Masterflex Group increases revenue by 2.7% to EUR 59.1 million in the first nine months of 2018
- EBIT margin of 8.8% influenced by delayed provision of services
- Continued strong growth in order intake
- Earnings per share increase from EUR 0.32 to EUR 0.33
Gelsenkirchen, 9 November 2018 - The Masterflex Group increased its revenue by 2.7% from EUR 57.6 million to EUR 59.1 million in the first three quarters of 2018. The revenue trend was driven by an unchanged very strong order intake. At the same time, the growth momentum increased as expected, but not quite to the extent forecast. As a result, revenue increased by 3.4% in the third quarter after a growth rate of 2.4% in the first half of 2018. At the same time, the revenue target for 2018 remains to achieve revenue of around EUR 78 million or more with growth of 4 to 8% - still ambitious, but still realistic after nine months. This is underscored not least by the positive order intake and order backlog, but also by the significant increase in total operating performance, which rose by 3.7% after nine months and by 4.7% in the third quarter, in particular due to increases in inventories of finished goods.
The reason for the persistent discrepancy between the pleasingly high level of incoming orders and the only satisfactory revenue trend is delays in revenue recognition. Throughout 2018, the Masterflex Group is already experiencing an unexpectedly high level of sick-leave. Corresponding countermeasures have been implemented or are in preparation, in particular the headcount has been and is being increased and additional shifts are being worked. However, the revenue gap that has arisen can only be closed step by step and is having a disproportionate impact on earnings and margins.
Accordingly, EBITDA fell slightly in the first nine months by 5.9% from EUR 8.1 million to EUR 7.7 million. Operating EBIT (operating EBIT = EBIT before discontinued business units and non-operating income and expenses) declined by 10.3% from EUR 5.8 million to EUR 5.2 million. As a result, the EBIT margin fell from 10.1% after nine months in 2017 to now 8.8%. The development in September in particular has shown that it will probably no longer be possible to close the earnings gap for the year in the remaining three months. The earnings forecast was already adjusted accordingly in October. Instead of the target of maintaining the EBIT margin at 9.5%, at least stable compared with 2017, Masterflex now expects an EBIT margin in the range of 8 to 9% for the year as a whole. Consolidated net income for the period rose from EUR 3.0 million to EUR 3.1 million. Earnings per share (from continued business units) increased from EUR 0.32 to EUR 0.33.
Dr. Andreas Bastin, CEO of Masterflex SE: "Despite revenue growth, we cannot yet be satisfied with the development of revenue and, in particular, earnings. The effects that are slowing us down have clearly shown how important and right our strategy expansion in 2017, with the addition of the pillars of digitization and operational excellence, was. Here, we are again placing significantly more emphasis on our internal processes and the necessary internal expansion of competencies. In addition to all the more short-term measures aimed at rapidly transforming the currently atypically high order backlog into revenue and earnings, in the medium and long term we will thus strengthen the company's position for the future and further increase our focus on strengthening profitability. After all, it is very unsatisfactory if, as is currently the case, we are not yet able to develop our operating earning power in line with the very pleasing increase in order intake."
Masterflex Group specializes in the development and production of high-quality hose and connection systems. With 14 operating units in Europe, America and Asia, the Group maintains a nearly global presence. Its growth drivers are internationalization, innovation, operational excellence and digitization. Masterflex shares (German Securities ID: 549293) have been admitted for trading in Deutsche Börse's Prime Standard segment since 2000.
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