va-Q-tec further advances expansion plans in H1 2018
- H1 2018 revenue: EUR 24.9 million compared with EUR 22.5 million in H1 2017 (+11%)
- H1 2018 total income: EUR 31.0 million compared with EUR 26.6 million in H1 2017 (+16%)
- H1 2018 EBITDA: EUR 1.4 million compared with EUR 4.2 million in H1 2017 (-67%)
- H1 2018 financial performance significantly affected by product mix, production relocation, preliminary costs and strategic investments
- Significant investments in personnel, production capacities and infrastructure in readiness for expected growth
- Around 80% of growth investments announced at the IPO successfully completed
- Adjustment of 2018 revenue and earnings forecast
Würzburg, 21 August 2018. va-Q-tec AG (ISIN DE0006636681 / WKN 663668), a technologically leading provider of highly efficient products and solutions in the area of thermal insulation and cold chain logistics, has today published its half-year financial report on business trends during the first six months of 2018 and announces continued revenue growth. A reduction in earnings before interest, tax, depreciation and amortisation (EBITDA) reflects several expenses, some of which are one-off. In particular, removal costs, hiring, currency effects and the company’s international development exerted an impact. Significant investments were made in personnel, production capacities and infrastructure during the period under review. As a consequence, the company regards the preconditions for the anticipated growth as having been created.
The company grew its revenue by 11%, from EUR 22.5 million in H1 2017 to EUR 24.9 million in H1 2018, according to 2018 half-year results (IFRS, unaudited). Total income was up by 16% from EUR 26.6 million in the prior-year period to EUR 31.0 million in H1 2018. Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased from EUR 4.2 million to EUR 1.4 million. The EBITDA margin measured against total income stands at 5%, compared with 16% in H1 2017. Especially the strong Products business as well as the Systems business made significant contributions to revenue growth again. As the revenue share of areas with weaker margins in relation to the Services business increased considerably to 66% (previous year: 60%), and cost-intensive restructurings were also implemented, the change in the product mix exerted a correspondingly diminishing effect on consolidated EBITDA.
In the Products division – the sale of vacuum insulation panels (VIPs) – new customers in the end-markets of Appliances & Food and Technics & Industry were acquired, and the base of existing customers was further expanded. Revenue in this operating segment amounted to EUR 10.6 million during the first six months of 2018, up 26% compared with H1 2017 when the company generated EUR 8.5 million of revenue. The Products division thereby contributed 43% to consolidated revenue. Revenue generated with Systems (sales of thermal packaging) were up by 14% to EUR 5.6 million (previous year: EUR 4.9 million), corresponding to a 23% revenue share. The Services division – the renting of thermal containers and thermal boxes – presented a mixed picture in the reporting period. In the temperature-controlled air freight transportation area, va-Q-tec successfully launched a project in January 2018 with a leading systems supplier to the semiconductor industry. The number of rented containers rose. Segmental revenue nevertheless reduced overall. Firstly, this reflected the result of a logistics optimisation program with a major customer where the duration of individual rentals decreased and thereby also the customer’s revenue contributions short-term. Secondly, exchange rate effects as well as a temporary loss of some revenues with a major customer in Puerto Rico in the first half of 2018 were not fully offset by new business, as some processes to acquire routes in the rental network for va-Q-tainers proved more time-consuming on the customer side than originally expected. Revenue of EUR 8.2 million was down by 7% compared with the previous year’s equivalent period (EUR 8.8 million), thereby contributing 33% to consolidated revenue. Revenue was at the previous year’s level after adjusting for currency effects.
Stefan Döhmen, CFO of va-Q-tec AG, explains the financial performance in H1 2018: “In financial terms, the first half of 2018 fell short of our high expectations. Although it is naturally a good sign that our Products and Systems enjoy double-digit rates of growth in market demand, projects in our high-margin Services business have taken longer than we hoped due to complex decision-making processes at our major customers. And at the same time, we have realised considerable strategic investment spending for the targeted business expansion over the coming years, and invested in processes, new products and capacity expansion. Further burdens arose from the overall national and international investments and expenses for market and capacity expansion. “
The move of the production lines to the new property in Würzburg and the return of the previous Group headquarters to the tenant were successfully concluded at the end of the reporting period. The container fleet in the Services area was also expanded significantly by around 300 units during the first half of the year alone. va-Q-tec invested in new or already existing subsidiaries in the UK, the USA, Uruguay, Japan, Korea and Switzerland. For many pharmaceutical industry customers, Uruguay represents the “Gateway to Latin America”. Customers in Latin America can thereby be served better in the future, and the existing customer base can be broadened locally. In the UK, the local management was supplemented by experienced industry experts, in order to improve the visibility and controlling processes in container rental. Since the IPO in September 2016, the Group has invested more than EUR 65 million, and thereby successfully concluded around 80% of its announced growth investments.
Dr. Joachim Kuhn, founder and Management Board Chairman (CEO) of va-Q-tec, adds: “With the conclusion of all important growth investments, we have created the foundation to meet constantly rising market demand. The medium- to long-term market trend towards renting our high-performance packaging systems is unbroken. This confidence was corroborated again in recent weeks by many conversations with both new and existing customers and partners. To this extent, we are also convinced that the growth rates in the Services business will emerge medium-term as we expect. In addition, we will now place a very strong focus on improving performance.”
Given the development during the first half of 2018 – projects in the high-margin Services business taking longer to start than expected due to complex decision-making processes at major customers, accompanied at the same time by considerable strategic investment spending for the targeted business expansion over the coming years – the Management Board now forecasts for the 2018 financial year consolidated revenue in a range between EUR 51 million and EUR 56 million, which corresponds to growth in the double-digit range. For EBITDA in 2018, va-Q-tec anticipates a marked reduction compared with the previous year. On a relative basis, compared with the level for the first half of 2018, it sees a slightly improved EBITDA margin.
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va-Q-tec is a leading supplier of high-performance products and solutions in thermal insulation and cold chain logistics. The company develops, produces and markets highly efficient and consequently thin vacuum insulation panels (VIPs) as well as phase change materials (PCMs) for reliable and energy-efficient temperature controlling. In addition, va-Q-tec produces passive thermal packaging systems (containers and boxes) through optimally integrating VIPs and PCMs, which can maintain constant temperatures, depending on type, up to 200 hours without external energy input. To implement temperature-sensitive logistics chains, va-Q-tec – within a global partner network – operates a fleet of rental containers and boxes meeting demanding thermal protection standards. Along with healthcare & logistics as the main market, va-Q-tec addresses the following further markets: Appliance & Food, Technics & Industry, Building and Mobility. The high-growth company, which was founded in 2001, is based in Würzburg, Germany. Further information: www.va-q-tec.com