Positive EBIT and cash flow on lower revenues
Comment from the CEO
Accelerated investments in long term growth markets
The overall market situation continued to be challenging in the third quarter due to the Covid-19 situation with consequences for both revenues and order backlog. After the summer the global uncertainty has impacted the decision making of our customers with delays to the delivery of existing projects as well as getting the final approval for new projects taking longer than previously.
As a result, revenue for the period decreased 22.5% to EUR 37.5 million (48.4) and EBIT decreased to EUR 0.7 million (3.1), corresponding to a margin of 2.0% (6.4%). The profit decrease, due to the negative volume impact, was partially offset by savings in employee costs, consultancy and travelling expenses. We have also, during the period, utilised Covid-19 related government salary assistance where available, although the effect on the financial performance of this was not material.
Despite the current impact of Covid 19, we continue to see strong interest in our solutions in select areas, especially for MoorMaster and Shore Power systems. For Airports & Industry, sales of individual ground support and fueling products developed well and revenue from our offering within Industry were in line with previous year, but in total delays of several projects resulted in lower revenues for the division as a whole. Services remain negatively impacted by the Covid travel restrictions. The proportion of Service revenues compared to total revenue was 21% in the third quarter.
The order backlog decreased 7% compared to the end of the previous quarter to EUR 91,6 million and 16.5% compared to the same period in 2019. The decrease is related to delays in final decisions on a number of projects in Ports & Maritime, while the order backlog for Airports & Industry was slightly higher compared to both the previous quarter and the previous year due to orders for airport expansion projects in the middle east worth close to EUR 7 million.
During the quarter we signed an order for a Moormaster system for ASKO Maritime in Norway. This was the first order for our new generation Moormaster, the NxG, which was launched globally on October 27th. We have redesigned MoorMaster from the ground up, to deliver faster, smarter installation, improved performance, continuous monitoring and easier maintenance. All in a unit with a smaller more streamlined footprint and an aesthetically pleasing design. These are qualities that ASKO Maritime have seen as crucial when they are planning the introduction of the world’s first fully autonomous, zero emissions vessels. We are very proud of having been selected as a key partner to ASKO and very excited about the future of MoorMaster as the NxG opens up new large, untapped market segments such as typical container terminals.
The Moormaster NxG is an example of how we are taking the opportunity during these challenging times to invest in areas where we expect to see rapid growth and where we can be the number one player. To underpin these ambitions, we announced in the beginning of October that we will open a new innovation center in the Netherlands in 2021. Focusing primarily on the maritime sector, the new center will be in charge of Cavotec’s research and development activities to bring to maturity new breakthrough solutions. The center will bring together the company’s capabilities within areas such as artificial intelligence, remote connectivity, high power high speed electrical charging, and battery technology.
The interest by our marine customers in finding solutions which increase productivity and simultaneously offer sustainable operations has grown drastically. The creation of an innovation center is an important step in building on Cavotec’s leading position in delivering what we call profitable sustainability for our customers.
A good example of how we have already today come far in this respect is our innovative high-power e-truck charging solution which recently won an important industry award. With our solution, we provide rapid and efficient high-power charging of battery powered heavy-duty terminal trucks in ports, thereby offering substantial operational, safety, and environmental benefits. The project with our partner, the Port of Long Beach in California, provides us with leading experience on how to convert the more than 30,000 diesel powered yard trucks operating in ports around the world to more sustainable and cost-efficient electrical operations.
With these steps, and more to come, we are positioning ourselves to leverage on trends such as automation, sustainability and workplace safety as leading ports and airports move towards more safe and efficient operations with a smaller environmental footprint.
In early October we held an investor information meeting in Stockholm at which we gave an in-depth update on the execution of our strategy and growth plans. I recommend watching the presentation at https://tv.streamfabriken.com/cavotec-investor-information-meeting-2020.
Lugano, 30 October 2020
Chief Executive Officer
Conference call in connection with publication of the quarterly report
A conference call for shareholders, analysts and media will be held on 30 October 2020 at 10:00 CET. Participating on the conference call from Cavotec will be Mikael Norin, CEO, and Glenn Withers, CFO.
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