PALFINGER’s first quarter of 2019 characterized by new structures and continued strong operations

• Further revenue growth: 11.8 per cent to EUR 440.9 million
• Marked improvement of profitability and EBIT margin
• New GLOBAL PALFINGER ORGANIZATION supports efficiency enhancements
• First-time application of IFRS 16 impacts balance-sheet and earnings ratios
• Outlook for 2019 financial year: best year in the Company’s history expected

A more detailed table of key figures can be found at the end of this press release.
 

Bergheim, 30 April 2019

The PALFINGER Group continued to record satisfactory growth in the first quarter of 2019. Revenue rose from EUR 394.2 million by 11.8 per cent to EUR 440.9 million, EBIT showed a significant year-on-year increase of 27.3 per cent. In terms of both revenue and earnings, PALFINGER achieved record levels for quarterly figures. The new GLOBAL PALFINGER ORGANIZATION was implemented as at the beginning of 2019; this resulted in a change in segment reporting.

“Our orders on hand are still high and incoming orders remained strong in the first quarter. Even in the marine business, the recovery of the oil and gas industry has been reflected in our order book. With our new organizational structure, we are now able to be faster and more focused in our actions,” said Andreas Klauser, CEO of PALFINGER AG, commenting on PALFINGER’s performance.

The main contributors to the satisfactory rise in revenue in the first quarter of 2019 were the regions NAM (North America) and EMEA. EBIT reached EUR 42.7 million, as compared to EUR 33.6 million in the first quarter of 2018, and the EBIT margin came to 9.7 per cent, up from 8.5 per cent in the same period of the previous year. The consolidated net result increased as well, from EUR 17.9 million to EUR 21.1 million. Earnings per share amounted to EUR 0.56, as compared to EUR 0.48 in the first quarter of 2018.

Changes in accounting

In connection with the first-time application of the new standard IFRS 16 Leases, the opening balance of 2019 was corrected. These changes in accounting rules resulted, for example, in an increase in non-current assets, total assets and net debt. Despite these effects, the equity ratio increased by 1.6 percentage points year-on-year and came to 35.0 per cent as at 31 March 2019. The gearing ratio improved by 6.4 percentage points year-on-year, amounting to 100.7 per cent as at the end of the quarter.

In this context, EBITDA and cash flows from operating activities show a marked improvement. A comparison with the previous year’s figures is only possible to a limited extent. A detailed explanation can be found in the Annual Report 2018 and will be disclosed in the Interim Report for the First Half of 2019 of PALFINGER AG.

GLOBAL PALFINGER ORGANIZATION and segment reporting

As at the beginning of the year, PALFINGER implemented the new GLOBAL PALFINGER ORGANIZATION (GPO). Its central elements are global structures and cooperation across business units to unlock internal synergies and facilitate efficiency enhancements. The GPO will not only increase profitability but also enhance customer orientation.

Segment reporting was adjusted in line with the new organizational structure: Since the beginning of 2019, PALFINGER has divided its business in the previous segment LAND into the new segments SALES & SERVICE LAND and OPERATIONS LAND. The segment SEA will remain a separate segment until full completion of the restructuring programme, when it will be integrated into the new GPO structure. The segment HOLDING will remain a cost centre and continue to comprise the Group’s administrative expenses and strategic projects for the future. The corresponding figures from the previous year were adjusted with retrospective effect.

The segment SALES & SERVICE LAND contains the sales and service units related to the land-based product lines. The Crane, Timber/Recycling and Hooklift product lines were the main contributors to the increase in the segment’s revenue from EUR 312.4 million in the first quarter of 2018 to EUR 360.5 million in the reporting period. As a result, the segment’s EBITDA rose from EUR 42.0 million to EUR 50.0 million. The segment’s EBIT went up from EUR 39.5 million to EUR 44.5 million, and at 12.3 per cent the EBIT margin was lower than in the first quarter of 2018, when it came to 12.6 per cent.

The segment OPERATIONS LAND contains the production sites and/or a company’s respective production share as regards all of PALFINGER’s product lines for use on land. The external revenue recorded by this segment in the first quarter of 2019 amounted to EUR 33.4 million, as compared to EUR 25.4 million in the same quarter of the previous year. The segment’s EBITDA increased from EUR 15.0 million in the first quarter of 2018 to EUR 19.8 million. The segment’s EBIT reached EUR 11.7 million, as compared to EUR 5.8 million in the first quarter of 2018.

The segment SEA continues to encompass PALFINGER’s entire marine business. A market recovery was felt in the offshore industry, which also led to satisfactory order books. However, the impact on revenue and earnings will not be noticeable before 2020. As planned, the restructuring of the marine business was continued in the first quarter of 2019. From today’s perspective, the adjustment of fixed costs and structures will be completed by the end of the second quarter. As a result of the weak development, which was chiefly market-related, the segment’s revenue of EUR 47.1 million in the first quarter of 2019 was lower than the previous year’s level of EUR 56.4 million. The segment’s EBITDA amounted to EUR –3.0 million, as compared to EUR –1.0 million in the first quarter of 2018. The EBIT recorded by this segment decreased from EUR –6.0 million to EUR –6.8 million. Restructuring costs came to EUR 4.2 million in Q1. Hence the EBIT margin came to –14.3 per cent in the first quarter of 2019.

In the segment HOLDING, the ongoing forward-looking strategic initiatives in particular incurred higher expenses. The segment’s EBITDA amounted to EUR –5.4 million, as compared to EUR –4.9 million in the first quarter of 2018. The EBIT recorded by this segment was EUR –6.7 million, after EUR –5.7 million in the same quarter of the previous year.

Key events

In October 2018, it had been agreed that SANY would buy back 2.5 per cent of the shares in Sany Lifting Solutions most recently held by PALFINGER. The transaction was completed in the first quarter of 2019, leading to an inflow of EUR 28.6 million.

In February, PALFINGER founded the joint venture STRUCINSPECT with two technology partners. The company will revolutionize the inspection of structures, chiefly railway and road bridges. The use of UAVs, as well as state-of-the-art data collection and assessment using artificial intelligence, will make the inspection and operation of structures much safer and more efficient.

At the beginning of April, in an impressive display of its market leadership, PALFINGER presented numerous new developments at the international trade fair bauma on a floor space of almost 2,000 m2. In a separate innovation area, PALFINGER also demonstrated that the digital future has already been integrated into PALFINGER’s high-tech solutions.

Outlook

As a result of strong order books and the satisfactory number of incoming orders in the first quarter, the outlook for 2019 remains positive. The management expects that the second quarter will also be marked by record levels of revenue and earnings. For 2019 as a whole, on the basis of current market trends PALFINGER reckons with revenue growth to EUR 1.7 billion and a further increase in profitability to an EBIT margin of 9 per cent.

For the years to come, PALFINGER sees its growth potential primarily in new products and new business models. PALFINGER has defined economic targets to be met by 2022, including an organic increase in revenue to around EUR 2 billion, an average EBIT margin of 10 per cent and an average ROCE of 10 per cent over the economic cycle.

Key figures of the PALFINGER Group

1) Balance-sheet date figures of consolidated Group companies exclusive of equity shareholdings and exclusive of contract workers. 
2) Changes have resulted from internal control loops.