R. STAHL's business performance in Q3 2020 impacted by weak global economy - yet specified earnings guidance slightly above market expectations

- Sales in Q3 2020 of €59.6 million down 16.4% compared to the strong prior year (Q3 2019: €71.3 million), but on par with prior quarter - weak global economy still weighed on daily business and projects

- EBITDA pre declines to €5.0 million (Q3 2019: €10.4 million) - selective cost adjustments noticeably cushion the impact of lower sales

- Reduction of working capital lowers net debt excluding lease liabilities sequentially to €8.6 million (Q2 2020: €10.3 million)

- Order backlog of €74.2 million at the end of the quarter continues to be solid and above prior year's quarterly levels

- Guidance corridor for 2020 further specified: sales to reach between €242 million and €248 million due to persisting market weakness, EBITDA pre to come in between €15 million and €18 million slightly above market expectations

Waldenburg, 12 November 2020 - R. STAHL, leading supplier of products and systems for explosion protection, today publishes preliminary figures for Q3 2020. Compared to the strong previous year, sales declined by 16.4% to €59.6 million (Q3 2019: €71.3 million), on par with the prior quarter, following the overall weak development of the global economy. Selective measures to particularly adjust personnel costs noticeably restricted the burden on earnings, yielding an EBITDA pre of €5.0 million in the quarter under review (Q3 2019: €10.4 million), equivalent to a margin of 8.3% (Q3 2019: 14.5%). Compared to the previous year, this corresponds to a decline by €5.4 million or 52.0%. Exceptionals stood at €-0.1 million (Q3 2019: €-1.4 million), a persistently declining and low level similar to the prior quarter. Earnings per share dropped year-on-year to €-0.09 in Q3 2020 (Q3 2019: €0.50).

Though statements of a slow recovery can increasingly be heard from a range of customer industries, demand for explosion-protected products unexpectedly remained very moderate in the quarter under review. While sales in Germany were roughly on par with the prior year thanks to more deliveries for expansion investments in the chemical industry, all other regions saw double-digit percentage declines due to their high exposure to the oil and gas sector. This was driven by postponements of orders for replacement and upgrade investments and in a corresponding purchase reticence in the daily business for components and systems. In addition, a number of major global projects are still frozen at the moment.

"As the COVID-19 pandemic continues, it is becoming clear that its economic effects hit our markets harder than we expected in the first half of the year. In the past quarter, again, we responded to the weak sales development with selective cost reductions which noticeably dampened the earnings decline. Today, R. STAHL is much better positioned to deal with economic downturns compared to some years ago", said Dr Mathias Hallmann, Chief Executive Officer of R. STAHL. "Although we will not be able to reach the sales level that we have communicated until recently, we expect EBITDA pre to slightly exceed market expectations", Dr Hallmann continued.

Total operating performance in Q3 2020 declined by 14.5% to €60.7 million (Q3 2019: €71.0 million). Cost of materials developed pleasingly well, falling in line with sales by 16.3% to €20.4 million and yielding a slightly improved, persistently low cost-of-materials ratio of 33.6% of the total operating performance (Q3 2019: 34.3% of the total operating performance). The personnel costs were lowered considerably by 5.9% to €27.3 million (Q3 2019: €29.1 million) by adjusting bonus reserves and transforming tariff-related special-payment claims (T-ZUG) into free time, supported by a large number of local measures at the global sites, including reduced hours. In addition, a reduction of severance pay by €0.4 million to €-0.1 million also contributed to this result (Q3 2019: €-0.5 million).

Measures aiming at safeguarding liquidity, including a lower build-up of receivables, decreased working capital in the reporting period by €2.9 million (Q3 2019: increase of €1.0 million). Despite softer earnings, this led to an increase of cash flow from operating activities by €1.2 million to €7.3 million in the quarter under review (Q3 2019: €6.1 million), resulting in a reduction of net debt (excluding pension provisions and excluding lease liabilities) to €8.6 million as of 30 September 2020 (30 June 2020: €10.3 million).

At the end of the period under review, the order backlog declined to €74.2 million (30 June 2020: €79.7 million), but continued to remain at a solid level above the quarterly average of the previous year.

On the basis of the business development in the first ten months of this year, the current situation suggests that it will no longer be possible to achieve the sales target of at least €260 million for 2020 that we have communicated until recently. Consequently, the Executive Board now adapts the sales outlook for 2020 to a range between €242 million and €248 million. However, based on the achievements we made to improve our cost position, we reiterate our earnings outlook 2020 to reach an EBITDA pre exceptionals in the low double-digit million Euro range and further specify it to a corridor between €15 million and €18 million, slightly above current market expectations of around €14 million. We also continue to anticipate a positive free cash flow for 2020. In light of the considerable increase in pension provisions as a result of a lower interest rate, we now foresee an equity ratio of about 20% as of the end of the year under review, down from 22.5% that we have anticipated until recently.

