Jenoptik remains on course for growth and raises full-year revenue forecast again
- Acquisitions successfully completed in the third quarter
- Strong growth – revenue up 12.6 percent; 8.5 percent excluding acquisitions
- Profit expanded significantly – EBIT up by 27.8 percent and EBITDA by 21.7 percent, despite substantial PPA effects
Jenoptik remains on strong course for growth. All segments contributed to this encouraging performance in the first nine months of 2018. “Demand in our markets remains robust. In view of the positive business performance and the acquisitions of Prodomax Automation and the Otto Group, we expect a strong fourth quarter. The purchased companies already made a good contribution to revenue in the third quarter. Due to the acquisition and consolidation effects now we are raising our revenue guidance for this year to 820 and 830 million euros. Despite substantial PPA effects, we are confirming our margin targets,” Stefan Traeger, President & CEO of JENOPTIK AG, summarizes the business development and the outlook for Jenoptik.
Revenue up 12.6 percent; strong growth in Germany and the Americas
Group revenue rose significantly, by 12.6 percent in the first nine months of 2018, to 593.4 million euros (prior year: 526.8 million euros). The organic growth was 8.5 percent. This increase was due to good demand for optical systems for the semiconductor equipment industry, as well as for systems from the Healthcare & Industry unit. The traffic safety area also contributed considerably to this growth. In addition, the acquisitions in the automotive area contributed 21.8 million euros to the group revenue. In the German market, revenue increased by a total of 19.4 percent to 180.1 million euros (prior year: 150.9 million euros), in particular due to the delivery of toll monitoring systems in the Mobility segment. In the Americas, revenue rose by 24.7 percent to 149.7 million euros, which was in part attributable to the acquisitions (prior year: 120.0 million euros).
Sharp rise in earnings due to good business performance in all segments
In the first three quarters of 2018, EBIT improved at a significantly faster rate than revenue. At 66.7 million euros, the operating result was 27.8 percent up on the prior year (prior year: 52.2 million euros). In addition to revenue growth, this is attributable to a slower increase in functional costs. All segments contributed to this good performance. The EBIT margin of 11.2 percent was significantly higher than in the prior year (prior year: 9.9 percent). EBIT of the newly acquired companies came to minus 0.2 million euros. This figure includes impacts arising from the purchase price allocation (PPA), which according to provisional calculations amounted to minus 6.3 million euros. EBITDA grew by 21.7 percent to 89.0 million euros (prior year: 73.1 million euros), and includes PPA effects of around minus 4.8 million euros.
Record order backlog and strong cash flow
Until the end of September 2018, the order intake rose to 588.4 million euros (prior year: 576.2 million euros). In the third quarter the order intake grew by 11.9 percent. The book-to-bill ratio came to 0.99, compared with 1.09 in the prior year. At 480.9 million euros, the order backlog reached a new record figure (31/12/2017: 453.5 million euros).
Cash flows from operating activities grew to 72.8 million euros (prior year: 50.2 million euros). Due to a significantly higher operating cash flow, the free cash flow also increased to 57.2 million euros (prior year: 32.2 million euros). This improvement was possible despite the revenue-related rise in expenditure for working capital and higher investments than in the prior year. Despite the payments made for the acquisitions and the higher dividend amount, net debt came to just 16.6 million euros (31/12/2017: minus 69.0 million euros).
Revenue growth and sharp improvement in earnings across all segments
Revenue in the Optics & Life Science segment rose by 10.4 percent to 211.2 million euros (prior year: 191.3 million euros). As in the prior quarters, this development was driven by a continuation of good business with solutions for the semiconductor equipment industry. Sales in the Healthcare & Industry unit also continued to see positive development. EBIT improved significantly by 23.3 percent to 45.5 million euros, which was in particular attributable to a positive product mix and good capacity utilization (prior year: 36.9 million euros). The segment thus increased its EBIT margin on the prior year, to 21.6 percent (prior year: 19.3 percent). Due to growth in the field of optical systems, the order intake rose by 4.8 percent to 233.4 million euros (prior year: 222.8 million euros).
Revenue in the Mobility segment grew by 23.7 percent to 223.4 million euros (prior year: 180.6 million euros). The organic growth of the segment was 11.6 percent. Both areas, systems and machines for the automotive industry and traffic safety technology, saw growth, the latter in particular due to deliveries of toll monitoring systems. The acquisitions of Prodomax Automation Ltd. and the Otto Group also contributed 21.8 million euros to revenue growth. On the basis of this good performance, the segment again posted a significantly improved quality of earnings, with EBIT of 16.9 million euros (prior year: 8.6 million euros). The EBIT margin climbed up to 7.6 percent (prior year: 4.8 percent). The operating result of Mobility already includes the described PPA effects in the amount of minus 6.3 million euros arising in connection with the takeovers. Acquisitions costs came to 1.8 million euros. The order intake was worth 212.3 million euros (prior year: 200.7 million euros).
In the first nine months of 2018, the Defense & Civil Systems segment generated revenue of 160.9 million euros (prior year: 155.1 million euros). Despite a revenue figure only slightly up on the prior year, EBIT grew significantly to 15.4 million euros (prior year: 12.3 million euros), in part due to a changed product mix and cost savings. Over the reporting period, the EBIT margin consequently increased to 9.6 percent (prior year: 7.9 percent). At 144.0 million euros, the order intake was 6.7 percent lower than in the prior year (prior year: 154.4 million euros). An improvement in the order intake compared to prior quarters is, however, expected in the fourth quarter of 2018. In September Jenoptik launched the new VINCORION brand, under which the Group will in future market its range of mechatronic products and services for the aviation, security, defense, and rail markets.
Executive Board raises revenue targets again and is confirming margin expectations for 2018 despite substantial PPA effects
On the basis of the successful acquisitions and continuing good business performance, the Executive Board is raising its former revenue forecast of 805 to 820 million euros from July to a new range of between 820 and 830 million euros. Despite substantial PPA effects in connection with the takeovers and the acquisition costs, the Executive Board expects the margin targets for 2018 to reach the figures raised in summer, i.e. an EBITDA margin of around 15 percent and an EBIT margin of approximately 11 percent.
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This announcement can contain forward-looking statements that are based on current expectations and certain assumptions of the management of the Jenoptik Group. A variety of known and unknown risks, uncertainties and other factors can cause the actual results, the financial situation, the development or the performance of the company to be materially different from the announced forward-looking statements. Such factors can be, among others, changes in currency exchange rates and interest rates, the introduction of competing products or the change of the business strategy. The company does not assume any obligation to update such forward-looking statements in the light of future developments.
Jenoptik is a globally operating technology group, which is active in the three segments Optics & Life Science, Mobility and Defense & Civil Systems. Optical technologies are the very basis of our business with the majority of our products and services being provided to the photonics market. Our key target markets primarily include the semiconductor equipment industry, the medical technology, automotive and mechanical engineering, traffic, aviation as well as the security and defense technology industries. Jenoptik has about 4,000 employees and generated revenue of approx. 748 million euros in 2017.