e Board expects a strong 2nd half-year
As expected, the Jenoptik Group recorded continued growth and saw further gains over the 1st half-year, particularly in terms of orders, revenue and earnings.
?The development of business in the Group proceeded as planned. Two of our three segments reported decent growth in the 1st half-year, with the pace of growth in the 2nd quarter increasing by comparison with the first three months of the year. Confident that we will achieve a further increase in the 2nd half-year, we are well on course overall to reach the goals we have set ourselves for this year?, said Stefan Traeger, President & CEO of JENOPTIK AG.
Revenue up 6.6 percent, particularly strong growth in the Americas
In the first six months, group revenue rose by 6.6 percent to 348.4 million euros (prior year 326.8 million euros). Revenue climbed 9.5 percent in the 2nd quarter alone. Increases were posted on the one side in the field of optical systems for the semiconductor equipment industry, as well as for information and communication technology. On the other side, the Group registered stronger demand in the traffic safety sector, as well as for metrology systems for the automotive industry.
In regional terms, the impetus for growth came almost exclusively from the non-European countries, in particular from the Americas. Revenue here rose significantly by 44.1 percent to 81.8 million euros (prior year 56.8 million euros). All three segments contributed towards this positive development, with the Defense & Civil Systems segment posting the strongest rise. Overall, the share of revenue generated abroad climbed from 65.0 percent in the prior year to currently 71.7 percent.
EBIT sharply up again on back of more profitable revenue mix
The EBIT of the continuing operations improved at a faster rate than revenue in the 1st half-year 2017. At 29.1 million euros, the operating result was up by 7.2 percent over the figure for the prior year (prior year 27.2 million euros). This positive development is attributable to the strong contribution from the Optics & Life Science segment. At 8.4 percent, the EBIT margin was slightly higher than in the prior year (prior year 8.3 percent). Earnings before interest, taxes and depreciation/amortization (EBITDA) rose by 4.4 percent to 42.7 million euros (prior year 40.9 million euros).
Order situation and financial indicators at very good levels
By the end of June 2017 the order intake reached a new record for a 1st half-year. At 405.3 million euros the figure was 26.9 percent above that for the same period in the prior year (prior year 319.4 million euros). Consequently, at 1.16, the book-to-bill ratio, the ratio of order intake to revenue, was also higher than in the prior year (prior year 0.98). The order backlog totaled 455.0 million euros as at the balance sheet date, i.e. 12.3 percent more than at the year-end 2016 (31/12/2016: 405.2 million euros). All three segments contributed to the increase in the order figures. In addition, there were frame contracts (framework agreements with customers) totaling 144.3 million euros (31/12/2016: 160.9 million euros).
In the first six months, the free cash flow, at 22.1 million euros, was up on the good level in the prior year despite significantly higher capital expenditure (prior year 21.5 million euros). In addition, despite the dividend payment, the Group remained net debt free at the end of the reporting period at minus 16.1 million euros (31/12/2016: minus 17.9 million euros).
Increase in employee numbers strongest abroad
As of June 30, 2017, the number of employees in the Jenoptik Group increased moderately compared with year-end 2016, to 3,603 (31/12/2016: 3,539). The number of employees abroad grew at a stronger rate than in Germany in the course of the expansion of the international business and due to first-time consolidations. At the end of June 2017, 738 staff were employed at the foreign locations (31/12/2016: 686), bringing the proportion of the workforce abroad up to 20.5 percent (31/12/2016: 19.4 percent).
Optics & Life Science as well as Mobility reported good growth, strong rise in the order intake in all three segments
At 124.9 million euros, the Optics & Life Science segment posted an increase of 15.6 percent in revenue in the first six months of 2017 (prior year 108.1 million euros). This development was driven by a continuation of the good business with solutions for the semiconductor equipment industry as well as for information and communication technology. The EBIT showed a significant improvement, in particular due to the high demand for optical system solutions and the good development in the lasers business as a result of the measures implemented, with the figure up by 68.3 percent to 22.4 million euros (prior year 13.3 million euros). As such, in the period covered by the report the segment achieved an EBIT margin of 17.9 percent (prior year 12.3 percent). The order intake rose sharply by 31.3 percent to 149.1 million euros (prior year 113.6 million euros). In relation to revenue this gives a book-to-bill ratio of 1.19 (prior year 1.05). At end of June 2017 the segment–s order backlog totaled 101.2 million euros (31/12/2016: 80.7 million euros). In addition, there were frame contracts amounting to 15.0 million euros (31/12/2016: 14.5 million euros).
Revenue in the Mobility segment rose by 8.1 percent to 117.8 million euros (prior year 109.0 million euros). The business with applications for the automotive industry and traffic safety technology increased to equal extent. The EBIT fell sharply by 66.4 percent to 2.4 million euros (prior year 7.1 million euros). The EBIT margin reduced accordingly to 2.0 percent (prior year 6.5 percent). As in the first quarter, this development is mainly attributable to one-off expenses included in the cost of sales for customer-specific projects. These include, in particular, the toll project awarded to Jenoptik in 2016. As a development and technology partner the Group will deliver new systems to monitor truck toll payments on Germany?s federal highways by 2018. The order intake improved from 128.0 million euros to 144.4 million euros, representing a book-to-bill ratio of 1.23 (prior year 1.17). The order backlog climbed 22.6 percent to 132.8 million euros (31/12/2016: 108.3 million euros). There were also frame contracts worth 72.8 million euros (31/12/2016: 79.1 million euros).
In the first six months, the Defense & Civil Systems segment reported revenue in the sum of 105.4 million euros. As expected, revenue was 5.6 percent below the same period in the prior year (prior year 111.6 million euros) which had posted particularly strong revenue in energy and sensor systems as a result of the settlement of major projects. The income from operations (EBIT) remained almost stable at 9.0 million euros compared with the prior year, despite weaker revenue and significantly higher research and development expenses (prior year 9.2 million euros). This was mainly attributable to a good performance by the service business and a changed product mix. The EBIT margin improved significantly to 8.5 percent (prior year 8.3 percent). The order intake rose sharply by 39.4 percent to 111.8 million euros (prior year 80.2 million euros). The book-to-bill ratio increased from 0.72 as at December 31, 2016 to the current figure of 1.06. The order backlog totaled 222.7 million euros (31/12/2016: 217.8 million euros). There were also frame contracts worth 56.5 million euros (31/12/2016: 67.4 million euros).
2017 guidance confirmed
With business having developed in line with expectations in the 1st half-year 2017, the JENOPTIK AG Executive Board has confirmed the guidance for the current fiscal year it published in March 2017. Based on the very good order figures and a traditionally stronger 2nd half-year, the Executive Board continues to anticipate growth in 2017. Group revenue is expected to come in at between 720 and 740 million euros. All three segments should contribute to this growth. Jenoptik also expects an increase in the EBIT in 2017 ? based on the continuing operations. Depending on the development of revenue, the Group anticipates an EBIT margin within a range of 9.5 to 10.0 percent.
As an integrated photonics group, Jenoptik divides its activities into three segments: Optics & Life Science, Mobility as well as Defense & Civil Systems. Its customers around the world mainly include companies in the semiconductor equipment industry, automotive and automotive supplier industry, medical technology, security and defense technology as well as the aviation industry. Jenoptik has about 3,600 employees worldwide and generated revenue of approx. 685 million euros in 2016.
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