“The development of our Group’s business has been very pleasing. All segments contributed to growth in the first half-year. Demand remains buoyant in our key markets. On this basis, and with the successful acquisition of Prodomax Automation in Canada as well as the initial steps taken to reorganize our business in Asia, we look into the second half-year with a lot of confidence. Therefore, we raised our revenue guidance to between 805 and 820 million euros in July. The management now also raises 2018 profit targets for the combined businesses to around 15 percent EBITDA margin and around 11 percent EBIT margin on the higher revenue, including purchase price allocation impacts,” says Stefan Traeger, President & CEO of the Executive Board of JENOPTIK AG.
Revenue up 10.4 percent; strong growth particularly in Germany
In the first six months, group revenue rose by 10.4 percent, to 384.7 million euros (prior year: 348.4 million euros). This increase was due to continuing good demand for optical systems for the semiconductor equipment industry, as well as for systems from the Healthcare & Industry area. The traffic safety area also significantly helped to boost growth in Germany – thanks to deliveries of toll monitoring systems.
In the German market, revenue increased by a total of 27.4 percent to 125.5 million euros (prior year: 98.6 million euros). A strong revenue increase of 15.7 percent was also achieved in Europe. In total, the share of revenue generated abroad came to 67.4 percent, compared with 71.7 percent in the prior year.
Sharp rise in earnings due to good business development in all segments
In the first half-year 2018, EBIT improved at a markedly faster rate than revenue. At 42.8 million euros, the operating result was 46.1 percent up on the prior year (prior year: 29.3 million euros). In addition to revenue growth, this is primarily attributable to a more favorable product mix and a relatively low increase in functional costs. All of the Group’s segments contributed to this good performance. The EBIT margin of 11.1 percent was significantly higher than in the prior year (prior year: 8.4 percent). EBITDA grew by 31.4 percent to 56.3 million euros (prior year: 42.8 million euros).
Solid order book and strong financial power
Order intake grew by 7.2 percent to 197.9 million euros in the second quarter (prior year: 184.7 million euros). In the first six months of the fiscal year, the order intake came to 397.2 million euros, 2.0 percent lower than in the prior year (prior year: 405.3 million euros), but exceeded revenue in the reporting period. The book-to-bill ratio, that of order intake to revenue, came to 1.03 in the first half-year, compared with 1.16 in the prior year. As of the balance sheet date, the order backlog was worth 454.7 million euros, practically unchanged from year-end 2017 (31/12/2017: 453.5 million euros).
In the first half-year, the free cash flow increased to 28.8 million euros (prior year: 22.1 million euros). The equity ratio, at 59.4 percent, remained at the same good level as at year-end 2017 (31/12/2017: 59.6 percent). In addition, despite a higher dividend payment, the Group remained net debt free at the end of the reporting period, at minus 65.3 million euros (31/12/2017: minus 69.0 million euros).
Revenue growth and improved earnings in all group segments
The Optics & Life Science segment posted a strong increase in revenue of 11.7 percent to 139.5 million euros (prior year: 124.9 million euros) in the first six months of 2018. As in the prior quarters, this development was driven by a continuation of healthy business with solutions for the semiconductor equipment industry and a very positive development in the Healthcare & Industry area. EBIT improved significantly due to a positive product mix and good capacity utilization, by 28.3 percent to 28.7 million euros (prior year: 22.4 million euros). Over the first half-year, the segment thus increased its EBIT margin to 20.6 percent compared to the prior year (prior year: 17.9 percent). The order intake grew 5.7 percent to a value of 157.5 million euros (prior year: 149.1 million euros). Set against revenue, this resulted in a book-to-bill ratio of 1.13 (prior year: 1.19).
Revenue in the Mobility segment saw a year-on-year increase of 17.6 percent in the first six months of 2018, to 138.5 million euros (prior year: 117.8 million euros). Both areas, systems and machines for the automotive industry and traffic safety technology, showed successful growth, in particular due to deliveries of toll monitoring systems. On the basis of a good revenue development, the segment, as expected, again significantly improved the quality of earnings in the first six months, with EBIT of 11.8 million euros (prior year: 2.4 million euros). The EBIT margin rose to 8.6 percent (prior year: 2.0 percent). The order intake in the Mobility segment was slightly down on the prior year, at 140.2 million euros, due to weaker growth in the Traffic Solutions area (prior year: 144.4 million euros), while the business with the automotive industry was further expanded. In the first six months of 2018, the book-to-bill ratio reached a figure of 1.01 (prior year: 1.23).
In the first half-year, the Defense & Civil Systems segment generated revenue of 108.2 million euros (prior year: 105.4 million euros), an increase of 2.7 percent. EBIT improved by 5.7 percent, from 9.0 million euros in the prior year, to 9.5 million euros, in part due to a more profitable product mix. Over the reporting period, the EBIT margin consequently increased to 8.8 percent (prior year: 8.5 percent). At 100.4 million euros, the order intake was 10.2 percent down on the prior year (prior year: 111.8 million euros). In the first quarter 2017 Jenoptik had received several major orders for energy and sensor systems. As expected, however, the order intake rose by 34.1 percent to 56.3 million euros in the second quarter 2018 compared with the same quarter in the prior year (Q2/2017: 42.0 million euro). The book-to-bill ratio in the first six months of 2018 accordingly fell to 0.93, compared with 1.06 in the prior year.
Following an increase in revenue guidance, the Executive Board now also sets higher profit targets for 2018
With closing in July, Jenoptik successfully completed its acquisition of Prodomax Automation Ltd. in Canada. The acquired company, which specializes in process and automation technology, will already contribute to group growth this year. Due to the acquisition and continuing good business performance, the Executive Board increased its revenue forecast in July, from an original 790 to 810 million euros to a new figure of between 805 and 820 million euros and confirms this now. Better than originally anticipated profitability in its ongoing businesses, driven mainly by favorable mix effects, enables management to also raise profit targets for the year. The EBITDA margin is expected to be around 15 percent (previously between 14.5 and 15.0 percent), the EBIT margin to be around 11 percent (previously between 10.5 and 11.0 percent). The new profit targets already include the effects from purchase price allocation in connection with the acquisition of Prodomax of around 5 million euros in EBITDA and 1.5 million euros in EBIT, according to preliminary calculations.
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