23.08.2019

Profit boost for Alimak

Swedish international mastclimber and hoist manufacturer Alimak has reported a strong rise in first half profitability

Group revenues for the first six months until the end of June, were SK2.36 billion, (€220.2 million) an increase of 14 percent on the first half of 2018. Order intake though was two percent lower at SK2.25 billion (€210 million). Pre-tax profits jumped 50 percent to SK274.9 million (€25.6 million). Net debt was more than 20 percent higher than this time last year at SK1.32 billion (€123.1 million).

Looking at revenues by major division, Construction Equipment revenues were 32.4 percent higher at SK478.7 million (€44.7 million), while order intake dropped 11.5 percent to SK376 (€35.1 million) operating profit for the six months was SK80.4 million (€7.5 million) up 70 percent on last year. The improvements are due mostly to stronger sales in the USA and Australia, offsetting performances in Northern Europe and the UK.

The industrial Equipment division achieved revenues of just over SK1 billion (€99 million) up 11.7 percent, while order intake came in at roughly the same levels as last year, but this is 4.7 percent lower than in the same period last year. Operating profit however more than doubled to SK50.7 million(€4.7 million). The division has been held back this year but slower sales in the Wind market while Oil & Gas and BMUs continue to perform well.

After Sales revenues were 628.2 million (€58.6 million) an increase of 6.4 on the year while operating profits were roughly flat at SK167 million (€15.6 million)

Finally the Rental business saw revenues improve 13.5 percent to SK190.4 million (€17.8 million), with operating profits 23 percent higher at SK26.5 million (€2.5 million).

Moving on to the fourth Quarter, group revenues were 7.5 percent higher at SK1.19 billion (€111 million) with a pre-tax profit of SK144.6 million (€13.5 million) just over 18 percent up on the year.

The Construction Equipment division posted sales of SK270.9 million (€ 25.3 million) 46.7 percent higher than the same quarter last year, although order intake collapsed, dropping more than 27 percent to SK164.3 million (€15.3 million) with an operating profit of SK50.2 million (€4.7 million) almost 65 percent higher than this time last year.

The Industrial division saw revenues fall by almost six percent to SK492.7 million (€46 million) although order intake was more than two percent up on last year’s levels, at SK551.1 million (€51.4 million) Operating profits increased 23 percent to SK17.2 million (€1.6 million)

After Sales revenues were 4.6 percent higher at SK331 million (€30.9 million) with an operating profit of SK89.9 (€8.4 million) up 27 percent on the year. Finally revenues at the Rental division were more than 13 percent higher at SK98.9 million (€9.2 million), with an operating profit of 14.6 million (€1.4 million) almost 20 percent higher than in the same quarter last year.

Chief executive Tormod Gunleiksrud said: “The financial performance improved for the group as a whole in the second quarter, while there were mixed outcomes in the different business areas. The period included several highlights such as record order intake for After Sales, all time high revenues for three of four business areas and good operating cash flow.”

“Revenue increased by seven percent and by three percent organically supported by very strong revenue development in Construction Equipment and Rental but held back by a revenue decrease in the Wind business unit. Profitability continued, with sequential improvements for all business areas except Industrial Equipment where low volumes directly impacted the margin. However, the group’s order intake decreased by three percent and by seven percent organically as a result of challenging market conditions in two of our end markets.”

“On the Construction side, we are noticing an increased market uncertainty following geopolitical concerns such as Brexit and bilateral trade issues. This has led to more cautious investment processes by customers in several regions, especially in the UK and Northern Europe. This may lead to increased lumpiness of order intake going forward, even though the global pipeline remains solid. With flexible production capabilities in place, we focus on increasing our geographical footprint and broadening our product portfolio to address new opportunities. The Wind business unit continues to face aggressive price competition on standardised tower internals from new actors, primarily in China. The situation is closely monitored and any changes we see in the market will be reflected in corresponding adaptions to the cost base given the lower volumes. We remain optimistic to the service lift and ladder parts of our Wind business, which are performing well.”

“In After Sales, orders for BMU (Building Maintenance Unit) refurbishments are materialising to a greater extent than previously seen. This is the result of our continued efforts to educate the market on the importance of properly maintained equipment. It has taken longer than what I initially hoped for, but I am happy to see this now starting to move in the right direction.”

“To conclude, the business areas are facing different challenges and opportunities, which are reflected in their performance in the second quarter. As a group, we are on track towards our mid-term targets, organic revenue growth year to date is at eight percent. Furthermore, with the strong backlog and it’s timing, we still maintain our belief that we will be on run-rate for the margin target by the end of the year.”

Vertikal Comment

This is a very positive performance from Alimak in terms of both revenues, and more importantly profits, with some stunning divisional turn arounds, on fairly modest revenues increases. However there are some warning signs for the future, given that order intake suffered significantly in some areas at the same time as net debt continues to grow.

A positive result but one hopes that the company has a solid strategy for what might see something of a slowdown next year in some of the markets in which it operates.