Alexander van der Lof, CEO of technology company TKH: "The continued internationalisation and the focus on the vertical growth markets identified by TKH helped us to generate organic turnover growth in the second quarter, despite the economic headwinds. Building Solutions did see marked margin pressure in the Benelux due to overcapacity in those markets following a drop-off in demand. However, operating result improved strongly compared with the year-earlier period thanks to acquisitions and efficiency programmes executed in the second half of last year. ROS growth did lag our growth targets due to the difficult market conditions, especially in the connectivity segment. At Industrial Solutions, the high order intake for tyre manufacturing systems was positive. TKH increased its market share among the top-five tyre manufacturers and increased the order intake outside the top five. This increases the prospect of future turnover and operating result growth. TKH incurred relatively high costs in the first half of the year in preparation for the growth we plan to realise in the second half of the year. Cost levels will normalise in the second half of the year. TKH expects overall second-half results to be higher than in the first half."
Financial results in the second quarter
Turnover rose by 12.9% to € 301.9 million in the second quarter (Q2 2012: € 267.3 million).
Acquisitions added 9.8% to the quarter’s turnover. Organic growth came in at 4.3%.
A drop in raw materials prices had a negative impact on turnover of 1.2%.
Turnover at Industrial Solutions came in 17.2% higher.
Turnover growth in the tyre manufacturing systems segment was especially high,
due to the order intake, which has continued to increase since the second half of 2012.
The second quarter saw record order intake levels of € 80 million.In view of this, TKH
has taken additional measures to respond to this growth. At Building Solutions, turnover was 13.5% higher. The acquisition of Augusta Technologie made a strong contribution to this growth. Despite the challenging market conditions, organic turnover growth - corrected for a reduction in inventories and a drop in raw materials prices – came in at 3.1%.
Turnover at Telecom Solutions fell by 0.3% due to the continuing drop in investments in copper networks.Telecom Solutions’ optical fibre systems business booked turnover growth of 7.4%.
EBITA rose by 38.1% to € 23.5 million in the second quarter. Building Solutions
made a strong contribution to this growth, both organically and through acquisitions.
The efficiency programmes launched in the second half of 2012 led to lower
cost levels as a proportion of the turnover,which in turn led to an organic rise in ROS. Margin pressure in the connectivity systems segment and low activity levels
at security systems for infrastructure projects did have a negative impact on ROS.
Despite this, Building Solutions booked a strong improvement in ROS, which rose to
7.4%, from 1.5% in the second quarter of 2012. Industrial Solutions saw a slight drop
in its operating result on the back of lower gross margins, due to the fact that many
projects are currently in the early stages of production, as well as temporarily higher innovation costs for new customers and new technology. Telecom Solutions recorded a higher EBITA, as a result of improved efficiency levels and the impact of lower raw materials costs.
Financial results in the first half
Turnover came in 11.6% higher at € 587.1 million in the first half (H1 2012: € 526.2 million). Acquisitions accounted for 11.1% of the total turnover, while organic turnover growth came in at 1.3%. Lower raw materials prices had a negative impact of 0.9% on turnover in the first half.
In the first half of 2013, Building Solutions accounted for 41.1% of total turnover, up from 38.2% in the same period of 2012. This increase was largely due to the acquisitions made in 2012. As a result Industrial Solutions saw its share of total turnover drop to 45.2% from 46.3% in 2012 and the share accounted for by Telecom Solutions fell to 13.6% from 15.5% in the year earlier period.
The gross margin rose to 40.9% in the first half of 2013, from 40.2% in the year-earlier period, due to a better product mix, partly due to acquisitions, and the reduction of inventories at production locations.
Operating costs (excluding one-off costs) as a percentage of turnover fell to 32.1% in the first half of 2013, from 33.1% in 2012, excluding the impact of acquisitions. This was due to the impact of the efficiency programmes executed in the second half of 2012.
Depreciation charges came in at € 9.7 million and where higher than in the first half of 2012 (€ 8.0 million), largely due to depreciations at the companies acquired in 2012.
The operating result before amortisation of intangible fixed assets (EBITA) was up by 28.4% at € 42.7 million in the first half of 2013, compared with € 33.3 million in the first half of 2012.
At Industrial Solutions, EBITA fell by 25.6% compared with the first half of 2012, mainly due to high costs levels and underutilisation in the first quarter in the run-up to the expected increase in order intake. Telecom Solutions saw EBITA rise by 10.4%, while at Building Solutions acquisitions and a strong organic improvement led to an increase in EBITA of 373% to € 16.7 million in the first half of 2013, from € 3.5 million in the same period of 2012.
ROS increased to 7.3% in the first half of 2013 (H1 2012: 7.1%).
Amortisation was € 3.8 million higher at € 12.0 million (H1 2012: € 8.2 million) mainly as a result of the acquisition of Augusta.
Financial expenses increased by € 2.1 million to € 7.2 million in the first half of 2013. This rise was the result of higher outstanding interest-bearing debts and a negative exchange rate effect of € 0.6 million compared with the first half of 2012. The higher financial expenses were partly offset by exceptional income of € 0.4 million due to the release of an earn-out provision, as well as a higher result from participations totalling € 1.2 million.
The tax burden fell to 23.0% in the first half of 2013, from 25.8% in the first half of 2012. The tax burden in the first half of 2012 was affected by one-off non-deductible acquisition costs.
Net profit before amortisation and one-off income and expenses attributable to shareholders came in at € 22.9 million in the first half of 2013 (H1 2012: € 22.0 million).
Net profit for the first half of 2013 came in 29.1% higher at € 19.4 million, compared with
€ 15.0 million in the year-earlier period.
Net bank debts increased by € 31.2 million from year-end 2012 to € 219.4 million.
This increase was the result of higher working capital – due to seasonal influences – and higher levels of investment. Solvency stood at 40.6%, from 42.4% in the first half of 2012. The net debt/EBITDA ratio came in at 1.9 and the interest coverage ratio at 9.0, which puts TKH well within the financial ratios agreed with its banks. Working capital rose to 15.5% of turnover, compared with 13.5% as per 30 June 2012.
The number of employees with an employment contract (FTEs) stood at 4,683 at 30 June 2013 (year-end 2012: 4,736).
Developments per solutions segment
Telecom Solutions develops, produces and delivers systems for applications from basic outdoor infrastructure for telecom and CATV networks to indoor home networking.
The focus is on providing customers with care-free systems due to the system guarantees we provide. Around 40% of the portfolio consists of optical fibre and copper cable for node-to-node connections. The remaining 60%, consisting of components and systems in the field of connectivity and peripheral equipment, is used mainly in the network’s nodes.