Results for the first half of fiscal year 2014: More orders – higher sales – higher profit

November 04, 2014

Burckhardt Compression, one of the world’s leading manufacturers of reciprocating compressors, recorded a 14% increase in order intake during the first half of fiscal year 2014 (April to September). Sales were 10% higher than in the first half of the preceding fiscal year. EBIT amounted to CHF 27.9 mn (+11%), net income CHF 21.5 mn (+12%). For the year as a whole Burckhardt Compression is expecting a higher order intake and materially higher sales compared to the previous year. Operating profit and net income for the entire fiscal year should both be significantly higher because of the substantial improvement in profits forecasted for the second half of the current fiscal year.

Sustained upturn in order intake

Orders received in the first half of 2014 amounted to CHF 270.0 mn, which is 14.0% more than the order intake of CHF 236.8 mn reported for the first half of 2013. Orders for applications in the gas transport and storage and in the petrochemical industriy accounted for much of the 13.4% growth in order intake at the Compressor Systems (CS) segment to CHF 192.7 mn. The Components, Services & Support (CSS) business area increased its order intake by 15.5% to CHF 77.3 mn. Most of that growth came from orders for spare parts.

Higher sales and profit

The 10.0% year-on-year increase in total sales to CHF 196.1 mn is primarily attributable to the Compressor Systems segment. The CSS business area also recorded significantly higher sales in the reporting period compared to the first half of 2013.

Gross profit amounted to CHF 63.9 mn, an increase of 7.9% compared to the first half of 2013, and the resulting gross profit margin was 32.6% (33.2% in the year-ago period). The slight contraction in the CS business area’s gross profit margin to 22.3% (24.4% in the year-ago period) can be traced to a shift in product mix. At the CSS business area, the gross profit margin edged higher to 51.0% (48.2% in the previous year’s period).

Selling, marketing and general administrative expenses rose by CHF 2.5 mn or 8.2% to CHF 32.9 mn in the first half of 2014 due to the expansion of sales and logistics operations in both business areas, with an emphasis on the CSS business area. Based by the higher level of gross operating profit, operating profit at the mid-year mark was 10.7% higher year-on-year at CHF 27.9 mn. Measured as a percent of sales, this resulted in a virtually unchanged operating profit margin of 14.2%. Net income improved to CHF 21.5 mn, which corresponds to a net income margin of 11.0% and net income per share of CHF 6.32 (CHF 5.66 in the previous year’s period).

 Solid balance sheet

Total assets at the end of September 2014 stood at CHF 639.3 mn, a year-on-year increase of 11.0%. Shareholders’ equity amounted to CHF 325.2 mn and the corresponding equity ratio was a solid 50.9%. An adjustment to the Swiss pension plan required under IAS 19 had a negative impact of CHF -15.9 mn on shareholders’ equity. The net financial position was slightly higher year-on-year (vs. September 30, 2013), having increased by CHF 1.3 mn to CHF 122.6 mn.

 Continued strengthening of market presence

Burckhardt Compression has been steadily and systematically expanding its global market presence during the past several years in order to offer even better local customer services. After establishing new subsidiaries with service centers in Singapore and South Africa last year, preparations to establish another operating site with a service center in Saudi Arabia were initiated during the period under review.

Outlook

The markets addressed by Burckhardt Compression continue to prosper despite various economic and geopolitical uncertainties. From today’s standpoint, management expects order intake for the entire fiscal year (closing March 31, 2015) to be higher at both the CS and CSS business areas, and sales should be significantly higher compared to the previous fiscal year. Operating profit and net income for the entire fiscal year should both be significantly higher because of the substantial improvement in profits forecasted for the second half of the current fiscal year. The operating profit margin for the fiscal year 2014 should be within the lower third of the targeted long-term range of 15% to 20%. The targeted payout ratio of 50% to 70% is reiterated.

 

 

Key figures for the first half of fiscal year 2014 (April – September 2014)

CHF mn

April-Sept.

2014

April-Sept.

2013

Change 2014/2013

Fiscal year 2013

 

Order intake 270.0 236.8 +14.0% 517.1
Sales 196.1 178.2 +10.0% 445.0
Gross profit 63.9 59.2 +7.9% 139.2

Operating profit (EBIT)

in % of sales

27.9

14.2%

25.2

14.1%

+10.7%

70.2

15.8%

Net income

in % of sales

21.5

11.0%

19.2

10.8%

+12.0%

53.9

12.1%

Total assets 639.3 576.2 +11.0% 645.9

Shareholders‘ equity

in % of total assets

325.2

50.9%

323.2

56.1%

+0.6%

358.5

55.5%

Earnings per share (in CHF) 6.32 5.66 +11.7% 15.87
Headcount as per Sept. 30 / March 31 1‘308 1‘160 +12.8% 1‘232

 

Disclaimer

This document may contain forward-looking statements including, but not limited to, projections of financial developments, market activity, or future performance of products. These forward-looking statements are subject to change based on known or unknown risks and various other factors that could cause actual results or performance to differ materially from the statements made herein.