Gurit saw its net sales decline by -7.0% at constant exchange rates or -9.2% in reported CHF versus prior year. For Continued Operations, the decline was -5.7% at constant exchange rates. Gurit reached an Operating Profit of CHF 19.8 million. Excluding divestment effects, restructuring and impairment charges, the adjusted operating profit is at CHF 4.6 million with an adjusted operating profit margin of 2.0% of net sales. The lower profit is mainly due to reduced sales in Wind, particularly in Manufacturing Solutions, and increased raw material, energy and freight costs. In the first half year 2022, the operating profit is temporarily impacted by CHF 5.6m (2021 H1 CHF 4.7m) ramp-up cost in its new and major production sites in Mexico and India. Earnings per share are CHF 3.61 in H1 2022 (H1 2021: CHF 2.56). Gurit achieved a net cash flow from operating activities of CHF -13.1 million compared to CHF 19.3 million in the first half of the previous year. The reduction is due to a lower operating profit in 2022 and higher working capital levels caused by the timing of received trade payments. Capital expenditures amounted to CHF 6.7 million in H1 2022 compared to CHF 13.8 million in H1 2021.
Net sales in the first half year continued to be impacted by a challenging market for wind turbine blades. Our largest Western wind customers produced less blades year-over-year. In China we observed a market growth, however at very aggressive price levels. While the wind market faces challenges, the marine and other industrial markets saw good growth towards well above pre-pandemic levels. As reported in April, Gurit acquired a majority stake in the wind industry supplier Fiberline Composites to strengthen its product offering for the wind energy market and divested its Aerospace business.
Split of net sales into wind energy and lightweighting
Lightweighting includes part of the segment Composite Materials.
Key Figures Consolidated Balance Sheet (in CHF million)
thereof current assets
thereof current liabilities
Key Figures Consolidated Income Statement H1 2022 (in CHF million)
Adjusted Operating profit margin
Net Sales Development (Continued Business) (in CHF million)
GURIT REPORTS NET SALES OF CHF 234.8 MILLION IN THE FIRST HALF OF 2022
Rudolf Hadorn, Chairman of the Board of Directors (left)
Mitja Schulz, CEO
In the first-half year of 2022 Gurit has been impacted by major challenges. In China we continued to see effects of Covid-19 with significant production and supply chain interruptions. Also, the outbreak of a war in the Ukraine did and continues to impact our input material and energy cost.
Our largest Western wind customers produced less blades year-over-year. In China we observed a market growth, however at very aggressive price levels. Additionally, the entire Wind Energy value chain faced difficulties in passing on the raised production cost in full to customers and consequentially the margins got hurt.
The medium-term perspectives for renewable wind energy remain positive. Various governments have taken steps to further increase wind energy production, both onshore and offshore, with the desire to meet climate targets and an increasing sense of urgency to reduce the dependency on fossil fuels. This will strongly support the demand for wind turbine blades, with a time lag equivalent to the time required for project development and permitting. Furthermore, technological advances towards cost-effective larger off-shore turbines will drive further growth in the medium and long-term.
While the wind market faces challenges, the marine and other industrial markets saw good growth towards well above pre-pandemic levels.
Total Group net sales of CHF 234.8 million were achieved for H1 of 2022, compared to net sales of CHF 258.6 million for the same period in 2021. For the continued business this is a decline of -5.7% at constant exchange rates and -7.8% in reported CHF.
GURIT INTERIM REPORT 2022 BUSINESS AND FINANCIAL REVIEW
With the acquisition of a majority stake in the pultrusion technology specialist Fiberline Composites A/S - as announced on April 28, 2022 - Gurit took a major step in executing its strategy of enhancing its position in the wind turbine value chain. Fiberline widens Gurit's product offering into the Wind Energy market, with pultruded carbon and glass products that help to make blades stiffer and lighter. Pultrusion is therefore expected to replace traditional glass infused spars in longer wind blades, which are primarily used for offshore wind turbines - a market segment offering significant growth perspectives. The joint product portfolio and combined technology and innovation capabilities of both companies allow us to further strengthen our position as a one-stop-shop and solution provider for our cus- tomers. The Fiberline Composites operations form a new Gurit business unit called Structural Profiles. Synergies of co-locating the new Structural Profiles business with existing regional Gurit hubs have already been exploited in India at our new Chennai site and are also planned at our Mexican site.
