taxes, depreciation and amortization (EBITDA) to EUR 9.0 million. The EBITDA margin in relation to total operating performance consequently recovered significantly to 10.0 percent, compared with 8.9 percent in the previous year.

"Our core business has recovered on a broad front despite Corona," explains Christoph Petri, CEO of Ringmetall AG. "We clearly feel that the destocking that we saw at our end customers during the summer months is coming to an end and that demand is normalizing and stabilizing again. Despite the second wave of the pandemic, we are basically positive about the rest of the year."

A separate analysis of the effects of steel price trends and inorganic and organic growth in the first nine months of 2020 showed the following effects on segment sales:
Industrial Packaging
- Effect of steel price development on segment revenue: - 7.1 percent
- Effect of corporate acquisitions on segment revenue: + 9.0 percent
- Effect of organic business development on segment revenue: - 3.0 percent
Industrial Handling
- Effect of organic business development on segment revenue: -15.3 percent

On a preliminary basis, the key performance indicators for the first nine months of 2020 are as follows:

IFRS, in EUR m 9M 2020 9M 2019 ∆ [abs.] ∆ [%]
Group revenues 89.9 92.0 -2.1 -2.3%
Total Output (TO) 89.9 92.7 -2.8 -3.1%
Gross Profit* 43.8 43.1 0.7 1.7%
Gross margin on TO 48.8% 46.5%    
EBITDA 9.0 8.3 0.7 8.3%
EBITDA margin on TO 10.0% 8.9%    
EBIT 4.3 4.6 -0.3 6.9%
EBIT margin on TO 4.8% 5.0%    
*Gross profit defined as: Group revenues including changes in inventories less cost of raw materials, consumables and supplies as well as purchased services; purchased services H1 2019 reduced by cost of temporary workers (EUR 1.8 million), as this item will be reported under personnel expenses upon publication of the Annual Report 2019

In the Industrial Packaging segment, revenues of EUR 82.5 million were slightly lower due to steel prices (9M 2019: EUR 83.3 million). While business with drum closure systems regained momentum, the inliner segment experienced a more pronounced pandemic-related weak phase. In the third quarter, sales in the product area of beer tank inliners in particular declined significantly and were characterized by restrained demand from the restaurant and hotel industry. The changed product mix consequently led to a reduced margin in the inliner product area. Nevertheless, the consistently positive course of business in the drum closure systems product area and the consistent cost management in the segment as a whole led to a noticeable improvement in the earnings situation. Segment EBITDA increased by 11.6 percent to EUR 10.4 million (9M 2019: EUR 9.3 million), corresponding to an EBITDA margin of 12.6 percent (9M 2019: 11.2 percent).

The Industrial Handling segment continued to be negatively impacted by subdued demand from the material handling equipment industry. Segment revenues were down 15.3 percent to EUR 7.4 million (9M 2019: EUR 8.8 million), with segment EBITDA of EUR 0.2 million (9M 2019: EUR 0.8 million). At the same time, however, the overall picture for the course of business in the fourth quarter is clearly brightening. Important key accounts in the material handling equipment industry are again looking more positively into the future, which is reflected in a rising demand situation.

"Given the circumstances, we will be able to close out 2020 quite properly. However, the sharp fall in steel prices, which were explicitly assumed to remain constant in our outlook, is now forcing us to adjust our revenue forecast," summarizes Board Member Christoph Petri. "On the other hand, we still feel very comfortable with our earnings forecast and our cash flow is again developing excellently. Accordingly, our operating cash flow for the year as a whole should be around EUR 10 million."

As already outlined in the half-year report, the Management Board of Ringmetall AG expects consolidated revenues for the year as a whole to be below the previous forecast due to the significant decline in steel prices. Instead of the expected EUR 125 to 135 million, a range of EUR 115 to 120 million is now considered realistic. The EBITDA forecast, on the other hand, is reaffirmed and an unchanged figure of between EUR 11 and 13 million is expected.

Further details on the business development in the first nine months of 2020 will be discussed by the Management Board today at 11:00 a.m. CET at a Zoom Video Conference for analysts, institutional investors and journalists. Registration for this event will be made by e-mail via Ms. Anja Brabec (brabec@ringmetall.de). Further information on Ringmetall AG and its affiliated subsidiaries is available at www.ringmetall.de.

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 the Ringmetall Group
Ringmetall is an internationally leading specialist supplier in the packaging industry. The Industrial Packaging division offers high-security closure systems and inliners for industrial drums for the chemical, petrochemical, pharmaceutical and food processing industries. The Industrial Handling division develops application-optimized vehicle attachments for the handling and transport of packaging units. In addition to the corporate headquarters in Munich, Ringmetall is represented by worldwide production and sales branches in Germany, Great Britain, Spain, Italy, Turkey, the Netherlands as well as China and the USA. Worldwide, Ringmetall generates a turnover of around 120 million euros per year.

05.11.2020 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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