Exel Composites Plc’s January–September Business Review 2017: “Adjusted operating profit almost tripled in Q3 2017”


Q3 2017 in brief

  •  Order intake increased by 5.9% to EUR 19.3 million (Q3 2016: 18.2).
  •  Revenue increased by 24.1% to EUR 20.4 million (16.4).
  •  Adjusted operating profit improved to EUR 1.6 million (0.6), which is 7.9% of revenue (3.6%).
  •  Net cash flow from operating activities was EUR 2.1 million (2.5).
  •  Earnings per share amounted to EUR 0.09 (0.03).

Q1-Q3 2017 in brief

  •  Order intake increased by 15.2% to EUR 65.1 million (56.5).
  •  Revenue increased by 18.1% to EUR 63.8 million (54.1).
  •  Adjusted operating profit amounted to EUR 5.0 million (1.9), which is 7.8% of revenue (3.5%).
  •  Net cash flow from operating activities was EUR 2.1 million (2.0).
  •  Earnings per share amounted to EUR 0.27 (0.11).

Outlook for full year 2017

Exel Composites reiterates its outlook for 2017 and estimates that both revenue and operating profit will increase significantly from the 2016 level.

President and CEO, Riku Kytömäki

The strong development in the first half of the year has continued into the third quarter of 2017 and is reflected in significant improvements in both quarterly revenue and adjusted operating profit. With more visibility into the full year, we communicated a revised outlook for 2017 in September. Our focused efforts in growth segments and strengthened position in growth markets such as China have enabled us to deliver double digit revenue growth rates in the nine month period. General market recovery, despite some prevailing uncertainties, has supported the increase in business volumes.

All of Exel’s regions performed well during the nine month review period. Europe, Exel’s largest market area, continued to deliver stable growth. The business volumes were driven by industrial investments, which have generally started to pick up in the region. The major contributor to revenue growth was nonetheless the Asia-Pacific (APAC) region. The newly acquired Nanjing Jianhui performed according to our expectations and made a substantial contribution to the third quarter revenue. The integration of the unit, which has been consolidated into the Group accounts since May 2017, continues according to plan.

From a customer segment perspective, Industrial Applications continued to drive the revenue increase during the review period. In line with our strategy, our focused activities especially in the mid-segment have broadened our customer base. The new accounts have contributed to increased business volumes in the review period. The demand of the project driven Construction and Infrastructure customer segment has shown modest improvements throughout the nine month period, but paced up particularly in the third quarter of the year.

Our adjusted operating profit continued its strong development almost tripling in both the third quarter and in the review period compared to last year. Increased revenue, operational efficiency and continued tight cost control are the major reasons behind the substantial improvement. The APAC region’s contribution to the improved adjusted operating profit is worth highlighting. Nanjing Jianhui, which we acquired during the spring, together with the improved performance of our other Chinese unit in Nanjing composed majority of the positive impact. To this we can add the reduced negative impact from the Australian unit. The process to downsize the business unit in Australia progresses as planned and production is expected to cease by the end of 2017.

To sum it up, it has been a very good nine month period. We delivered a significantly improved operating profit due to increased topline, APAC business reorganization, operational efficiency and continued tight cost control.

Consolidated key figures

EUR thousand 1.7.–30.9. 2017 1.7.–30.9. 2016 Change, % 1.1.–30.9. 2017 1.1.–30.9. 2016 Change, % 1.1.–31.12. 2016
Order intake 19,258 18,181 5.9 65,098 56,532 15.2 74,778
Order backlog ¹ 18,197 17,428 4.4 18,197 17,428 4.4 16,702
Revenue ² 20,394 16,431 24.1 63,841 54,070 18.1 73,079
Operating profit 1,549 565 174.1 4,693 1,858 152.6 649
% of revenue 7.6 3.4 7.4 3.4 0.9
Adjusted operating profit ³ 1,605 596 169.3 4,992 1,912 161.1 2,621
% of revenue 7.9 3.6 7.8 3.5 3.6
Profit for the period 1,089 384 184.0 3,256 1,263 157.7 198
Net cash flow from operating activities 2,067 2,492 -17.1 2,148 1,972 8.9 3,129
Return on capital employed, % 14.0 5.6 15.2 6.3 1.7
Net gearing, % 33.5 13.2 33.5 13.2 12.2
Earnings per share 0.09 0.03 0.27 0.11 0.02
Equity per share, EUR 2.34 2.36 -0.7 2.34 2.36 -1.0 2.27

¹ As per the end of the period.
² Revenue by customer segments Q3 2017 (Q3 2016): Industrial applications EUR 11.1 million (8.7); Construction & infrastructure EUR 5.6 million (4.2); Other applications EUR 3.7 million (3.5).
³ Excluding material items affecting comparability, such as restructuring costs, impairment losses and reversals, and costs related to planned or realized business acquisitions or disposals. For more information, please refer to the paragraph “Change in Exel Composites’ financial reporting terminology” of the Half-year Financial Report published on 21 July 2016.

Financial results briefing

Exel Composites will hold a financial results briefing for investors, analysts and journalists regarding the business review on Wednesday 25 October 2017 at 12:30 EET at Scandic Hotel Simonkenttä’s Roba meeting room (address Simonkatu 9, Helsinki, Finland). The related presentation material will be available after the meeting at the company’s website www.exelcomposites.com under Investors > Publications.

Vantaa, 25 October 2017

Exel Composites Plc
Riku Kytömäki
President and CEO