Kardex Holding AG: Kardex records decline in bookings, net revenues and earnings

Media information - Half-Year Results 2020

Zurich, 30 July 2020

Kardex records decline in bookings, net revenues and earnings

The first half of 2020 at Kardex was also dominated by the corona pandemic. This affected in particular the bookings of Kardex Remstar and, to a lesser extent, its net revenues and profitability. Although Kardex Remstar expects the bookings situation to gradually recover, a further decline in net revenues and profitability is expected for the second half of the year. Kardex Mlog, on the other hand, recorded a strong recovery in bookings and is looking forward to the second half of the year with confidence. Despite the currently uncertain trends, Kardex will continue its strategic investment program in the supply chain and digitalization based on the confidence in its market position and the growth potential of intralogistics.

In the first half of 2020, Kardex' bookings were 16.6% below the same period of the previous year. This decline is attributable to the development at Kardex Remstar, whose bookings are 26.2% below previous year. Bookings had already weakened due to the economic slowdown in Europe before the outbreak of the corona crisis, but now reflects a high level of uncertainty in all markets. Since the end of May, the important US market has also cooled down significantly. Although interest in Remstar solutions remains high, many customers are holding back on investment decisions. By contrast, bookings at Kardex Mlog are 54.9% higher than in the weak prior-year period. Kardex Mlog benefited in particular from the fact that some of the orders expected for 2019 materialized in the first half of 2020. At EUR 210.9 million, the Group's order backlog at the end of the period was 3.2% lower than at the end of 2019.

Kardex Remstar and Kardex Mlog have always been able to deliver in recent months, despite the COVID-19 challenges. In some cases, however, access restrictions at customer sites meant that deliveries, installations and service work on site were not possible and had to be postponed. This led to delayed revenue recognition and partial short-time work in the organization. In combination with the weaker bookings, the first six months of the year show a decline of 9.5% in net revenues compared to the previous year. The achieved gross profit margin of 34.6% was only slightly below the prior-year period (34.9%). In absolute terms, however, the gross profit of EUR 71.8 million was 10.4% lower than in the previous year. Thanks to immediate measures, operating costs were reduced by 7.5% compared to the previous year period and thus adjusted to the declining net revenues development. The operating result (EBIT) amounted to EUR 24.0 million, 15.5% below the same period of the previous year with a corresponding EBIT margin of 11.5% (12.4%). Net profit amounted to EUR 17.1 million (EUR 20.2 million) for the first half of the year. The number of employees decreased by 0.4% to 1 906 full-time equivalents compared to the beginning of the year.

Global weakening of demand at Kardex Remstar
Since the fourth quarter of 2019, the previously strong bookings of Kardex Remstar have been declining. The outbreak of the corona crisis significantly reinforced this trend. A sharp decrease in Asia was followed by Europe and, with some delay, North America. Bookings in new business fell by 34.3% and the Life Cycle Service business reported a 7.3% decline in orders. The main of decrease for Remstar in Europe happened with customers in the traditional industry segments production and assembly. By contrast, the emerging warehousing, wholesale, e-commerce and government segments were less affected. At the end of the period, the order backlog amounted to EUR 143.3 million, 22.9% less than at the end of June 2019.

Net revenues fell by 8.4% to EUR 173.2 million in the first six months. Thanks to efficiency gains in the supply chain, a better revenue mix and rigid cost management, the gross profit margin in the first half of the year increased slightly compared to the previous year. The operating result decreased by 8.8% to EUR 25.0 million due to the lower volume with an EBIT margin of 14.4% which is close to the same level as in the previous year period (14.5%).

Kardex Remstar is able to cope with the decrease in orders to date with measures already initiated without any significant structural adjustments. However, if the expected rebounce does not materialize in the third quarter and the global economy continues to deteriorate, adjustments will be made to structures and capacities.

The strategic investments in the supply chain and digitalization will continue as planned. However, the start-up of the new plant in the USA will be postponed to the first half of 2021 due to current travel restrictions.

Strong recovery in bookings at Kardex Mlog
Bookings of Kardex Mlog show a different picture, which is directly related to the situation in the previous year. Investment decisions for projects, that had already been expected in the first half of 2019, were taken in the last quarter of 2019 and the first quarter of 2020. After a brief collapse directly after the Corona outbreak in Europe, bookings returned to normal in the second quarter. With various projects in new business from a wide range of industries, bookings in this segment were 60.6% higher than in the previous year. Service and modernization orders also rose sharply by 49.2%. With an order backlog of EUR 67.4 million, the base for a good second half of the year has been established.

Kardex Mlog's net revenues of EUR 34.5 million were 15.0% down compared to the previous year period as a result of the low order backlog at the beginning of the year and the interruptions caused by corona. The otherwise solid profitability of the division was adversely affected by a one-off revaluation of inventories, which reduced EBIT by a low single-digit EUR million amount. As a result, the operating result fell to EUR 0.2 million (EUR 2.4 million) and the EBIT margin to 0.6% (5.9%). Kardex Mlog expects to return to the profitability level previously achieved from the second half of the year onwards.

Healthy balance sheet and high equity ratio
Kardex' balance sheet remains very stable and, with total assets of EUR 265.0 million at the end of the period, the equity ratio remained high at 57.8%. Free cash flow of EUR 10.0 million has been generated in the first six months of the year. Despite the payment of the high dividend, the acquisition of Robomotive and increased spending on strategic investments, Kardex reported a net cash position of EUR 109.1 million.

Outlook
Board of Directors and Group Management remain convinced of the medium to long-term growth opportunities and the dynamics of automation in intralogistics. Due to the short-term uncertainties regarding the timing and extent of the recovery in bookings at Kardex Remstar, no guidance is given for the second half of 2020. Kardex' medium-term financial targets remain unchanged.

Today, 30 July 2020 at 2:00 p.m. (CET), an analyst and media conference call will be held with CEO Jens Fankhänel, CFO Thomas Reist as well as Investor Relations Contact Officer Edwin van der Geest to discuss the half-year results. The conference call will be held in English. The corresponding presentation is available on http://www.kardex.com/presentation.

Please dial in approx. 5 minutes prior to the conference and kindly hold the presentation ready.
Dial-in details:
Switzerland / Europe +41 (0) 58 310 50 00
United Kingdom +44 (0) 207 107 06 13
United States +1 (1) 631 570 56 13 

Interim Report
The Interim Report is available on our website.

Contact
Edwin van der Geest, investor-relations@kardex.com
Tel. +41 (0)44 419 44 79 / Mobile +41 (0)79 330 55 22
 

Kardex - Corporate Profile
Kardex is a global industry partner for intralogistic 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. Over 1 900 employees in over 30 countries work for Kardex.

Disclaimer
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' 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' past and future filings and reports and in past and future filings, press releases, reports and other information posted on Kardex 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.

Privacy policy
You have registered with us for our ad hoc announcements and are therefore entered in Kardex Holding AG's list of recipients and regularly receive price-sensitive or current information about our company. The protection of your personal data is very important to us and we implement this throughout the entire life cycle of personal data in compliance with the applicable data protection regulations. You can find further information about data protection on our website under Privacy Statement.

Recipients of our communications have the option at any time of revoking their registration for ad hoc communications for the future or requesting information from Kardex Holding AG about their own personal data that has been processed or their deletion. Please send us an e-mail to investor-relations@kardex.com.