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KAP AG

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KAP : PDF Quarterly Statement Q1/2021

05/21/2021 | 12:33pm EDT

Q1/2021

Quarterly Statement

1 January to 31 March 2021

KAP ENJOYS SUCCESSFUL START TO 2021 FINANCIAL YEAR

--Market environment noticeably better in first quarter of 2021

--Consolidated revenue increased by 2.8% to €90.1 million in the first three months --Normalised EBITDA up 12.5% to €11.7 million

--Accelerate programme sees tangible success: Normalised EBITDA margin increases by 1.1 percentage points to 13.0%

--Confirmation of the forecast for 2021: Revenue between €300 and 330 million and normalised EBITDA between €27 and 33 million (excluding it/services segment) at the upper end of the ranges announced

The KAP Group made a good start to the 2021 financial year with an increase in revenue of close to 3%. After a previous year hit hard by the COVID-19 pandemic, the market environment noticeably recovered in the first quarter and was shaped by a recovery in customer demand. By contrast, bottlenecks on procurement markets and in supply chains largely persisted. In comparison to the same quarter of the previous year, almost all the KAP Group's continuing segments improved their operating profitability. In particular, the flexible films segment continued its strong growth course from the previous year and, in the first three months, achieved its highest quarterly revenues to date since being created. The segments' improved profitability is due not only to the increase in the volume of unit sales but also to the measures already taken as part of Accelerate. In line with the Accelerate programme's clearly defined objective of strengthening KAP's investment portfolio with attractive additional acquisitions, the industrial holding group has already concluded two transactions in the flexible films segment in the first quarter. Both acquisitions have led to very satisfactory earnings contributions.

KAP Group

Selected key indicators on financial

performance 1

Q1 | 2021

Q1 | 2020

Change (%)

Revenue

€ millions

90.1

87.6

2.8

EBITDA

€ millions

11.6

8.8

31.8

Normalisations

€ millions

0.1

1.6

33.3

Normalised EBITDA

€ millions

11.7

10.4

12.5

Normalised EBITDA margin

%

13.0

11.9

1.1 pp

Investments

€ millions

8.2

5.4

51.9

Employees as of 31 March

2,297

2,797

-17.9

¹ Continuing operations

2

KAP AG | Q1/2021 QUARTERLY STATEMENT

INCREASE IN REVENUE AND SIGNIFICANT IMPROVEMENT IN PROFITABILITY

The KAP Group's operations achieved revenue of €90.1 million in the first quarter, which is equivalent to a rise of 2.8% (previous year: €87.6 million). Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 31.8% to €11.6 million (previous year: €8.8 million) and was normalised for consulting and restructuring costs, costs in connection with fire damage in the US and proceeds from the disposal of assets in a net amount of €0.1 million. Normalised EBITDA thus rose by 12.5% to €11.7 million (previous year: €10.4 million). The normalised EBITDA margin increased to 13.0% and was thus significantly above the minimum target return of 10% (previous year: 11.9%).

The it/services segment, whose sale is planned, generated revenue of €4.3 million in the first quarter (previous year: €6.3 million). The significant decrease in revenue is mainly due to the sale as of 1 January 2021 of the subsidiary MEHLER Engineering und Service GmbH (MES), whose revenue is still included in the previous year's results. Because the initiated sale should complete during the current­ financial year, the revenue and earnings contributions are not taken into account in the analysis of the consolidated results. In line with the applicable IFRS requirements, the segment is accounted for as an "asset held for sale".

DEVELOPMENT OF CASH FLOWS AND THE FINANCIAL POSITION

The total assets of the continuing operations increased by €24.3 million to €337.4 million (31/12/2020: €313.1 million), whereas the equity ratio fell to 47.4% (31/12/2020: 49.3%).

Cash flow from operating activities decreased by €10.8 million year-on-year to -€2.9 million in the first quarter (previous year: €7.9 million). The significant decrease results largely from the rise in trade receivables as a result of the sharp increase in operating performance. Investments amounted to €15.5 million (previous year: €5.4 million) and include the acquisition of AerO ­Coated Fabrics for €8.3 million.

The number of employees fell to 2,297 as of 31 March 2021 (previous year: 2,797) and is due to the decrease in staff in all segments apart from the flexible films segment.

CONFIRMATION OF THE 2021 FORECAST

The Management Board continues to expect revenue between €300 and 330 million and normal- ised EBITDA between €27 and 33 million (excluding the it/services segment) at the upper end of the ranges announced for the 2021 financial year. The forecast includes the already foreseeable risk that may still result from the COVID pandemic.

