PALFINGER AGAIN ACHIEVED SIGNIFICANT GROWTH IN THE FIRST HALF OF 2017

• Record revenue of EUR 753.8 million, record EBITDAn of EUR 105.5 million
• EBITDAn margin: 14.0 per cent, EBITn margin: 10.2 per cent
• Full order books and the completion of restructuring give reason to expect an increase in revenue and earnings for 2017

1) Figures were normalized (n) by restructuring costs.
2) On average; consolidated Group companies excluding equity shareholdings, as well as excluding temporary workers.

Bergheim, 27 July 2017

In the first half of 2017, the PALFINGER Group continued to post strong growth. The overall positive trend remained unbroken, although the global environment was heterogeneous. The good performance in Europe, Russia and China, as well as the acquisitions made by the Group since 2016, contributed significantly to the expansion of business. In the marine business, PALFINGER managed to curb organic decline in connection with the oil and gas crisis in the reporting period. The ongoing restructuring in North America and in the marine business had a detrimental effect on earnings and is expected to continue for a few more months. Nevertheless, PALFINGER’s goal for 2017, which is to achieve two-digit operating profitability (normalized by restructuring costs), was already met in the first six months with an EBITn margin of 10.2 per cent.

The PALFINGER Group’s revenue rose by 13.2 per cent from EUR 665.6 million in the first half of 2016 to EUR 753.8 million in the reporting period, setting a new record for a first-half result. In the LAND segment, revenue rose by 6.3 per cent, while in the SEA segment PALFINGER recorded growth of 65.2 per cent, reflecting the acquisition of the Harding Group. As a consequence, the contribution of this segment to the consolidated revenue was 17.1 per cent, as compared to 11.7 per cent in the previous year.

“We are continuing to grow,” says Herbert Ortner, CEO of PALFINGER AG. “Our flexibility enables us to utilize market opportunities that present themselves to varying degrees in the different regions across the globe. In addition, we have already met our profitability target for 2017, which is to achieve two-digit EBITn margin. We are optimistic that due to the continuously high number of incoming orders we will again achieve record revenue for the 2017 financial year. Our ongoing restructuring efforts are expected to have a positive impact on earnings on a long-term basis.”

LAND segment
The economic recovery in Europe is still being felt in the EMEA region. Particularly in construction and infrastructure, PALFINGER benefited from replacement investments, which had been suspended in recent years.

The restructuring in North America brought material success. The revision of the product portfolio is progressing and the first newly developed products are about to be presented to the market. Provided that the demand for loader cranes continues to be satisfactory, profitability in North America is expected to grow in the months to come. In South America, PALFINGER continued to operate in a highly difficult market environment, but it seems that the downturn has bottomed out.

In Asia, particularly in China, the partnership with SANY is the foundation for the sound development of business. The Sany Palfinger joint venture recorded satisfactory increases in revenue during the reporting period. In Russia/CIS, the economic environment remained a challenging one, and local value creation facilitated additional growth.

In the first half of 2017, the segment’s revenue rose by 6.3 per cent from EUR 587.4 million in the first half of 2016 to EUR 624.6 million. In Europe positive contributions also came from the acquisition of the Spanish distribution company and the establishment of PALFINGER Iberica in 2016, as well as the acquisition of the Danish distribution partner Palfinger Danmark AS.

The segment’s normalized EBITDA (EBITDAn) grew by 11.3 per cent from EUR 95.7 million to EUR 106.5 million. At 17.0 per cent, the segment’s EBITDAn margin in the first half of 2017 was higher than in the same period of the previous year, when it came to 16.3 per cent. The restructuring costs allocated to this segment amounted to EUR 7.5 million in the reporting period, as compared to EUR 4.1 million in the first half of 2016.

SEA segment
In the first half of 2017, the business environment of the SEA segment remained highly challenging as a result of the strained situation of the oil and gas industry. Nevertheless, following massive declines in 2016, PALFINGER succeeded in keeping its revenue, excluding the acquisition of Harding, nearly at the same level as in the first half of 2016.

In the reporting period, the level of incoming orders was on the increase in some areas, pointing to a stabilization of the market situation. PALFINGER intends to position itself favourably for future upturns through targeted restructuring. Some measures, such as the consolidation of business operations and sites in Korea and the Netherlands, have already been implemented, also with the aim of utilizing synergies between PALFINGER’s established marine business and the Harding Group. The integration of Harding is expected to take until the end of the year.

In the first half of 2017, the SEA segment’s revenue grew to EUR 129.2 million, corresponding to an increase of 65.2 per cent over the previous year’s figure of EUR 78.2 million. This growth in revenue reflects the acquisition of the Harding Group at the end of June 2016.

The segment’s normalized EBITDA (EBITDAn) increased from EUR 5.2 million in the first half of 2016 to EUR 5.9 million. The EBITDAn margin came to 4.6 per cent, after 6.7 per cent in the same period of the previous year – a clear indication of the currently low business volume in the established marine sector and the potential yet to be tapped by Harding. The restructuring costs incurred by this segment amounted to EUR 2.5 million, as compared to EUR 0.9 million in the first half of 2016.

Development of key financials
EBITDA normalized by restructuring costs (EBITDAn) increased from EUR 93.2 million to EUR 105.5 million year on year, corresponding to a rise of 13.2 per cent. At 14.0 per cent, the EBITDAn margin remained stable. EBITn grew from EUR 71.4 million to EUR 77.1 million, and the EBITn margin returned to the double-digit range, coming to 10.2 per cent.

In the reporting period, restructuring costs amounted to EUR 10.2 million, as compared to EUR 6.5 million in the first half of 2016, and were incurred primarily as a result of the initiatives taken in North America and in the marine business. The operating result (EBIT) increased by 2.9 per cent year on year, from EUR 64.9 million to EUR 66.8 million. The financial result of the PALFINGER Group declined to –EUR 7.3 million in the first half of 2017. This decrease of EUR 1.2 million was mainly caused by financing costs in connection with the acquisitions made. Income tax expense increased from EUR 14.6 million in the first half of 2016 to EUR 15.3 million in the first half of 2017. The consolidated net result generated in the first half of 2017 was therefore EUR 38.6 million, 2.8 per cent lower than the previous year’s figure of EUR 39.7 million. Earnings per share amounted to EUR 1.03, as compared to EUR 1.06 in the first half of 2016.

Average current capital in proportion to revenue decreased from 27.9 per cent in the first half of 2016 to 27.4 per cent in the reporting period. The continued measures to reduce inventories, accounts receivable and accounts payable are expected to guarantee a continuous improvement of this key figure. Equity rose from EUR 540.9 million as at 30 June 2016 to EUR 568.3 million. This increase was primarily caused by the increase in retained earnings. The equity ratio rose slightly from 35.5 per cent to 35.6 per cent.

Outlook
The high level of incoming orders recorded by the PALFINGER Group in the first half of 2017 gives reason to expect that overall business performance will continue to be satisfactory throughout the rest of the financial year.

Most of the restructuring measures in North America and in the marine business were implemented in previous months; any outstanding issues are expected to be completed by the end of the year. In particular the integration of the Harding Group, the largest acquisition in the history of PALFINGER, requires a sufficient amount of attention and time. The restructuring costs will impact negatively on 2017 earnings, as expected.

For the 2017 financial year as a whole, the management continues to expect revenue and earnings, normalized by integration and restructuring costs, to grow. From today’s point of view, new record levels seem realistic. PALFINGER’s target for 2017, which was met in the first half of the year, is to achieve a two-digit EBITn margin.