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​Q2/20 - New guidance with hefty drop in earnings​

  • Sales of EUR 88.1m (previous year: EUR 106.7m) in Q2/20, significantly below the level of the previous year; sales at the end of the first half of the year were thus EUR 175.4m (previous year: EUR 199.1m)

  • Cost reduction of 8.5% yoy in the first half of 2020; further measures within the scope of the accelerated performance program are being implemented

  • EBIT of EUR 3.5m (previous year: EUR 6.6m) in Q2/20; EBIT in H1 20 of EUR 5.2m (previous year: EUR 9.3m) thus significantly below the previous year

  • Free cash flow increased by EUR 29.3m to EUR 13.6m (previous year: EUR -15.7m)

  • Guidance for FY20: revenue decline of 15%-20% and falling EBIT with an EBIT margin of 3%-5%

Q2/20 sales of WashTec Group were 17.4% below the previous year's level and came in at EUR 88.1m (previous year: EUR 106.7m). While the service and chemicals business recorded only slight declines, sales of fixed assets declined sharply, mainly attributable to the negative sales development caused by the spread of the COVID 19 pandemic. In particular the European market was hit hard in Q2/20 with a 23.9% decline in sales to EUR 68.2m (previous year: EUR 89.6m). However, the situation in Europe improved significantly during Q2/20 as the decline in incoming orders in June was only in the low single-digit range.


Group's EBIT in Q2/20 came in at EUR 3.5m (previous year: EUR 6.6m), i.e. dropped disproportionately by some 50% yoy given

a) the overall lower sales levels as well as

b) negative operating leverage.

The decline in EBIT is also mainly attributable to the European region. The EBIT margin in the second quarter was 4.0% (previous year: 6.2%), while EBIT for the first half of the year was EUR 5.2m (previous year: EUR 9.3m). 

Order backlog (machines and systems) at the end of the first half of the year was significantly lower than in the previous year. In Asia/Pacific, the order backlog was slightly higher than in the previous year. Due to significant reversal in cash used for w/c, free cash flow rose to EUR 13.6m (previous year: EUR - 15.7m). In the same period last year, the change in cash and cash equivalents amounted to EUR -53.4 m. This included a dividend payment in the previous year in the amount of EUR 32.8m. However, no dividend payment were made in 2020 for the fiscal 2019, significantly helping WashTec’s cash position at the end of H1 2020. New guidance: Management reissued its forecast for fiscal 2020, now expecting group’s sales to decline in a range of 15%-20% compared to the previous year. EBIT will also fall compared to the previous year. The company aims to achieve an EBIT margin of 3-5% on the forecast sales development. Conclusion. WashTec remains a high quality company with a decent balance sheet and high average returns. Given its superior market position and sticky subscription model, we consider current financial weakness as temporary.

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