PALFINGER Earnings 2019: Records and course-setting decisions

• Revenue exceeded EUR 1.75 billion

• EBIT margin increased to 8.5 percent

• Record 38.1 percent increase in consolidated net profit for the period

• GPO successfully implemented – investment in future-proof structures, improved transparency and greater clout

• Conclusion of the restructuring of the SEA segment, second half of 2019 operationally positive

Outstanding result

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Record levels for revenue, EBIT, and consolidated net profit for the period, the operational break-even result in the second half of 2019 in the Segment SEA, the implementation of the new global organizational structure (GPO), and a series of investments in the future: Fiscal year 2019 was extremely successful for PALFINGER AG.

Revenue reached a new record value of EUR 1,753.8 million. Compared with the previous year (EUR 1,615.6 million) that corresponds to an increase of 8.6 percent. This improvement can be attributed to increased demand in the most important markets of Europe, North America, Russia, and China. For example, profitability increased year-on-year, despite a shift in revenue within the product groups and regions as well as additional expenses in future-proof structures – GPO implementation, commencement of the rollout of a uniform ERP system, PALFINGER 21st. EBITDA increased by 13.7 percent from EUR 196.7 million to EUR 223.6 million, while the EBITDA margin was 12.8 percent after amounting to 12.2 percent in fiscal year 2018. EBIT increased by 17.4 percent to EUR 149.0 million – the highest level in the history of PALFINGER. The EBIT margin rose from 7.9 percent in 2018 to 8.5 percent in 2019.

Consolidated net profit for the year 2019 increased by 38.1 percent to EUR 80.0 million compared with EUR 58.0 million in the previous year – also a record amount in the history of PALFINGER. Earnings per share increased accordingly from EUR 1,54 in the previous year to EUR 2.13 in the reporting period.

The equity ratio increased from 36.4 percent to 38.3 percent as of the balance sheet date. The gearing ratio decreased from 92.8 percent in the previous year to 83.6 percent. Net debt/EBITDA likewise exhibited a clearly positive trend, improving from 2.62 to 2.35. This clear improvement in the key balance sheet indicators was achieved despite the first-time application of IFRS 16. Free cash flow increased from EUR 46.8 million to EUR 112.4 million. At 9.9 percent, the return on capital employed clearly exceeded the previous year's value of 8.5 percent.

Course-setting events

The increased complexity as a result of the worldwide expansion by means of acquisitions made it necessary for PALFINGER to fundamentally restructure its operations. In 2019, the GLOBAL PALFINGER ORGANIZATION (GPO) was successfully implemented. Thanks to the new structure, PALFINGER now operates more efficiently than ever before as a solution provider in even closer collaboration with its customers and partners. The Group’s transparency and clout has increased considerably thanks to the GPO.

In 2019, PALFINGER invested substantially in forward-looking measures such as improving its distribution network, Group-wide initiatives such as PALFINGER Process Excellence and PALFINGER 21st.

The Segment SEA completed the second half of 2019 operationally positive after extensive restructuring measures and the diversification of the divisions. In addition, PALFINGER attained the leading position over the Neptune joint venture (the transaction is expected to close in the first half of 2020) in the ambitious Chinese market for lifesaving equipment for cruise ships.

Segment performance

An excellent revenue result of EUR 1,448.4 million with an increase of 12.7 percent year-on-year (2018: EUR 1,285.6 million) was achieved in the Segment Sales & Service LAND. EBIT for the segment increased by 6.9 percent to EUR 155.0 million. However, at 10.7 percent, the EBIT margin trended lower compared with the previous year (2018: 11.3 percent) due to a shift in the product mix within the product lines and regions. External revenue of EUR 113.0 million in the Segment Operations LAND in 2019 was roughly at the same level as in the previous year (2018: EUR 113.8 million), as was the segment EBIT of EUR 31.7 million (2018: EUR 32.9 million). Revenue in the Segment SEA decreased to EUR 192.5 million in fiscal year 2019, but segment performance was operationally positive beginning with the second half of 2019 and EBITDA for the segment increased from

EUR –9.3 million in 2018 to EUR 6.7 million in 2019. EBIT for the segment improved from EUR –29.1 million to EUR –8.2 million in the reporting period. The solid inflow of orders in 2019 will have an effect on revenue beginning in 2020. The investments in the future of PALFINGER are taking shape in the HOLDING unit. EBIT for the segment amounted to EUR –29.5 million after EUR –21.8 million in the prior year’s reporting period. The additional expenses were related to capital expenditures in the new GLOBAL PALFINGER ORGANIZATION and the group-wide initiatives PALFINGER Process Excellence and PALFINGER 21st.

Dividend proposal

Due to the very good earnings per share of EUR 2.13 in the reporting period, the Executive Board and the Supervisory Board will propose to the Annual General Meeting that a dividend of EUR 0.71 be distributed for the 2019 fiscal year, in line with PALFINGER’s dividend policy (2018: EUR 0.51).

Outlook

The GPO will considerably increase PALFINGER’s clout in 2020 and the following years. The Segment SEA will also make a positive contribution to earnings in the current fiscal year. PALFINGER will expand its global market position as a solution provider that closely collaborates with its customers thanks to a series of innovative product solutions to be launched in 2020. Despite slower growth in the global economy, the more challenging market environment in Europe, and shifts in the product mix, PALFINGER expects a strong fiscal year 2020 even though significantly lower profitability is anticipated in the first quarter of 2020 compared with the outstanding first quarter of 2019. PALFINGER will further invest in the future of the company also in 2020 by consolidating its brands, continuing the rollout of the global ERP system and with PALFINGER 21st. Thanks to its global presence and the GPO, PALFINGER is in a position to quickly react to economic developments. Therefore, the management remains committed to its goals for 2022: total revenues of EUR 2.0 billion as well as an average EBIT margin and average ROCE of 10 percent above and beyond the economic cycle.