Q1 2015 Market update

Press Release

Haaksbergen, the Netherlands

6 May 2015

Trading update Q1 2015

Highlights

  • Turnover increased 7.1% at € 336.6 million, of which acquisitions accounted for 3.2% and exchange rate impact for 1.7%.
  • Turnover Building Solutions up 21.9%, of which 10.0% organic, largely driven by success of vertical growth markets.
  • Turnover Industrial Solutions down 3.3% due to reduced turnover in manufacturing systems segment in Asia – order intake at healthy level.
  • EBITA up by 34.9% at € 36.0 million.
  • EBITA Building Solutions doubled, also increase at Industrial and Telecom Solutions.

Alexander van der Lof, CEO of technology company TKH: "In line with the developments in the fourth quarter, the Building Solutions segment in particular performed well. The doubling of the operating profit in this segment proof we are well on the way to realise our margin target in this segment as well. The focus on the growth markets we defined is a key driver of our success. The other segments also performed well. The reluctance to invest among Chinese tyre manufacturers, first noted in the fourth quarter of last year, due to uncertainty regarding high import duties in North America, did have a downward impact on turnover in the segment tyre manufacturing systems. However, order intake remained healthy because of increasing demand from other regions of the world.

Developments in the first quarter

Turnover came in 7.1% higher at € 336.6 million in the first quarter of 2015 (Q1 2014: € 314.4 million). Acquisitions accounted for 3.2% of this turnover growth. Higher exchange rates of foreign currencies compared to the euro had a positive impact of 1.7% on turnover. Raw material prices had virtually no impact on turnover. On balance, organic turnover growth stood at 2.2%.

Turnover growth in Building Solutions was solid at 21.9%. Turnover at Telecom Solutions increased by 5.8%, while turnover from Industrial Solutions declined by 3.3%. Innovations once again made a considerable contribution to turnover.

The operating result before amortisation of intangible assets and extraordinary income and expenses (EBITA) increased by 34.9% to € 36.0 million in the first quarter of 2015, from € 26.7 million in the first quarter of 2014. All segments showed an increase of the operating result.

ROS improved to 10.7% in the first quarter of 2015 (Q1 2014: 8.5%).

Net profit before amortisation attributable to shareholders came in 45.4% higher at € 22.6 million in the first quarter of 2015 (Q1 2014: € 15.5 million).

Net debt increased by € 75.4 million from the year-end 2014 figure and stood at € 240.2 million. This was due to the completion of the merger squeeze-out of minority shareholders Augusta Technologie AG in March 2015, financing part of the acquisition of Commend as well as a seasonal increase in working capital. The net debt/EBITDA ratio was 1.4 and the interest coverage ratio stood at 20.9, which means TKH is operating well within the financial ratios agreed with the banks.

Telecom Solutions
As of 1 January 2015, Telecom Solutions comprises two sub-segments: indoor telecom systems and fibre network systems.

Turnover in the Telecom Solutions segment was up 5.8% at € 40.6 million. Currency exchange rates had a positive impact of 1.4% on turnover. The increase was realised in both indoor telecom systems and in fibre network systems. TKH recorded turnover growth in both Asia and Europe. EBITA improved as a result of higher capacity utilisation and efficiency improvements.

Building Solutions
As of 1 January 2015, Building Solutions comprises two sub-segments: vision & security systems and connectivity systems.

Turnover in the Building Solutions segment increased by 21.9% to € 140.5 million in the first quarter of 2015. Acquisitions accounted for 8.6% of this growth, while currency exchange rates had a positive impact of 3.2% on turnover. The effect of higher raw materials prices was limited to 0.1%. On balance, organic growth came in at 10.0%. Although market conditions in the Benelux region failed to improve, TKH recorded strong growth in both connectivity systems and vision & security systems. This success was achieved by focusing on its vertical growth markets and the related international growth, driven by innovations. The EBITA doubled.

Industrial Solutions
Industrial Solutions comprises two sub-segments: connectivity systems and manufacturing systems.

Turnover in the Industrial Solutions segment fell by 3.3% to € 155.6 million in the first quarter of 2015. Currency exchange rates had a positive impact of 0.6% on turnover. Organically, turnover declined 3.9%. This decrease was largely due to the reluctance to invest among Asian tyre manufacturers. However, with an order intake of € 85 million in manufacturing systems in the first quarter, the order book remains well filled. EBITA increased as a result of efficiency and effective cost controls.

Outlook

TKH maintains its forecast with respect to its business segments as issued at the presentation of its annual results in March 2015. As usual, TKH aims to provide a more specific indication about the profit for the full year 2015 when it presents its interim results in August 2015.

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Press Release TKH - Q1 2015 Market update