News › JENOPTIK AG • sustained good demand from the semiconductor equipment industry and the public sector in first half-year
- Group order intake down on prior year; order backlog slightly up
- Adjusted revenue decreased by 11.9 percent to 329.0 million euros
- Sharp improvement in second-quarter profitability (adjusted EBITDA margin up from 10.5% in Q1 to 15.6% in Q2)
- Adjusted free cash flow up to 17.8 million euros
- More precise outlook for 2020: revenue of 770 to 790 million euros (without TRIOPTICS) expected, with adjusted EBITDA margin of between 14.5 and 15.0 percent
From January through early March business performance was in line with expectations, but clear impacts of the corona pandemic and increasing uncertainty within the automotive industry became apparent from late March on. These impacts impeded Jenoptik’s business performance in this sector over the second quarter. Overall, demand at group level declined significantly in the six-month period, in part due to project postponements and cancellations. The order intake decreased to 333.9 million euros (prior year: adjusted 381.6 million euros). Due to the acquisition of INTEROB, the order backlog grew slightly to 478.0 million euros (31/12/2019: adjusted 464.7 million euros).
The corona pandemic had varying effects on the development of revenue of Jenoptik’s divisions. The pandemic had little to no impact on business with public-sector customers and the semiconductor equipment industry, which actually posted growth. By contrast, the Light & Production division was strongly affected by developments in the automotive industry. Over the first six months of 2020, the Jenoptik Group generated revenue of 329.0 million euros (prior year: adjusted 373.4 million euros). The Spanish company INTEROB, acquired in February 2020, contributed 5.3 million euros to group revenue over the reporting period.
Measures taken to limit the impact of the COVID-19 pandemic, such as short-time working, had a positive effect on profitability in the second quarter. Adjusted EBITDA rose appreciably from 17.3 million euros in the first quarter to 24.9 million euros in the second quarter. For the full reporting period, adjusted EBITDA fell to 42.2 million euros as a result of the drop in revenue, and was thus 22.3 percent down on the comparable prior-year figure (prior year: 54.3 million euros). The adjusted EBITDA margin accordingly fell to 12.8 percent (prior year: 14.5 percent). As we already informed, the figures include effects arising from structural and portfolio measures amounting to a total of minus 4.4 million euros (prior year: minus 0.3 million euros). The measures include effects of minus 0.8 million euros for restructuring and site optimization, minus 2.4 million euros for cost-cutting programs, and minus 1.1 million euros for M+A activities.
“After a solid start to the year, the second quarter has seen a weaker order situation, as we expected. However, we are confident of achieving improved business performance in the second half-year,” says Stefan Traeger, President & CEO of JENOPTIK AG. “Key to this has been our comprehensive and rapid response, with a bunch of measures, to the structural challenges we face, particularly in the automotive industry, and, of course, to the effects of the corona pandemic.”
Robust cash and liquidity situation creates good basis for future business performance
In the first quarter, the Executive Board had decided to take precautionary action allowing it to react quickly to the situation created by the corona pandemic. In addition to securing the company’s liquidity and profitability, measures were implemented to secure the operating businesses, including the supply chain, and optimize the working capital. As a result, the operating cash flow improved to 26.7 million euros as of June 30, 2020 (prior year: minus 7.6 million euros), chiefly due to active working capital management. As a result of the higher operating cash flow, the free cash flow also saw a strong increase to 16.0 million euros (prior year: minus 14.6 million euros), despite an increase in capital expenditure over the reporting period. Adjusted for the cash impacts arising from structural and portfolio measures, the free cash flow actually grew to 17.8 million euros.
In view of the current situation, the Group is in a good position with short-term financial resources of 123.5 million euros (31/12/2019: 168.7 million euros). Despite a slight reduction in financial debt, the acquisition of INTEROB and the repayment of a debenture loan resulted in net debt of 26.6 million euros (31/12/2019: minus 9.1 million euros).
Development of the divisions: improved margin in Light & Optics, positive development in Light & Safety, and stable performance in VINCORION, losses as expected in Light & Production
In the first six months of 2020, the Light & Optics division generated 137.7 million euros of revenue, 10.0 percent down on the adjusted prior-year figure of 153.0 million euros. Despite the spread of the coronavirus, business with the semiconductor equipment industry proved to be very robust. By contrast, the division reported sharp declines in its Biophotonics and Industrial Solutions units. EBITDA adjusted for the effects arising from structural and portfolio measures fell at a lower rate than revenue, by 4.3 percent to 30.7 million euros (prior year: 32.0 million euros). The adjusted EBITDA margin consequently improved noticeably from 20.8 percent to 22.1 percent, thanks to active cost management. At the end of the first half-year of 2020, the division reported an order intake worth 139.6 million euros (prior year: adjusted 142.1 million euros). At the end of June 2020, the order backlog remained at a good level of 139.0 million euros (31/12/2019: adjusted 143.5 million euros).
