Kardex AG: Year End Result 2014 / Kardex further expands its profitability
12 March 2015, Company News
Kardex AG / Key word(s): Final Results
Media information - Year End Results 2014
Zurich, 12 March 2015
Kardex further expands its profitability in 2014
The Kardex Group enjoyed a successful 2014 financial year and recorded further major increases in profitability. The good overall result can be attributed to the general strong demand, the profitable growth of its major division Kardex Remstar and the confirmation of the turnaround of Kardex Mlog. In the following information, the previous year comparisons of the Group results are based on continued operations only. In other words, the revenue and results figures for the Kardex Stow division sold at the end of July 2013 are not taken into account.
Further substantial improvements to the operating result
At EUR 308.9 million, the Kardex Group recorded a 2.5% increase in bookings compared to the previous year (EUR 301.5 million). The generated revenue of EUR 308.0 million exceeded the previous year (EUR 302.1 million) by 2.0%. The order backlog at the end of the year was EUR 107.8 million (EUR 108.0 million). The gross margin generated increased by 7.0% to EUR 102.8 million, equating to an increase of 1.6 percentage points to 33.4% of the revenue. Although the operative costs increased by EUR 2.4 million (+3.3%) to EUR 74.3 million, this was largely due to increased research and development expenditure (+EUR 1.3 million). On the whole, the operating result increased over proportionately by 17.8% to EUR 28.5 million (previous year: EUR 24.2 million) with an EBIT margin of 9.3% (8.0%). As a result of the almost unchanged financial result and a slightly higher but still low tax rate of 16.8%, a net profit of EUR 23.8 million (7.7% of the revenue) was generated, up around 20% on that of the previous year. Pleasing returns on capital employed (ROCE) of 33.4% (previous year: 28.7%) were achieved. The Group headcount increased in 2014 by 33 full-time positions to 1 480 employees.
Positive development in both divisions
The Kardex Remstar division achieved its principle set goal of 'profitable growth' for 2014. Bookings and revenue grew by 4.1% and 6.6% respectively. The higher volume, the further increase in service business revenue and efficiency improvements more than offset the higher operating costs and sustained price pressure. The EBIT rose by 19.2% to EUR 28.6 million (previous year: EUR 24.0 million), which equates to a strong EBIT margin of 11.4% (previous year: 10.2%).
The Kardex Mlog division also developed positively and achieved the aim of confirming its turnaround. The consistently risk-conscious behavior in the field of project business and the increased focus on product and service contracts are demanding but increasingly having a positive impact on the result. As such, in 2014 an operating result of EUR 1.9 million (previous year: EUR 1.2 million), equating to an EBIT margin of 3.3%, was achieved despite the lower volume (EUR 58.1 million, -13.3%). On this basis, the company can continue to grow and should be able to achieve the desired target EBIT margin range of 4% to 6% in the foreseeable future.
Cyclicality reduced through a positive change to the revenue mix
The strategic measures implemented in recent years have clearly improved the Kardex Group's revenue quality. The Group-wide share of service business rose to 27.5% (previous year: 26.1%). In 2011, this share was still at 23.6%. This increased demand for services and modernization activities strengthens customer loyalty and reduces the cyclicality of greenfield installations caused by the general economic climate. The successful OEM business is also opening up new sales channels and further diversifying the customer base. From a geographic perspective, Europe remains the most important and a still growing core market for Kardex products and services (78.5% revenue share) but major investments are also being made in market development in the USA (12.5% revenue share) and in the Asia/Pacific region (6.2% revenue share), where the penetration level of our technologies is still lower and thus a great deal of potential is available.
The Kardex Group has a solid balance sheet with no debts and no potential depreciation risks due to goodwill or capitalized tax loss carryforwards. The financial reserves provide the flexibility required to avail of targeted opportunities to further strengthen our market position.
Adaptation of the dividend policy and motions to the General Meeting
In April 2014, the Kardex AG General Meeting approved payouts with an equivalent value of EUR 16.8 million (ordinary dividends of CHF 1.25, special dividends of CHF 1.40 from the sale of the Kardex Stow division). This financial outflow could be more than offset by the generated free cash flow of EUR 23.7 million. The Group's equity ratio increased as at the end of 2014 to a comfortable 59.4% (previous year: 55.9%) and the net cash increased to EUR 85.1 million (previous year: EUR 77.0 million). The Board of Directors has therefore decided to adapt the dividend policy. The payout ratio is to be increased from the former level of a maximum of 35% to a new level of a maximum of 75% of the net profit. For the 2014 financial year, it will therefore be proposed to the Annual General Meeting to declare a dividend of CHF 2.30 per share (tax free for Swiss individuals), equating to CHF 17.8 million. Payment will occur as a payout of CHF 1.65 from the capital contribution reserves and a CHF 0.65 reduction in the par value.
The constitution of the Board of Directors is to again remain unchanged in 2015. Internal cooperation and exchanges with the Executive Committee have been successful. All current members of the Board of Directors will make themselves available for re-election.
The Kardex Group continues to expect a long-term growing need for intralogistics solutions and wants to fully exploit the opportunities available on the market. The Board of Directors and Executive Committee currently expect upheaval in several geographical markets but the continuation of the robust market conditions on the whole. We therefore again expect a solid course of business for 2015. The strength of the Swiss franc only affects us marginally as the Group, like all its main competitors, manufactures solely in the euro zone. The currently weak euro makes our products more attractive to the growth markets outside the euro zone.
Key figures (Continued Operations)
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 shuttles and 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 life cycle of a product or solution. This begins with the assessment of customer requirements and continues through planning, realization and maintenance of customer-specific systems. It ensures a high level of availability combined with low total cost of ownership and operation. Around 1 500 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.
End of ad hoc announcement
Document title: Year End Results 2014_Kardex Group
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