The divestment of the Aerospace business as announced on April 14, 2022 was another important step taken during the first half-year. This is in line with Gurit's strategy to focus its activities on the Wind turbine industry as well as on the Marine and Industrial markets. We have found a new owner that offers our Aerospace business the opportunity of further growth, strategic development and thus a good future perspective also for the employees.
Gurit has successfully strengthened its global footprint with the opening of a large production site in Chennai, South India. The new campus has been inaugurated in June. Extrusion and kitting production are running, and the first PET core kits have been delivered to customers. With tooling and pultrusion now also becoming operational, Chennai is the first Gurit site combining PET extrusion, kitting, tooling and pultrusion at the same location. Gurit invested significant capital expenditures into the campus and also incurred start-up expense which affected the profitability in the first half-year 2022 markedly.
Furthermore, operational measures were taken to finalize the ramping up of the Mexican site's co-located extrusion and kitting operations. Also, in this site Gurit continued to incur start-up expense in significance.
The extended transition phase and supply chain challenges of the global wind market also called for an adjustment to the situation. Gurit has responded with a Fit-for-Future program where the operations of all business units are trimmed for observed shifts in material and technology use, the expected short-term and long-term market demands as well Gurit's unchanged ambitions to position itself as a leading innovative solution provider. Our sites in Falces, Spain and Izmir, Turkey will be strengthened and will accommodate the volumes from Ringkøbing, Denmark, which is being converted into an innovation hub for the wind industry. Ringkøbing now hosts a wind innovation center and will remain a kitting engineering center of excellence. Some operational adjustments are also being made to the Manufacturing Solutions operations. And to better serve the important Chinese market, the organisation in China has been adapted and enabled to respond even faster to market demands. We continue to observe a technology trend where wind turbine blade designers replace balsa with PET as the main core material. In anticipation of market demand, Gurit has further adjusted and right sized its balsa operations in Ecuador.
INITIATIVES SUPPORTING EXECUTION OF STRATEGY
During the first half year, Gurit teams have given further momentum to the execution of the "One Winning Gurit 2025 Strategy" with continued efforts in the fields of sustainability, human resources, and innovation. In Sustainability we have received a bronze medal rating from EcoVadis and further driven forward the work of our dedicated work- streams, for example focusing on resource utilisation, responsible supply chain, safety, the participation in industry -wide sustainability initiatives, as well as local community involvement. Furthermore, we have successfully launched an employee engagement initiative aiming at attracting and retaining employees. And we have started an innovation culture initiative, aiming at embedding a spirit of innovation throughout the company and systematically harvesting ideas and talent available internally.
ON TRACK FOR INNOVATION
As one of the building blocks of Gurit's Strategy, driving innovation forward has been a key priority in the first half-year of 2022. Noteworthy is the OptiCore kit design platform, further reducing the resin uptake while improving properties of the final core kits for wind turbine blades. This innovative project has received funding and will further contribute to reducing wind blade production cost.
CORPORATE GOVERNANCE STRENGTHENED
With the introduction of a single share structure Gurit has applied the One-Share-One-Vote principle with equal voting rights for all shareholders and further strengthened its corporate governance and ESG performance. Simultaneously, a 1:10 share split of bearer shares and 1:2 share split of unlisted registered shares has been applied. Since May 2, 2022, 4'680'000 registered shares with a nominal value of CHF 5.00 each are trading on the SIX Swiss Exchange (Swiss security No. 801223, ISIN CH0008012236, symbol GURN). Furthermore, the Annual General Meeting has approved the amended articles of association and consequently abolished the opting-up clause and introduced authorised capital.
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