SFC Energy AG publishes figures for the first half of 2020 - Sales development in the second quarter characterized by the challenging environment as a result of the COVID-19 pandemic with heterogeneous development
DGAP-News: SFC Energy AG
/ Key word(s): Half Year Results
SFC Energy AG - Corporate News
- Underlying EBITDA at €1,239k (H1 2019: €2,199k), underlying EBIT at minus €647k (H1 2019: €584k)
- Clean Energy & Mobility segment with sales growth of 70.2% to €9,428k (H1 2019: €5,539k)
- Order backlog increases by 9.4% to €12,451k (H1 2019: €11,376k)
- Due to the pandemic and ongoing limited visibility in submarkets, a specific outlook for 2020 as a whole still not possible - medium-term growth potential significantly improved
"In an eventful first half of 2020, there were two factors that had the greatest influence on business development. On the one hand, measures to contain the coronavirus pandemic made our sales and marketing activities more difficult in some areas. Customers delayed purchasing decisions, which led to orders being postponed. On the other hand, fuel cell technology as a reliable and environmentally friendly source of energy increasingly came into the focus of various users. Particularly pleasing in this context is unprecedented strong momentum in the demand for direct methanol and hydrogen fuel cells for civil applications.
As previously communicated, the impact of the COVID-19 pandemic was particularly noticeable in the second quarter. Trade shows and personal customer appointments could not be attended at all, or only if the highest hygiene standards were in practice, and orders were postponed in some segments.
Nevertheless, SFC never went into short-time work in Germany. On the contrary, our "Fit for the Future" allowed us to formulate and roll out a comprehensive program of measures. We are convinced that this program lays the foundation for us to be able to act even more powerfully and efficiently following the coronavirus pandemic. As an example, sales and marketing activities will be tailored more precisely online. At the same time, we have stepped up our commitment to research and development to accelerate the completion of the next generation of EFOY fuel cells and the development of the new generation of hydrogen fuel cells and to evaluate complementary technologies such as electrolysis. With our decision to stockpile essential components, we intend to prevent potential supply bottlenecks in the wake of the COVID-19 pandemic.
Hydrogen and related technologies, such as the fuel cell, are increasingly becoming the focus of social attention and thus of political action. The clear commitment of the German Federal Government to a sustainable energy policy clearly highlights this development. With the National Hydrogen Strategy, the German Federal Government launched a comprehensive funding program for market ramp-up and research and development activities in June. Incentives that have been created, for example, to switch from conventional methods of energy generation to more sustainable alternatives such as fuel cell technology, are already having an effect. This is reflected in further demands to use EFOY Jupiter hydrogen fuel cells for emergency power supply to the digital public authority radio network BOSNet. This order received in early June 2020 thus sends a strong signal in an environment marked by uncertainty.
The coronavirus pandemic has caused great uncertainty among all market participants and is significantly restricting visibility. A valid prognosis therefore cannot be reliably made. Nevertheless, SFC Energy considers itself well-positioned for the challenges ahead. Based on 20 years of experience in the market, products that are already extremely well established, and a well-filled project and product pipeline, management is convinced that it will be able to gain an above-average benefit from the acceleration of the energy turnaround," says Dr. Peter Podesser, CEO of SFC Energy AG.
In terms of operations, SFC Energy generated sales of €27,710k in the first half of 2020, down 10.8% from the same period last year (H1 2019: €31,076k). COVID-19 has impacted business development as much as expected, and the influences of this have been particularly communicated in the second quarter of 2020. At business area level, a heterogeneous development was evident in the half-year under review.
The order backlog as of June 30, 2020, increased by 9.4% from €11,376k in the previous year to €12,451k.
Performance by segment
Oil & Gas
In the Oil & Gas segment, the negative development of the oil price in connection with the OPEC+ dispute and the simultaneous weakness in demand in the wake of the pandemic led to a general reluctance to invest. In the first half of the year, sales in the Oil & Gas segment declined by 13.1% from €11,907k in the previous year to €10,346k. Sales of fuel cells increased despite the difficult environment. It should also be noted that sales of €840k were properly allocated to the Clean Energy & Mobility segment. Taking into account the influence of COVID-19, the development shown is in the upper range of management's expectations. The cost structure was optimized in order to counter the decline in sales in an appropriate manner. Ongoing difficult market conditions for the third and fourth quarter are expected.
The Industry segment recorded a decline of 27.4% to €6,532k (previous year: €8,998k) in the first half-year as a result of the postponement of requests and new orders from major customers due to the effects of the COVID-19 pandemic. We expect the environment to remain difficult in the current third quarter. Nevertheless, there were several encouraging new orders in the first half of the year under review. These include the follow-up series order via PBF for high-performance power supply solutions of security and communication systems with a volume of €3 million. This has given rise to optimism for a recovery in industrial power electronics at the end of the year.
