DGAP-News: Gesco AG / Key word(s): Half Year Report Gesco AG: Strong growth in the second quarter - guidance raised 2021-08-24 / 07:15 The issuer is solely responsible for the content of this announcement.

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Strong growth in the second quarter - guidance raised

- Continued high demand

- Incoming orders and sales up significantly

- Marked earnings effects from OPEX projects

- Outlook for the full year raised

Wuppertal, 24 August 2021 - GESCO AG, an industrial group made up of market and technology leading SMEs listed in the Prime Standard, recorded positive performance over the first six months of financial year 2021 and has adjusted its outlook for the year as a whole.

The high level of revived demand seen in the first quarter of 2021 continued in the second quarter of 2021 for the companies of GESCO Group. Besides business with stainless steel products, strip steel and stainless steel, as well as business involving paper sticks in the confectionery and hygiene industries, contributed to the positive trend. Overall, all three segments report positive and considerably improved figures for the reporting period on all fronts, with the Healthcare and Infrastructure Technology segment even outperforming the good results seen in the previous year. The substantial increases in efficiency resulting from the OPEX projects and positive effects from material price developments also led to favourable progress with regard to EBIT. UMT Group, which was successfully acquired in June 2021, did not yet have a material impact on sales and earnings in the first half of 2021 due to the short time frame between acquisition and reporting.

In the second quarter of 2021, incoming orders were once again slightly higher than in the first quarter of 2021. As a result, incoming orders for GESCO Group stood at EUR 274.5 million in the first half of 2021, 35.7% higher than the previous year's figure (H1 2020 continued, abbreviated in the following as "H1 2020-c": EUR 202.3 million). At EUR 228.1 million, Group sales exceeded the level of the previous year's reporting period by 19.9% (H1 2020-c: EUR 190.3 million). The second quarter, in particular, contributed to this development with its sales growth of 30.7% following growth of 10.5% in Q1 2021. As at the reporting date, the Group's order backlog stood at EUR 199.5 million as compared to EUR 139.5 million in H1 2020-c.

In both the first and second quarters of the current financial year, the ratio of material expenditure ranged between 55% and 56%, signifying a decrease from 59.9% in the first half of the previous year to 55.7%. Similarly, the personnel expenditure ratio fell from 28.3% in H1 2020-c to 24.1% in the first half of 2021 due to better capacity utilisation and adjusted capacity, as well as increases in efficiency from OPEX activities. Earnings before interest, taxes, depreciation and amortisation (EBITDA) reached a total of EUR 23.4 million in the first half of 2021, significantly exceeding the result from same period in the previous year (H1 2020-c: EUR 10.3 million). Depreciation and amortisation declined by 17.5% in the cumulative reporting period, resulting in EBIT that rose significantly from the weak comparable period of the previous year to stand at EUR 15.2 million (H1 2020-c: EUR 0.4 million). The same applies to EBIT in the second quarter of 2021 at EUR 7.8 million (versus EUR -1.7 million in Q2 2020-c). As such, the EBIT margin improved significantly to 6.7% in the first half of 2021 (versus 0.2% in H1 2020-c). Group net income after minority interest stood at EUR 8.2 million in the first half of 2021 (versus EUR -2.5 million in H1 2020-c). Earnings per share for continuing business operations amounted to EUR 0.76 in the cumulative reporting period (H1 2020-c: EUR -0.23).

The equity ratio stood at 55.6% as at the reporting date (versus 58.3% as at 31 December 2020), thereby remaining at a sufficient level. At EUR 47.1 million, liquid assets reflected a similarly strong cash position as compared to 31 December 2020. Cash flow from ongoing business activities improved from EUR 17.6 million in the first half of 2020 to EUR 28.6 million in the first half of 2021.

The Production Process Technology segment was able to nearly double incoming orders in the first half of 2021, resulting in an expected time lag in terms of sales and earnings contribution for the second half of 2021. The EBIT margin came to 4.0% in the cumulative reporting period following a negative margin in the previous year. The positive contribution was mainly generated by the stainless steel technology business.

