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Cavotec SA - 4Q17 Report and full-year 2017 summary

08:00 / 23 February 2018 Cavotec Press release

Cavotec SA
Financial Statement Release

Cavotec SA - 4Q17 Report and full-year 2017 summary

Transformation plan progressing

Fourth quarter 2017

  -- Revenues for the quarter amounted to EUR 56.6 million, a decrease of 6.0%
     compared to previous year (60.2).
  -- EBIT excluding non-recurring items amounted to EUR 6.9 million (8.5),
     corresponding to a margin of 12.2% (14.1%).
  -- Non-recurring items amounted to EUR 19.4 million including the impairment
     of goodwill in Airports & Industry division for a non-cash charge of
     EUR 18.3 million.
  -- Impact of US Tax Reform resulted in a non-cash write-down of deferred taxes
     of EUR 6.6 million.
  -- Net result for the period was a loss of EUR -20.4 million (4.9). Earnings
     per share basic and diluted decreased to EUR -0.260 (0.063).
  -- Operating cash flow ended positive at EUR 18.0 million (7.7).

Full-year 2017

  -- Revenues amounted to EUR 212.4 million, an increase of 0.4% compared to
     previous year (211.5).
  -- EBIT excluding non-recurring items amounted to EUR 9.6 million (12.1),
     corresponding to a margin of 4.5% (5.7%).
  -- Non-recurring items amounted to EUR 27.6 million including the impairment
     of goodwill in Airports & Industry division for a non-cash charge of
     EUR 18.3 million.
  -- Net result for the period was a loss of EUR -31.8 million (6.5). Earnings
     per share basic and diluted decreased to EUR -0.405.
  -- Operating cash flow was EUR 12.9 million (10.1).
  -- Net debt decreased to EUR 20.4 million (22.7).
  -- The Board of Directors will propose a dividend, in the form of capital
     reduction, of CHF 0.02 (0.05) per share to the OGM.

Comment from the CEO

Stable progress despite high transformation pace

In the fourth quarter, we initiated our internal transformation project, called
A New Day, to increase our efficiency and capability, after recent years of
stagnant growth and unsatisfactory profitability. We’re working from a position
of strength in terms of customer relations and technology. But a fragmented
structure, weak internal accountability and processes have prevented us from
reaching our full potential. Having led a transformation process of this nature
several times before in my career, my experience is that it takes time.
However, I am confident that it will move us into an era of successful growth
for the long term. 

Despite our high rate of transformation, we achieved revenues for the full year
that were in line with the previous year, although down somewhat in the fourth
quarter. Net sales increased by 0.4% for the full year, but decreased by 6% in
the fourth quarter. 

The Airports and Industry division achieved high revenue growth for both the
full year and the fourth quarter, and order intake was up on the previous year.
We’re experiencing increasing interest in our offerings, including heating and
cooling systems, converters and fuelling pit systems in the airport sector, as
well as reels and radio remote control systems in mining and other industries. 

Revenues in Ports & Maritime were lower in the last three quarters compared to
the previous year due to market softness–investment remains low with a limited
number of large orders or project opportunities. However, we do expect
increased activity with better market conditions in the medium term. This is
especially evident in the container terminal business, where we’re seeing
increased interest in our automatic mooring and charging solutions. 

Fourth-quarter EBIT excluding non-recurring items decreased by EUR 1.6 million
to EUR 6.9 million, and by EUR 2.5 million to EUR 9.6 million for the full
year. Overall, progress means that operating margin was 12.2% for the fourth
quarter and 4.5% for the full year. As an outcome of improved working capital
management, we saw good progress in our cash flow towards the end of the year
resulting in full-year cash flow from operating activities of EUR 12.9 million. 

The ongoing review of our Balance Sheet, that was initiated in the third
quarter, resulted in a goodwill impairment of EUR 18.3 million in the fourth
quarter for INET Airport Systems Inc., which was acquired in 2011. This
impairment loss reflects the current value of these operations but will have no
cash effect. It is important to clarify that the technologies coming from the
acquisition are strategic for Cavotec, and will remain an important component
of our turnkey solutions for customers in the airport sector. A non-cash charge
of EUR 6.6 million related to a change in US tax legislation and the impairment
was also made. 

Transformation Plan

What was very clear from my interviews with employees and customers in the
third quarter was that accountability and clarity about responsibilities were
an issue at Cavotec, which was obstructing efficiency and future growth.
Accordingly, we decided to streamline and simplify decision-making by creating
three business divisions with clear profit and loss ownership, from product
development through to sales and delivery. This new organisational structure
became effective 1 January 2018. 

Based on our findings, we also started almost 50 transformation projects in the
quarter, including customer and key account management, procurement, SOP
deployment and production planning. We have involved more than 200 employees
for this journey, who are all fully behind it. Almost all projects started in
the fourth quarter of 2017, about a quarter of them will be complete at the end
of the first quarter 2018, another quarter by the midpoint of the year, and the
remainder before year-end 2018. 

Stable process and long-term strategy

In 2018, we will continue investing in actions to improve operational
efficiency, enhance our customer offering and ensure that all employees have
clear mandates, responsibilities and accountability right across our
organisation. I’m confident that our people and technologies put us in a unique
position to help our customers take advantage of global trends in safety,
automation, and sustainability, although the lower order intake during 2017
will be reflected in revenues in the short to medium term. We have a strong
position in our markets, while our challenges, which we are now addressing, are
all internal. This means that we are truly masters of our own destiny–which is
a great place to be! 


This is a summary of the 4Q17 report and full-year 2017 summary published
today. The complete 4Q17 report and full-year summary with tables is available
on Cavotec’s investor relations website and attached to
this press release.  Investors should not rely on summaries only, but should
review the complete reports with tables. 

For further details please contact:

Kristiina Leppänen

Group Chief Financial Officer & Investor Relations

Telephone: +41 91 911 40 11 — Email:

Cavotec is a leading engineering group that designs and manufactures automated
connection and electrification systems for ports, airports and industrial
applications worldwide. Cavotec innovative technologies ensure safe, efficient
and sustainable operations. TofindoutmoreaboutCavotec, 

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 23
February 2018, 08:00 CET.

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