Defense & Security
Unlike in the same period of the previous year, no significant major orders were recorded in the Defense & Security segment in the first six months of the current financial year. Sales in the first half of 2020 therefore fell to €1,404k compared with €4,633k in the prior-year period, which was mainly attributable to two major orders totaling €2.7 million. The containment measures for the coronavirus pandemic played a major role in this in many countries. For example, some of our customer countries, such as Israel and India, imposed highly restrictive lockdown measures, delaying decisions and slowing down sales activities. Initial easing measures and specific project work in the second and third quarter provide the basis for the expected year-end business.
Clean Energy & Mobility
The Clean Energy & Mobility segment achieved a very pleasing sales growth of 70.2% from €5,539k in the previous year to €9,428k in the first half of 2020. A regionally broad-based development with accelerated momentum again in the course of the second quarter was driven by growing demand for civil fuel cell products. These different applications are based on EFOY Pro and EFOY COMFORT fuel cells and the EFOY Jupiter hydrogen fuel cell. The very positive market development in Japan, Singapore and Scandinavia for EFOY Pro products is worth mentioning here, as well as the start of deliveries for Jupiter hydrogen fuel cells as part of the roll-out of the BOSNet program in Germany. Sales in the industrial applications sub-segment rose to €6,810k, up 95.0% on the previous year's figure of €3,492k. Continued dynamic demand both regionally and in all submarkets is the basis for stable growth in the second half of the year.
At 31.7%, the margin in the first half of 2020 was slightly below the margin of the same period of the previous year (H1 2019: 33.5%). Gross profit in the first half of 2020 amounted to €8,777k, and was thus 15.6% below the previous year's figure (H1 2019: €10,404k). The increase in gross profit in the Clean Energy & Mobility segment was unable to fully compensate for the decline in gross profit in the other segments.
Gross profit by segment
EBITDA for the Group decreased to minus €2,113k in the half-year under review, compared with minus €371k in the same period of the previous year. Underlying EBITDA adjusted for non-recurring effects was €1,239k in the first half of the year, after €2,199k in the same period of the previous year.
The Group's EBIT fell to minus €4,000k in the first half of 2020 (H1 2019: minus €1,987k). Taking into account non-recurring effects, underlying EBIT in the period under review amounted to minus €647k (H1 2019: €584k). The main reason for the decline in underlying EBIT compared with the first half of 2019 is the lower consolidated sales in conjunction with the lower gross margin.
For the first half of 2020, the consolidated loss for the period was €4,337k, after a loss of €2,555k in the same period of the previous year. Accordingly, earnings per share in accordance with IFRS (basic and diluted) amounted to minus €0.33 (H1 2019: minus €0.25).
The equity ratio declined to 53.8% at the end of the first half of 2020, primarily as a result of the quarterly loss (December 31, 2019: 55.3%). As of June 30, 2020, available cash and cash equivalents came to €14,850k (December 31, 2019: €20,906k). In this context, special attention must be paid to increased R&D activities to complete the next generation of EFOY fuel cells, as well as the development of the new generation of hydrogen fuel cells and the stockpiling of essential components to prevent potential supply bottlenecks in the wake of the COVID-19 pandemic.
In the first half of 2020, a bond was exercised with warrants with a net cash inflow of €750k. The SFC Energy Group had 284 permanent employees as of June 30, 2020 (December 31, 2019: 282).
Despite the current very challenging and dynamic situation, SFC Energy AG's solid capital base enables it to remain stable through a turbulent phase, press ahead with essential product developments, tap into new market segments and achieve sustainable growth in the medium term.
The continuing high level of uncertainty regarding the impact of the pandemic on global economic development continues to mean that SFC Energy cannot make a reliable forecast for 2020.
Even before the publication of the 2019 annual report, the Management Board had withdrawn the guidance for the 2020 financial year published along with the preliminary figures for 2019 due to the uncertainty and lack of visibility resulting from the COVID-19 pandemic and the negative development of the oil price. Management Board expects sales revenues and profitability to be significantly lower than in the previous year given the background of the current high level of uncertainty, subject to a global recession. Midterm targets though remain unchanged and growth potential has significantly improved.
"However, innovative solutions are needed to continue to operate successfully in this challenging environment. In the period under review, our program of measures has thus ensured that our company is fit for the future. We are convinced that we will be able to benefit from the trend towards increased use of green technologies for energy generation, distribution and storage. With the National Hydrogen Strategy, the German Federal Government has reaffirmed its will to increase the use of environmentally friendly technologies and has clearly sharpened awareness for this," explains Dr. Peter Podesser.
The interim report of the first half-year 2020 of SFC Energy AG is available for download under https://www.sfc.com/en/investors/finance/.
SFC Energy AG will hold a conference call in English for interested investors and members of the media at 9:00 a.m. today, August 20, 2020. To register, please send an e-mail to [email protected].
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20.08.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.