Key Figures R. STAHL Group for Q3 2020 pursuant to IFRS

in € million	Q3 2020	Q3 2019	Change in %		9M 2020	9M 2019	Change in %
Sales	59.6	71.3	-16.4		184.4	204.3	-9.7
Germany	15.5	15.7	-1.7		47.3	46.4	+2.0
Central region 1)	26.8	31.8	-15.8		84.6	91.5	-7.5
Americas	6.0	9.6	-37.9		18.6	25.4	-26.6
Asia/Pacific	11.3	14.1	-19.7		33.8	41.0	-17.5
Order backlog as of 30 Sep.					74.2	71.2	+4.2
EBITDA pre exceptionals 2)	5.0	10.4	-52.0		13.6	23.5	-42.0
EBITDA margin pre exceptionals 2)	8.3%	14.5%			7.4%	11.5%
EBITDA	4.9	9.0	-45.9		13.1	19.4	-32.7
EBIT	0.8	4.6	-81.6		0.7	6.5	-88.7
Net profit	-0.6	3.3	n/a		-3.2	2.6	n/a
Earnings per share (in €)	-0.09	0.50	n/a		-0.50	0.40	n/a
Cash flow from operating activities	7.3	6.1	+19.7		9.8	16.2	-39.2
Depreciation and amortization	4.0	4.4	-9.1		12.3	13.0	-4.8
Capital expenditures	3.7	3.2	+16.6		8.7	7.9	+10.2
					30 Sep. 2020	31 Dec. 2019	Change in %
Total assets					256.8	259.4	-1.0
Equity					50.2	58.4	-14.0
Equity ratio					19.6%	22.5%
Net financial debt 3)					8.6	4.2	>+100
Net financial debt incl. lease liabilities pursuant to IFRS 16					36.1	36.0	+0.5
Employees 4)					1,688	1,669	+1.1

¹⁾ Africa and Europe excl. Germany

²⁾ Exceptionals: restructuring charges, non-scheduled depreciation and amortization, charges for design and implementation of IT-projects, M&A costs as well as profit and loss from the disposal of non-current assets no longer required for business operations

³⁾ excl. pension provision and excluding lease liabilities

⁴⁾ excl. apprentices

Percentages and figures in this report may include rounding differences. The signs used to indicate rates of change are based on economic aspects: improvements are indicated by a "+" sign, deteriorations by a "-" sign. Rates of change >+100% are shown as >+100%, rates of change <-100% as "n/a" (not applicable).

Investors' and analysts' conference call of R. STAHL AG for Q3 2020

The Chief Executive Officer of R. STAHL AG, Dr Mathias Hallmann, will explain the results of Q3 2020 today at

10:00 CET

in a conference call and will be available for questions afterwards. The conference call will be held in English language.

Please dial the following number to join the call and provide the PIN as well as your full name and company when prompted:

DE: +49 (0)89 20303 5709
UK: +44 (0)330 336 9125
US: +1 323-794-2588

PIN: 6087329#

Along with the conference call, we will provide an online presentation via the internet. Please log on as a participant on the following website (no password required):

https://www.webcast-eqs.com/rstahl20201112/no-audio

A replay of the audio webcast will be available shortly after the conference call has ended on the company's website under the following link:

https://r-stahl.com/en/global/corporate/investor-relations/ir-news-and-publications/events-and-presentations/
 

Financial calendar 2020

16 - 18 November Eigenkapitalforum,
Frankfurt am Main (virtual)

About R. STAHL - www.r-stahl.com
R. STAHL is the world's leading supplier of electrical and electronic products and systems for explosion protection. These products and systems prevent explosions in hazardous areas and contribute to the safety of people, machines and the environment. The portfolio ranges from products used in switching/distributing, installing, operating/monitoring, lighting and signalling/alarming up to automation. Typical customers are the oil & gas industry, the chemical and pharmaceutical industry and the food industry. In 2019, global sales amounting to about €275 million were generated by 1,669 employees. The shares of R. STAHL AG are traded on the Regulated Market/Prime Standard of Deutsche Boerse (ISIN DE000A1PHBB5).

Forward-looking statements
This release contains forward-looking statements based on assumptions and estimates of R. STAHL's management. Although we assume that the expectations of these forward-looking statements are realistic, we cannot guarantee that these expectations will prove to be correct. The assumptions may involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Factors that may cause such discrepancies include: changes in the macroeconomic and business environment, exchange rate and interest rate fluctuations, the roll-out of competing products, a lack of acceptance of new products or services, and changes in business strategy. R. STAHL does not plan to update these forward-looking statements nor does it accept any obligation to do so

The contents of this press release are intended to address all genders. For the sake of readability and without any intent to discriminate, only the male form is used.

Contact:
R. STAHL AG
Dr. Thomas Kornek
Senior Vice President Investor Relations & Corporate Communications
Am Bahnhof 30
74638 Waldenburg (Württ.)
Germany

Tel. +49 7942 943-1395
[email protected]