Reflecting the global slump in the automotive industry, the Light & Production division was most strongly affected by the impacts of the corona crisis. In the first six months, the division posted a revenue decline of 33.2 percent, to 74.3 million euros (prior year: 111.3 million euros). While the Automation & Integration unit remained largely stable, in part due to the INTEROB acquisition, both Metrology and Laser Processing posted significant reductions. INTEROB contributed revenue of 5.3 million euros over the reporting period. Nevertheless, stable development in the automation business was not sufficient to offset underutilization in the other units. Sharp were primarily due to weak business in Asia, but also project postponements and the temporary closure of two Jenoptik plants declines in the division. To counter these developments, structural and portfolio adjustment projects were initiated at the beginning of the year, together with measures to reduce the impact of the COVID-19 pandemic. The division’s EBITDA, adjusted for the impacts arising from the structural and portfolio measures, came to minus 3.4 million euros in the reporting period (prior year: 11.9 million euros). Due to the cancellation of a major order and a number of postponed projects, the order intake in Light & Production fell to 65.0 million euros (prior year: 113.0 million euros). Including the INTEROB orders, worth 13.9 million euros, the division’s order backlog of 90.6 million euros at the end of the reporting period was, however, up on the figure at year-end 2019 (31/12/2019: 81.6 million euros).
Despite the spread of the coronavirus, stable capital spending patterns by public-sector customers helped the Light & Safety division to achieve very good business performance in the first half-year of 2020. Revenue rose by 15.1 percent to 55.7 million euros (prior year: 48.4 million euros). As a result of good business performance, the division also managed to significantly improve its operating results. Adjusted EBITDA increased to 10.9 million euros in the period covered by the report (prior year: 6.6 million euros). The adjusted EBITDA margin accordingly increased appreciably to 19.6 percent (prior year: 13.5 percent). The order intake is subject to typical fluctuations and, for project-related reasons, fell to 41.9 million euros in the first six months of 2020 (prior year: 50.6 million euros). The order backlog grew 22.6 percent to 54.1 million euros (31/12/2019: 69.9 million euros).
Over the first six months of the year, VINCORION generated revenue of 58.8 million euros, thereby almost reaching the prior-year figure (prior year: 59.1 million euros). This positive business performance was primarily due to strong demand in the Power Systems unit, mainly for power generators and components for energy systems. Due to revenue mix effects, the operating result was slightly down. Over the reporting period, EBITDA came to 4.1 million euros, down on the prior-year figure of 4.5 million euros. The EBITDA margin fell from 7.6 percent to a present 7.0 percent. At 84.3 million euros, the order intake in the period covered by the report was sharply up on the prior-year figure of 73.8 million euros. In light of good demand, VINCORION’s order backlog also grew in value, by 23.9 million euros to 193.6 million euros (31/12/2019: 169.7 million euros), and was thus strongly up on all the quarters in the prior year.
JENOPTIK AG specifies revenue and margin targets for 2020
Supported by the actions taken to limit the impacts of COVID-19 and in view of an expected stronger second half-year, the Executive Board forecasts revenue of 770 to 790 million euros for the full year 2020 (not including the impacts arising from the expected acquisition of TRIOPTICS GmbH). Adjusted for the effects arising from the initiated structural and portfolio measures, the EBITDA margin is expected to be between 14.5 and 15.0 percent. “To ensure a stronger second half-year, we expect to see signs of recovery in the economy and no further corona wave. The structural and portfolio measures that we have initiated will help Jenoptik to accelerate growth and improve profitability starting next year at the latest. To ensure full transparency, we are reporting the associated effects separately in this fiscal year,” says Traeger.
The half-year report is available in the “Investors/Reports and Presentations” section of the Jenoptik website (www.jenoptik.com). The “Jenoptik app” can be used to view the report on mobile devices running iOS or Android. Images for download can be found in the Jenoptik image database at media.jenoptik.com.
*Figures without note are not adjusted
Jenoptik is a globally operating technology group, which is active in the three photonics-based divisions Light & Optics, Light & Production and Light & Safety as well as with VINCORION for mechatronics solutions. 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 is listed on the Frankfurt Stock Exchange, has more than 4,100 employees and generated revenue of approx. 855 million euros in 2019.