Hexatronic Group Year-End Report 2016-17 Hexatronic Group AB (publ) Year-End Report 2016/17 (The quarter October - December 2017, the full year January - December 2017 and the period September 2016 - December 2017)
The full year (January-December 2017) - Net sales amounted to MSEK 1,299.4 (1,032.3), which represents 26% (43%) growth during the full year.
- The operating result before interest, taxes, depreciation and amortisation (EBITDA) totalled MSEK 151.0 (109.8), which corresponds to an EBITDA margin of 11.6% (10.6%).
- The operating result amounted to MSEK 122.3 (88.8).
- Net earnings totalled MSEK 90.4 (54.1).
- Earnings per share after dilution totalled SEK 2.38 (1.50).
- Cash flow from operating activities during the full year amounted to MSEK 133.4 (33.1)
The quarter (October-December 2017) - Net sales amounted to MSEK 325.0 (305.1), which represents 7% (51%) growth during the quarter
- The operating result before interest, taxes, depreciation and amortisation (EBITDA) totalled MSEK 37.9 (32.8), which corresponds to an EBITDA margin of 11.7% (10.8%).
- The operating result amounted to MSEK 30.4 (26.4).
- Net earnings totalled MSEK 23.7 (13.6).
- Earnings per share after dilution totalled SEK 0.62 (0.36).
- Cash flow from operating activities during the quarter amounted to MSEK 56.0 (-54.7)
The period (September 2016-December 2017) - Net sales amounted to MSEK 1,717.8 (1,309.3), which represents 31% (45%) growth during the period.
- The operating result before interest, taxes, depreciation and amortisation (EBITDA) totalled MSEK 198.6 (129.0), which corresponds to an EBITDA margin of 11.6% (9.8%).
- The operating result amounted to MSEK 161.6 (102.2).
- Net earnings totalled MSEK 112.3 (64.0).
- Earnings per share after dilution totalled SEK 2.97 (1.80).
- Cash flow from operating activities during the period amounted to MSEK 102.7 (-15.5).
- The board will propose a dividend of SEK 0.40 (0.30) per share for the financial year 2016/17 to the annual general meeting.
Comments from the CEO
A year of successful internationalisation Our internationalisation continues, and 2017 is the first year that Sweden, despite good development on the Swedish market, pro forma (including the acquisition of Blue Diamond Industries) accounts for less than half of the Group's sales - 49% compared to 60% in 2016. Our efforts to establish ourselves more firmly on our strategic growth markets such as the USA, UK and Germany continue, and this is where much of my own energy and focus have been concentrated since last year. These markets have announced major investments in fibre to the home (FTTH) in 2018 and beyond, and this is where we want to grow.
The most important development during the year was that we established a strategic position on the American market. Early in the new year we acquired a duct manufacturer, and during the final quarter we made our first breakthrough with our system offering after technical approval from a major operator. The combination of local duct production and our fibre optic system developed and produced in Sweden is attractive, and means big savings for customers when building FTTH. The key financial developments in 2017 were a 26% increase in sales and an improvement in the EBITDA margin to 11.6%, compared to 10.6% the previous year. We exceeded our financial targets of 20% growth in sales and a 10% in EBITDA margin.
The end of the year was at an acceptable level, bearing in mind it is a weaker quarter seasonally. Sales growth amounted to 7% during the final quarter, adversely affected by a build-up of stock on the Swedish market. It is our assessment that a high rate of expansion followed by the seasonal slowing towards the end of the year led to a build-up in stock levels along all parts of the value chain, and this had an adverse impact at the end of the quarter, both in terms of invoicing and incoming orders. We achieved an EBITDA margin of 11.7%, compared to 10.8% the previous year. Adjusted for the one-off items we refer to in the year-end report, the EBITDA margin amounted to 8.1% in the final quarter.