KAP AG | Q1/2021 QUARTERLY STATEMENT

3

SEGMENT REPORTING

CONTINUING OPERATIONS

engineered products

Q1 | 2021

Q1 | 2020

Change (%)

Revenue

€ millions

30.2

37.0

-18.4

Normalised EBITDA

€ millions

2.9

2.2

27.3

Normalised EBITDA margin

%

9.6

5.9

3.7 pp

Investments

€ millions

0.4

0.3

33.3

Employees

669

911

-26.6

In the engineered products segment, revenue fell by 18.4% to €30.2 million in the first quarter of 2021 (previous year: €37.0 million) primarily as a result of the permanent closure of two sites in the second half of the previous year. By contrast, normalised EBITDA improved to €2.9 million, which is equivalent to an increase of 31.8% (previous year: €2.2 million) and was normalised for restructuring costs of €0.1 million. The higher quality product mix compared to the previous year had a positive effect on the segment result. The normalised EBITDA margin also improved significantly, rising by 3.7 percentage points to 9.6% (previous year: 5.9%).

In the current financial year, KAP AG will implement additional measures for the long-term

improvement­of profitability in the engineered products segment as part of Accelerate. For ­example, quantification and further detailing of the sales strategy is planned for 2021.

Investments amounted to €0.4 million in the first quarter (previous year: €0.3 million). As of

31 March 2021, 669 people were employed in the segment (previous year: 911).

flexible films

Q1 | 2021

Q1 | 2020

Change (%)

Revenue

€ millions

31.6

21.6

46.3

EBITDA

€ millions

4.8

3.0

60.0

EBITDA margin

%

15.2

13.9

1.3 pp

Investments

€ millions

0.8

0.7

14.3

Employees

334

324

3.1

The flexible films segment continued its strong growth course of the previous year in the 2021 financial year and generated record revenue of €31.6 million, which is equivalent to growth of 46.3% (previous year: €21.6 million). Overall, the segment again benefited from its strong market position in the first quarter. EBITDA increased to €4.8 million (previous year: €3.0 million), whereas the EBITDA margin was correspondingly 15.2% (previous year: 13.9%). The segment ­currently faces rising commodity prices.

4

KAP AG | Q1/2021 QUARTERLY STATEMENT

In the first quarter of 2021,KAP AG completed two attractive transactions in flexible films. The acquisition of AerO Coated Fabrics, a highly specialised extrusion company and manufacturer of thermoplastic composite materials, and the acquisition of all the remaining shares in packaging specialist NOW Contec GmbH significantly strengthened the Group's competencies in this segment. Targeted M&A activities such as these are important measures of the Accelerate programme and have the aim of strengthening the industrial holding group's portfolio in a focused way.

In the reporting period, investment expenditure by the segment companies increased slightly to EUR 0.8 million (previous year: EUR 0.7 million). The number of employees increased slightly from 324 to 334 people employed in the segment as of 31 March 2021.

surface technologies

Q1 | 2021

Q1 | 2020

Change (%)

Revenue

€ millions

15.8

16.3

-3.1

Normalised EBITDA

€ millions

3.2

3.4

-5.9

Normalised EBITDA margin

%

20.3

20.9

-0.6 pp

Investments

€ millions

5.3

3.1

71.0

Employees

597

778

-23.3

In the surface technologies segment, revenue remained relatively stable with a slight decrease of 3.1% to €15.8 million (previous year: €16.3 million) despite adverse effects from COVID-19 in Hungary and a loss of revenue due to a fire in the US (Spartanburg). At €3.3 million, normalised EBITDA also remained almost at the previous year's level (previous year: €3.4 million) and includes normalisations in connection with the fire damage (-€0.1 million). The normalised EBITDA margin fell only slightly to 20.3% (previous year: 20.9%).

The segment also reported important successes in connection with Accelerate in the first quarter. For example, new plants at Metallveredelung Döbeln MvD and at Heiche Poland successfully went into production. In the remainder of the 2021 financial year, the top priority is establishing a new site in Alabama, USA, for the anchor customer Daimler.

The investment volume in the reporting period was €5.3 million (previous year: €3.1 million). Of this amount, €2.3 million was invested in our new site in Alabama (USA) and €1.6 million in our site in Döbeln (Germany). As at 31 March 2021, 597 people were employed in the segment (previousyear: 778).

KAP AG | Q1/2021 QUARTERLY STATEMENT

5

Disclaimer

KAP AG published this content on 21 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 May 2021 16:32:08 UTC.


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Sales 2020 323 M 383 M 383 M
Net income 2020 -2,96 M -3,52 M -3,52 M
Net Debt 2020 54,9 M 65,1 M 65,1 M
P/E ratio 2020 -36,4x
Yield 2020 5,40%
Capitalization 154 M 183 M 182 M
EV / Sales 2019 0,70x
EV / Sales 2020 0,50x
Nbr of Employees 2 297
Free-Float 16,6%
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Alexander Riedel Chief Financial Officer
Christian Schmitz Chairman-Supervisory Board
Fried M÷ller Deputy Chairman-Supervisory Board
Uwe Stahmer Member-Supervisory Board
Roy Bachmann Member-Supervisory Board
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