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Cavotec SA – 2Q16 Report

12:00 / 4 August 2016 Cavotec Press release

Cavotec SA – 2Q16 Report

This is a summary of the 2Q16 report published today. The complete 2Q16 report
with tables is available at Investors
should not rely on summaries only, but should review the complete reports with

  -- Revenues for the quarter decreased 8.3%, amounting to EUR 53.9 million
     (2Q15: 58.8).
  -- Quarterly operating result (EBIT) ended with a profit of EUR 7.5 million
     (2Q15: 2.3), including non-recurring net income of EUR 3.2 million,
     corresponding to a margin of 13.9%.
  -- Net result for the period ended at EUR 6.1 million (2Q15: 0.8).
  -- Order Intake decreased by 19.5% in the quarter to EUR 50.3 million (2Q15:
  -- Order Book increased 6.9% to EUR 105.2 million (FY15: 98.4).
  -- Book to bill ratio was at 1.07x compared to 1.30x in 1H15.

CEO’s comments

2Q16 developed in line with our expectations with revenues amounting to EUR
53.9 million, an 8.3% decrease compared to 2Q15. Day-to-day business remained
strong, while a number of larger projects were postponed towards year-end.
Organic growth was negative at 5.1%, and currency exchange differences had a
negative impact on quarterly revenues. Gross margin remained strong
quarter-on-quarter. We registered a 19.5% decrease year-over-year in order
intake for the period, amounting to EUR 50.3 million. Our order book has grown
6.9% to EUR 105.2 million from year-end. 

We have seen continued success for our Alternative Maritime Power supply
systems for ships throughout the first half of 2016, with orders totalling more
than EUR 8.9 million for the second quarter. In the Airports Market Unit (MU)
we received several orders for Ground Support Equipment systems including new
PCA/400Hz converters underlining increased market demand for technologies that
improve operational efficiency. I see these orders as further affirmation of
our strategy to focus on our core technologies and integrated systems in the
Ports & Maritime and Airports segments. 

Thanks to our strong global network, we are able to fill the gap in our order
intake with smaller projects. Innovation continues to play a key role in our
business, exemplified by the successful installation of a highly advanced and
innovative Cavotec Inet PCA system at a large military aircraft maintenance
base in the Middle East. The MoorMaster™ installation at the Port of Ngqura in
South Africa has also recently been finalised following a programme of
intensive performance tests. We passed these with a 100 per cent success rate
over a period of four months dealing with some of the worst weather conditions
the port has ever experienced. 

As part of our strategic realignment, we made significant progress in resizing
various areas of operations during the quarter, most notably in Norway,
Germany, and the US. 

Given current order intake levels, and the negative outlook for the Norwegian
oil and gas segment for the coming two to three years, we have consolidated
production of specialised explosion-proof radio remote controls (RRC) to
Germany, where all standard RRC units are already manufactured. The result is
an optimised production footprint with production of RRC units where market
demand is currently strongest. Cavotec Micro-control in Norway will remain as a
technology centre, where its team of R&D engineers will continue to focus on
the development of new, innovative products. 

Parallel to this, we concluded the administrative merger of our companies in
Germany, bringing them together under a single legal entity. This new
organization will benefit from the synergies in sharing services such as R&D,
purchasing, finance, and HR, while also reducing lead-times and costs. 

In the US, we have put a comprehensive plan in place focussed on resizing
Cavotec INET operations to better match current market requirements. As we
continue to identify our opportunities in the US and international markets, and
focus on a standardised range of products and systems, we expect that further
savings and efficiency gains will be achieved. 

Looking ahead

In line with preceding months, 2Q16 has developed as expected in terms of
overall performance. The prevailing caution exhibited by customers across our
MUs has translated into a lack of larger projects in the first six months of
the year, and I expect this to continue in the months ahead. 

As set out above, we are maintaining our focus on streamlining operations, and
this process will continue to ensure that we operate as efficiently as
possible. I am closely monitoring this complex process, together with Cavotec’s
Senior Management Team, one that impacts many facets of our organization. We
must strike the right balance between proactively reducing costs and
positioning the Group for future growth, and I am confident that we will be
able to secure further improvements over the coming period. 

We also continue to refocus activities towards our two major MUs – Ports &
Maritime and Airports – to meet the growing demand for our core technologies in
these markets. 

Notwithstanding the challenging period ahead, I believe Cavotec is on the right
path to become a stronger, more profitable company, and to further build our
reputation as one of the world’s leading companies in our markets. 


For further details, please contact:

Michael Scheepers



The information in this release is subject to the disclosure requirements of
Cavotec SA under the Swedish Securities Market Act and/or the Swedish Financial
Instruments Trading Act. This information was publicly communicated on 4 August
2016 at 12:00 CEST.

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