Kardex AG: Kardex Group remains on course for success
1 March 2018, Company News
Kardex AG / Key word(s): Final Results
Media information - Year End Results 2017
Zurich, 1 March 2018
Kardex Group remains on course for success
The Kardex Group continued its strong performance once again in the 2017 financial year. Attractive market conditions and a strong position in the intralogistics market contributed to record-high bookings, higher sales and a further increase in margins in both divisions. The Group has stepped up marketing efforts and technology development. It is investing in its employees to create the conditions for continued profitable growth in the future.
Significant growth in bookings
The strong increase in bookings at Kardex Remstar and a solid demand at Kardex Mlog resulted in bookings of EUR 411.9 million for the Kardex Group, an increase of 10.3% or EUR 38.3 million compared to the previous year (EUR 373.6 million). At EUR 173.6 million (EUR 137.8 million), the order backlog had reached a new record high at the end of the year. The service business accounted for a slightly larger share of revenue, increasing to 31.5% (31.0%) following Kardex Remstar's acquisition of a company in the USA and further organic growth. Total revenue increased by 4.9% to EUR 376.1 million compared to EUR 358.5 million in the previous year. As a result of this favorable performance, staffing in the Group rose by more than 6.5% to 1 653 full-time equivalents.
The gross profit margin at Group level increased due to the growth of the service business, which accounts for a greater share of revenue, and its improved margin. As in previous years, almost 3% of revenue was spent on R&D. In the year under review, the EUR 10 million threshold was passed for the first time. Overall, operating costs increased at a disproportionately lower pace, rising by 3.0% to EUR 89.7 million, corresponding to 23.9% of revenue. This led once again to a significantly improved operating income of EUR 46.0 million and a further increased EBIT margin of 12.2% (11.5%). The tax rate increased to 28.5%, which was due primarily to the one-off devaluation of tax assets in conjunction with tax reform in the USA. Adjusted for this item, the tax rate amounted to 26.7%. Net profit for the Kardex Group increased by EUR 1.0 million to EUR 31.8 million. This result corresponds to a return on capital employed (ROCE) of 46.9% (42.3%).
Demand for Kardex Remstar's intralogistics solutions was strong throughout the entire financial year. The markets in Central Europe and Southwest Europe (France, Italy, Spain, Benelux countries) proved to be particularly robust. Activity on the North American market also intensified as the year progressed. The UK, Scandinavia and some Eastern European countries posted below-average demand. Bookings increased by 16.5% to EUR 336.9 million and revenue increased by 6.6% to EUR 302.7 million. The more profitable service business continued to grow and contributed more than 30% to division revenue for the first time. Despite increased material and labor costs, Kardex Remstar was in a position to once again increase its operating result on the basis of economies of scale and process improvements. At EUR 44.4 million, operating income reached a new record high, up 10.2% on the previous year. This corresponds to an EBIT margin of 14.7%. In order to deal with the high order backlog worth EUR 124.6 million, capacities throughout the entire organization will be optimized and expanded in Q1 2018.
Targeted sales activities and a focus on orders with a well-balanced risk profile proved to be the key to success in a positive market environment with sustainable investment activities. Following the previous year's extraordinary item (a major project with a high share of third party), bookings were somewhat lower at EUR 75.1 million (EUR 84.7 million) and revenue totaled EUR 73.6 million (EUR 75.1 million). The profitable service business alone also grew disproportionately. Targeted investment in product sales and technology development increased operating costs by 4.1%. Based on the increased gross profit margin of 19.0%, the operating profit nevertheless rose slightly to EUR 3.9 million, corresponding to an increased EBIT margin of 5.3% (5.1%). Good order backlog levels of EUR 49.1 million represent a positive starting point for the current financial year.
The Kardex Group's balance sheet remains solid and the balance sheet total at the end of the period on 31 December 2017 was EUR 240.2 million (EUR 232.0 million). The company has no debts, net cash of EUR 114.9 million and an equity ratio of 57.9% (59.6%). The slightly lower equity ratio arose from the balance sheet extension, which is due to an increased cash holding, and goodwill written off through equity following two minor acquisitions. Despite strong bookings in November and December, net working capital remained almost unchanged at EUR 64.6 million (EUR 65.6 million) due to reduced inventory. Free cash flow increased again to EUR 34.6 million (EUR 16.4 million) after the previous year was negatively impacted by extraordinary items.
With an overall performance of 29.0%, the Kardex share delivered an above-average performance again in 2017. The positive annual result prompted the Board of Directors to apply for a payout of CHF 3.60 per share in the form of a nominal value reduction at the Annual General Meeting. The current nominal value of the Kardex share is CHF 4.05, which implies that the potential for tax-free payouts for individuals who are resident in Switzerland is almost exhausted.
The Board of Directors and the Group Management are optimistic about the current 2018 financial year. Both divisions are well positioned to benefit from the growing demand for intralogistics services, to gain market share and to deliver results within the frame-work of the stated financial goals. The good order backlog, attractive solutions portfolio and increasingly important service business form a strong starting point for continued favorable business development. Continued investment in employee development, in the products and solutions portfolio and in the digitization of processes forms the basis for sustainable and profitable growth. There is currently no indication of any significant change in the current trend.
1 2017: planned.
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Kardex Group - Corporate Profile
The Kardex Group is a global industry partner for intra-logistic solutions and a leading supplier of automated storage solutions and material handling systems. The Group consists of two entrepreneurially managed divisions, Kardex Remstar and Kardex Mlog. Kardex Remstar develops, produces and maintains dynamic storage and retrieval systems and Kardex Mlog offers integrated materials handling systems and automated high-bay warehouses. The two divisions are partners for their customers over the entire lifecycle of a product or solution. This begins with an assessment of customer requirements and continues via the planning, realization and implementation of customer-specific systems through to ensuring a high level of availability and low lifecycle costs by means of customer-oriented lifecycle management. Around 1 650 employees in over 30 countries work for the Kardex Group.
This communication contains statements that constitute "forward-looking statements". In this communication, such forward-looking statements include, without limitation, statements relating to our financial condition, results of operations and business and certain of our strategic plans and objectives. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors which are beyond Kardex's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors detailed in Kardex's past and future filings and reports and in past and future filings, press releases, reports and other information posted on Kardex Group companies' websites. Readers are cautioned not to put undue reliance on forward-looking statements, which speak only of the date of this communication. Kardex disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Document title: Kardex_Media information Year End Results 2017
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