KHD nine-month revenue down 4.6% YoY
KHD Humboldt Wedag reported a 4.6 per cent decline in revenue for the first nine months of 2014, with the group reporting an “unsatisfactory” order intake under its Capex segment during the period.
In the first nine months of 2014, KHD’s order intake was EUR80.2m, slightly below the previous year’s level at EUR82.8m. The Parts & Services* segment contributed EUR41.8m, more than half of the total value.
As its recently-won order in Russia’s Kaluga region (totalling more than EUR90m) could not be recorded in its order intake due to uncertainties surrounding the crisis in Ukraine, total orders in the Capex segment amounted to just EUR38.4m.
As a result of the low level of order intake and the execution of existing projects, the order backlog as at 30 September 2014 was EUR246m, well below the level at the end of last year.
Revenue of EUR173.2m declined slightly by 4.6 per cent compared with the previous year’s amount of EUR181.5m). Within the cost of sales, project costs of approximately EUR5m that were back charged to a subcontractor in the third quarter of 2014, had a positive impact. As a result, gross profit for the first nine months was EUR28.3m, 15.5 per cent higher YoY. Gross profit margins rose from 13.5 per cent to 16.3 per cent.
The Capex segment revenue of EUR131.3m fell short of the budged value, KHD stated. In the Parts & Services segment, revenue totalled EUR41.9m, well above the budgeted amount, it added.
Despite back-charging project costs of roughly EUR5m to a sub contractor, gross profit in the Capex segment of EUR16.7m was “unsatisfactory”, KHD said. “This is in particular, due to the execution of low-margin projects and margin deterioration in current projects,” it highlighted. In contrast, the Parts & Services segment generated a gross profit of EUR11.6m.
EBIT amounted to EUR3.2m in the reporting period (versus EUR4.1m in the previous year), which corresponded to an EBIT margin of 1.8 per cent (against 2.3 per cent during the year before).
Net profit for the period came to EUR3.3m, down 8.3 per cent YoY from EUR3.6m.
Market developments
The company said key sales markets were affected by a weaker global economy. While India continued to suffer from low capacity utilisation, KHD stressed that there were signs of stronger economic growth in the third quarter which had a positive impact on demand.
The economic situation in Russia continued to deteriorate in view of the Ukraine crisis and related sanctions, but cement consumption increased further due to ongoing infrastructure investments.
In Turkey, while growth has slowed the construction industry has shown stability. US cement demand benefitted from high growth rates in the construction industry. However, cement markets in Latin America continued to be affected by the lack of momentum in Brazil, Mexico and Argentina.
Outlook confirmed,
order intake slightly below expectations
On its outlook, KHD noted that its core markets are not expected to gain momentum in the final quarter. “Nevertheless, modernization program and upgrades to improve efficiency and to meet increased environmental requirements remain important growth drivers,” the company added.
KHD essentially confirmed its forecast figures published in August. Since the large Russia order could not yet be booked as an order intake, the group’s order intake is expected to fall slightly short of last year’s EUR172.4m. For the Capex segment, KHD expects an order intake of no more than EUR85m. However, its Parts & Services segment is expected to achieve an intake of at least EUR45m.
* Controlling, monitoring and reporting within KHD have been carried out in the two separate segments Capex (project business) and Parts & Services since 1 January 2014. Comparative 2013 figures are only provided for the aggregated values.
