2G Energy : grows sales and earnings in 2018 as planned and expects further sales and margin growth in 2019

11.04.2019 / 08:30
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- Net sales of EUR 209.8 million up by 10.8 %

- EBIT margin improves significantly to 5.5 % (previous year 3.9 %), consolidated net profit at EUR 7.6 million (previous year: EUR 4.9 million)

- Above-average new order intake in Q1 2019 ensures full capacity utilization in two-shift operation until FY 2020

- 2019 guidance: net sales EUR 210 - 230 million, EBIT margin 5.5 % - 7.0 %

- Expansion of OEM business with Viessmann approved

Heek, April 11, 2019 - 2G Energy AG (ISIN DE000A0HL8N9), one of the internationally leading manufacturers of gas driven combined heat and power (CHP) systems, reports consolidated net sales up by 10.8 % to EUR 209.8 million in the past 2018 financial year, thereby clearly exceeding the previous record achieved in the prior year (EUR 189.4 million). Earnings before interest and tax (EBIT) rose substantially by 56.2 % to EUR 11.5 million (previous year: EUR 7.3 million), corresponding to a 5.5 % EBIT margin (previous year: 3.9 %).

Service revenue reports further significant growth
Compared to the previous year, 2G's business with services and the sale of spare parts again outpaced its rate of topline growth, recording an increase of more than 20 % to EUR 78.0 million (previous year: EUR 64.5 million). These additional service and spare parts sales were generated in nearly equal measure at home and abroad. In foreign markets, 2G generated service and spare parts sales of EUR 20.4 million (previous year: EUR 14.1 million), with foreign sales thereby now accounting for more than a quarter of total service sales.
2G increased its sales of CHP systems to reach EUR 131.7 million (previous year: EUR 124.9 million). In total, 2G generated around 40 % of its CHP revenue abroad in the past financial year. The UK and France were the strongest markets in terms of sales.

Lead-to-Lean project delivers sustainable profitability enhancement
Since 2017, 2G has been working to consistently establish the lean philosophy throughout the Group. To this end, an industrial process model has been gradually implemented since 2018, with direct positive effects in terms of efficiency, quality, throughput times and capacities. In 2018, total output and consequently also capacities were increased by 16 % to EUR 221.1 million (previous year: EUR 190.5 million). Total output for 2018 includes an increase in inventories of finished goods and work in progress of EUR 10.8 million (previous year: reduction of EUR 2.3 million). According to the financial accounting principles of the German Commercial Code (HGB), this significant rise in inventories does not include the margin to be expected on regular sales.
Thanks to efficiency measures introduced as part of the Lead-to-Lean process, 2G reduced its personnel cost ratio (in relation to total output) by a substantial 1.2 percentage points to 16.0 %. The ratio of other operating expenses also reduced by 0.5 percentage points. Both cost types are thereby making a significant contribution to the EBIT margin enhancement. Only the cost of materials ratio rose slightly, by 0.7 percentage points, in relation to total output. If the expected margin on changes in inventories is also included in the calculation of total output, the cost of materials ratio lies at the previous year's level.
As planned, 2G will publish its audited consolidated financial statements and 2018 annual report on May 10, 2019.

Further rise in profitability 2019 - new order intake in Q1 2019 in line with expectations
New order intake in the first quarter of 2019 amounted to a total of EUR 39.2 million. As expected, this fell short of the previous year's record figure (EUR 54.7 million) but was clearly above the Q1 2017 level (EUR 28.7 million) and well above the long-term average. The export ratio reached almost 50 %, especially thanks to strong new order intake of the US subsidiary (EUR 6.4 million). Given the continuing high order book position at the end of the first quarter (EUR 156.3 million, previous year EUR 130.5 million), the Management Board regards the sales forecast that it has already communicated for the current financial year of EUR 210 million to EUR 230 million as confirmed. The Management Board is also confident that with the help of further effects from the Lead-to-Lean process and rising margin contributions from the service business, the profitability of the 2G Group can be further and sustainably improved. On this basis, the Management Board expects an EBIT margin of between 5.5 % and 7 % for the current financial year.

Expansion of OEM business - supply contract signed with Viessmann
2G has concluded an OEM agreement with Viessmann Kraft-Wärme-Kopplung GmbH for the supply of gas engines. Starting in the second quarter of 2019, 2G will initially supply these key components in the 250 to 360 kW electrical output range to one of the leading international manufacturers of heating systems. In its CHP division, Viessmann is thereby also relying on efficiency- and emission-optimized combustion engine concepts developed by 2G.

2G company portrait
2G Energy AG is an internationally leading full-service provider of combined heat and power systems (CHP) with electric output between 20 kW and 2,000 kW, which are deployed for the decentralized generation and supply of electricity and heating. 2G is consistently expanding its technology leadership through continuous research and development work, both in gas engine technology for natural gas, biogas and synthetic gas applications (e.g. hydrogen), as well as in specific software development. In particular, this product range, which is based on thousands of systems realized, significantly differentiates 2G from its competitors.

2G benefits from global long-term trends that make efficient and effective energy solutions ever more important. These include rising energy demand accompanied at the same time by the need to conserve natural resources. Moreover, in the energy revolution's future electricity market design, the digitalization consistently implemented by 2G forms an indispensable system-relevant element in combination with solar, wind, biogas and natural gas producers, and creates a high barrier to market entry for competitors.

The cogeneration of mechanical energy and heating/cooling make CHP technology more efficient and more environmentally-compatible than conventional energy production methods. Compared with conventional electricity generation, CHP technology saves up to 40 percent of primary energy, and emits up to 60 percent less carbon dioxide and nitrogen oxide. 2G customers thereby benefit consistently from economically and ecologically highly beneficial innovations that rapidly pay for themselves and create extensive added values.

2G employs around 600 staff at its headquarters in Heek, Germany, in St. Augustine, USA, as well as at five other European locations. The company is active in a total of 49 countries and generated net sales of EUR 209.8 million in the 2018 financial year. 2G was founded in 1995 and has been listed on the stock market since 2007. The shares of 2G Energy (ISIN DE000A0HL8N9) are listed in the 'Scale' segment of the Frankfurt Stock Exchange. The share capital amounts to EUR 4,430,000, and is divided into 4,430,000 shares. As of December 31, 2018, company founders Christian Grotholt and Ludger Gausling held a 53.5% interest in the company, with the free float amounting to 46.5%.

2019 calendar dates
May 10 Publication of the consolidated financial statements for the FY ending December 31, 2018
May 13-14 Spring Conference, Frankfurt am Main
May 29 Q1 key figures and business trends
June 25 Ordinary AGM, Ahaus
September 26 Consolidated financial statements as of June 30, 2019
November 25 Q3 key figures and business trends
November 25-26 German Equity Capital Forum 2019, Frankfurt am Main

IR contact
2G Energy AG
Benzstrasse 3, 48619 Heek
Telephone: [phone]
Fax: [phone]
Email: [e-mail]
Internet: www.2-g.de

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