Sales and cash flow stable in pandemic year - Operating result slightly down - Dynamic growth in DewertOkin product area - New divisional structure for Phoenix Mecano Group
Kloten/Stein am Rhein, 18 February 2021. Based on provisional and unaudited results, the Phoenix Mecano Group's consolidated gross sales increased from EUR 680.0 million to EUR 687.4 million (up 1.1%). Organic, local-currency gross sales rose by 0.6%. Net sales grew from EUR 674.0 million to EUR 682.1 million (up 1.2%). Incoming orders climbed from EUR 691.6 million to EUR 766.0 million (up 10.8%).
In the fourth quarter, the Group recorded a significant year-on-year increase in both sales (up 5.5%) and incoming orders (up 21.8%). This growth was driven by the DewertOkin product area (Mechanical Components division). By contrast, the Enclosures and ELCOM/EMS divisions felt the effects of the COVID-19 crisis and have so far been unable to catch up with the previous year's level. The book-to-bill ratio at the end of the year was 111% (previous year: 102%), suggesting a continuation of the positive business performance.
Operating result and result for the period under review
The unaudited operating cash flow (EBITDA) fell slightly to around EUR 48 million, compared with EUR 48.8 million the previous year.
The provisional operating result (EBIT) was down by 4% from EUR 23.4 million to around EUR 22 million. This includes net one-off expenses of EUR 8 million. In the Mechanical Components and ELCOM/EMS divisions, there were subsequent one-off expenses from the 2019 performance enhancement programme totalling around EUR 4 million. In the DewertOkin product area, the introduction of an employee share investment plan and further preparations for the planned stock-market listing in Shanghai generated one-off expenses of EUR 4 million.
The (as yet unaudited) figures indicate a result for the period of around EUR 9 million (previous year EUR 13.9 million).
Development of the Group's divisions
The Enclosures division generated sales of EUR 173.5 million in financial year 2020 (down 8.3%). After a good start to the year, sales fell significantly in the subsequent quarters due to the pandemic. By the end of the year, however, incoming orders were showing signs of recovery. Moreover, the division was able to maintain its supply chains during the lockdown in spring 2020. The Group took a further step to becoming a system supplier by expanding its range of human-machine interface products to include ready-to-install solutions comprising control enclosures, industrial PCs and support-arm systems.
The Mechanical Components division posted record sales of EUR 399.2 million (up 10.7%).
The DewertOkin product area saw a sharp drop in sales in the first half of 2020 as a result of the COVID-19 pandemic. However, the second half more than made up for this, thanks in part to a surge in demand for electrically adjustable office and comfort furniture as well as the complete integration of Haining MyHome Mechanism Co., Ltd., the latter enabling Phoenix Mecano to gain market share by offering drives and fittings in combination. The DewertOkin product area achieved high growth rates in sales and incoming orders compared with the previous year.
In the Rose+Krieger industrial segment, customer visits and start-ups were delayed in the spring due to travel restrictions, although the situation eased in the second half of the year. Thanks to two smaller bolt-on acquisitions, Rose+Krieger acquired additional expertise in control technology and software as well as access to new customers in the semiconductor manufacturing sector.
After a difficult second quarter, demand for the ELCOM/EMS division's products picked up only slightly in the second half of 2020. Sales remained below the previous year's level at EUR 114.8 million (down 11.8%). While project business in Electronic Packaging was postponed, incoming orders for electrotechnical components recovered steadily in the second half of the year. The division's sites in southern China were consolidated at a new plant in Lechang, and sales in China are also being handled from this plant from January 2021.
New divisional structure
In view of the planned partial listing of DewertOkin, the Phoenix Mecano Group reorganised its divisional structure with effect from 1 January 2021.
The new structure reflects the Group's evolution from a traditional component manufacturer to a provider of system solutions and highlights its increasing independence from cyclical capital goods sectors.
As the largest and fastest-growing product area, DewertOkin now forms its own division under the name DewertOkin Technology Group (DOT Group). This will give it the independent structures it needs for the planned partial listing as well as further growth. Given the sustained market growth in electrically adjustable comfort furniture, the DOT Group's share of Group sales is steadily increasing, meaning that the Phoenix Mecano Group's business performance will be less heavily impacted by industrial economic and investment cycles.
The product areas of the old ELCOM/EMS division together with Rose+Krieger make up the new Industrial Components division, with a focus on industrial digitalisation and modular automation solutions. This division brings together the established industrial components business areas into a new structure comprising Automation Modules and Electrotechnical Components as well as the two growth segments of Rugged Computing and Measuring Technology.
The Enclosures division retains the same composition but under the new name Enclosure Systems. For years, this division has been the most profitable in the Phoenix Mecano Group, generating stable cash flows across economic cycles.
Update on partial listing of DOT Group
The success story of today's DOT Group in China is based on the commitment of local management. Ever since OKIN Refined Electric Technology Co., Ltd. was founded in 2010, its managers have always had a share in the company's success, and this collaborative approach is to be further expanded. As part of preparations for the planned partial listing of the DOT Group on the STAR Market in Shanghai, a share investment plan for local key employees was established at the end of 2020, giving around 60 members of staff the chance to acquire a total of almost 12% of the DOT Group's share capital. The plan is linked to performance targets and is in line with the interests of the Phoenix Mecano Group and its shareholders. The shares will be subject to a three-year lock-up period after the listing.
Outlook
Demand in key core markets of the Group recovered further in the fourth quarter of 2020, taking it above the previous year's level overall. At the start of the year, purchasing managers' indices for the industrial sector in Europe, Asia and the United States pointed to a broad-based recovery. However, the COVID-19 pandemic continues to pose a risk of supply-chain disruptions and economic setbacks.
The sustained dynamic growth in consumer durables means that Phoenix Mecano is becoming increasingly independent of capital goods cycles. Moreover, growth in some of the Group's key sales markets is driven by long-term megatrends, which are an expression of social and technological developments. These are continuing despite the current crisis, with some even accelerated by the pandemic. Its new divisional structure will allow Phoenix Mecano to identify these opportunities even more effectively and make targeted investments in growth areas.
For example, the DOT Group supplies furniture manufacturers, who are benefiting from rising demand for electrically adjustable office desks, driven by higher ergonomic standards and the trend towards working from home. As for the Enclosure Systems division, its customised enclosure solutions are increasingly being used in Internet of Things (IoT) applications as mobile communication technologies become more widespread. Finally, with the generation and distribution of energy from renewable sources placing considerable demands on grid infrastructure, solutions from the Industrial Components division help to measure and control the flow of energy in smart power grids.
In light of this outlook, Phoenix Mecano's management and Board of Directors are cautiously optimistic for 2021. The Group anticipates an increase in sales in 2021 compared with the previous year as well as a disproportionate improvement in profitability, with an operating result of around EUR 40 million.
Phoenix Mecano will publish its 2020 financial statements and annual report on 21 April 2021, together with the results for the first quarter of 2021.
About Phoenix Mecano
The Phoenix Mecano Group is a global player in the enclosures and industrial components segments and is a leader in many markets. Headquartered in Stein am Rhein, Switzerland, the Group employs around 7,500 people worldwide and generated sales of EUR 687 million in 2020. It is geared towards the professional and cost-effective manufacture of niche products for customers in the mechanical engineering, measurement and control technology, medical technology, aerospace technology, alternative energy and home and hospital care sectors. Phoenix Mecano was founded in 1975 and has been listed on the Swiss stock exchange since 1988.