Globally speaking, the market is in the early stages of FTTH, and the expansion of infrastructure for 5G has just begun. The expansion of FTTH in Sweden during 2018 has been discussed in media. It is our assessment that the Swedish market in 2018 will be in line with the market in 2017, i.e. still strong. Bearing in mind the winter in the Nordic countries with snow and frozen ground limitating installation activities, the first quarter is our weakest quarter. To compare, in the previous year the Swedish market was very weak up to and including April, and then improved dramatically starting in May.
We have a generally very positive market outlook, and in 2018 we will invest in higher production capacity and in our organisation so as to enable continued profitable growth. Our targets of sales growth of at least 20% and at least 10% in the EBITDA margin remain, and we believe we have every possibility of achieving them.
We move into the first quarter 2018 with an order book that is 8% larger than at the same point last year. The order book has been adversely affected by the slowing in the Swedish market of late 2017. To sum up, 2018 looks like it is going to be one of the most exciting years in the Group's history. Continued acquisitions to make us local in our strategic markets, and to take advantage of the major expansions that are under way, are high on the agenda.
Thank you for joining us on our continued journey towards further growth,
Henrik Larsson Lyon
President and CEO of Hexatronic Group AB (publ)
Events during the quarter (October - December 2017)
With the AGM's authorisation, Hexatronic's Board of Directors decided on a new issue of 30,892 shares. The sellers of the shares in Hexatronic UK Ltd. (formerly OpticReach Ltd.), which Hexatronic acquired in January 2016, each subscribed for half of the shares. Payment is by way of offsetting. The reason for the deviation from the shareholders' preferential right was that it was an offset issue. In spring 2015, Hexatronic was sued by Emtelle Ltd. regarding the alleged infringement of a Swedish patent relating to what is known as air blown fibre. Hexatronic contested the suit and issued a counter-suit claiming that the Emtelle patent should be declared invalid. Negotiations in the Swedish Patent and Market Court were held in early September 2017. The Court made a decision on the dispute in favour of Hexatronic. The Court declared the patent invalid and thus struck down Emtelle's patent infringement claim. Emtelle was obliged to compensate Hexatronic for court costs amounting to approximately MSEK 6.9. The decision has gained legal effect. The company decided to invest in further production capacity for ducts at its factory in Hudiksvall, northern Sweden. The investment is part of the company's strategy to increase production capacity and product breadth, in order to meet increased demand for its products. The investment amounts to approximately MSEK 21 and will take place in two stages with the first capacity increase taking place in spring 2018 and the second in autumn 2018. Events since the end of the period The company's share was moved to the Mid cap segment on Nasdaq Stockholm on January 2, 2018. The change of segment is a result of Nasdaq's annual review of the average market values within the Nordic market segments. The Mid Cap segment consists of companies with a market value between EUR 150 million and EUR 1 billion. Hexatronic acquired 100% of the American duct manufacturer Blue Diamond Industries LLC. The company is included in the group consolidation from 2 January 2018.
This information is information that Hexatronic Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:00 CET on 22 February 2018.
Please direct any questions to: · Henrik Larsson Lyon, President and CEO, + 46 (0)70-650 34 00 · Lennart Sparud, Chief Financial Officer, + 46 (0)70-558 66 04
Hexatronic Group AB (publ) is a corporate Group developing, marketing and delivering products, components and system solutions with the primary focus on the fibre optic market. Hexatronic offers a wide range of innovative system and product solutions for infrastructure primarily in passive fibre optics with global brands such as Ribbonet®, Micronet(TM), Drytech(TM), Lightmate®, FibreHub(TM), Matrix, DCIO(TM), Basic Broadband(TM) and Wistom®. Hexatronic is domiciled in Gothenburg, Sweden and has companies in Sweden, Norway, Finland, the UK, China, New Zealand and the USA. The Group is listed on the Nasdaq Stockholm exchange under the ticker HTRO. For further information, please go to www.hexatronicgroup.com. |
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