The companies in the Resource Technology segment recorded a significant recovery in demand, sales and EBIT in the first half of 2021. The EBIT margin increased from 3.6% (H1 2020-c) to 9.7% in the first half of 2021. The significant improvements in sales and earnings were driven by all companies in the segment.

The Healthcare and Infrastructure Technology segment was able to increase incoming orders by 34.2% in the first half of 2021. Due to the disproportionate rise in earnings compared to sales growth, EBIT improved to 11.4% in the cumulative reporting period (H1 2020-c: 10.7%)

The original guidance issued on 27 April 2021 had forecast Group sales of between EUR 445 million and EUR 465 million for financial year 2021, along with Group net income after minority interest of EUR 16.5 million to EUR 18.5 million (both target ranges before M&A activities and without changes to the scope of consolidation). During the Annual General Meeting on 30 June 2021, the Executive Board refined the outlook, specifying the upper end of the range in each case. In light of the positive performance of the companies of the GESCO Group in the first half of 2021 and the expectations for the rest of the year, the Executive Board of GESCO AG raised the target ranges for sales and earnings for financial year 2021 on 17 August 2021. GESCO now expects Group sales of between EUR 465 million and EUR 485 million, along with Group net income after minority interest of EUR 20 million to EUR 22 million for financial year 2021 (both target ranges before M &A activities and without changes to the scope of consolidation, as previously announced).

"The financial situation has become more promising, but it remains complex. That is why it is all the more important not to rest on our laurels. Our subsidiaries are therefore keeping a close eye on the supply of materials to prevent delivery problems and price pressures as far as possible. We at GESCO are supporting our investments and continue working with them to successfully implement the NEXT LEVEL strategy with the help of the excellence programmes already in place. At the same time, we always keep our sights set firmly on our target portfolio architecture. We have made substantial progress towards this goal by expanding the medical technology portfolio through the current acquisition of the United MedTec Group. That is the best approach for us to ensure profitable growth," Ralph Rumberg, CEO of GESCO AG, underscores.

The complete interim report for the first half of 2021 is available at https://www.gesco.de/en/investor-relations/ financial-reports/. 


 
 
GESCO Group                                        01/01/2021 - 30/06/2021        01/01/2020 - 30/06/2020        Change 
key figures (IFRS)                                 (continuing operations)        (continuing operations)        (in %) 
 
Incoming orders                      EUR '000                        274,508                        202,272          35.7 
Sales                                EUR '000                        228,079                        190,265          19.9 
EBITDA                               EUR '000                         23,411                         10,334         > 100 
EBIT                                 EUR '000                         15,235                            421         > 100 
EBIT margin                               %                            6.7                            0.2        646 bp 
EBT                                  EUR '000                         14,571                           -451         > 100 
Group result^1)                      EUR '000                          8,236                         -2,472         > 100 
Earnings per share                        EUR                           0.76                          -0.23         > 100 
Closing price^2)                          EUR                          20.50                          15.25          34.4 
Employees^3)                            No.                          1,744                          1,741           0.2

^1) After minority interest. ^2) XETRA closing price as at the balance sheet date. ^3) Number as at the balance sheet date. About GESCO GESCO AG is an industrial group made up of market and technology leading companies in the capital goods industry with a focus on production process technology, resource technology, as well as healthcare and infrastructure technology. As a stock company listed in the Prime Standard, GESCO AG offers private and institutional investors access to a portfolio of hidden champions among Germany's industrial SMEs. Contact Julia Pschribülla Head of Investor Relations & Communications Tel +49 (0) 202 24820-18 Fax +49 (0) 202 24820-49 E-mail: investorrelations@gesco.de * presse@gesco.de * stimmrechte@gesco.de Internet: www.gesco.de

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2021-08-24 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de

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