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In the first half of 2020, the POLYTEC GROUP was subject to the negative economic developments that emanated from the COVID-19 pandemic. Moreover, owing to the fact that major customers introduced a halt to production at their plants at the end of March, POLYTEC was also forced to cease production at numerous locations. During April in particular, this resulted in huge sales revenue losses and in May, the slow resumption of plant output also burdened sales activity. In June sales recovered slightly, but overall the lockdown and its repercussions impacted the second quarter of 2020 to a massive extent.
As compared to the same period of the preceding year, consolidated POLYTEC GROUP sales in the first half of 2020 fell by 24.4% to stand at EUR 242.3 million (H1 2019: EUR 320.6 million).
Due in particular to the COVID-19 crisis, a marked decline in sales was evident in all three market areas.
In the passenger cars and light commercial vehicles market area, which with a 64.2% (H1 2019: 58.4%) share of total sales represents the strongest area within the POLYTEC GROUP, sales in the first half of 2020 fell sharply and as compared to the identical period of the previous year were 16.8% lower at EUR 155.7 million (H1 2019: EUR 187.1 million).
When compared to the first half of 2019, the share of sales in the commercial vehicles market area (21.3%; H1 2019: 29.5%) showed a marked fall of 45.7% from EUR 94.8 million to EUR 51.5 million. The sales of parts for trucks and other commercial vehicles had already declined considerably in the first three months of 2020 and the Turkish truck market collapsed almost completely, necessitating the first quarter closure of the local POLYTEC plant. Moreover, owing to the far more important downturn in the global economy during the second quarter, the level of call-offs dropped even further. Therefore, in order to adjust production capacity to market demand, the POLYTEC GROUP management has initiated the shutdown of additional plants, which will be implemented in the course of the current financial year.
In the first half of 2020, the smart plastic and industrial applications market area accounted for a 14.5% (H1 2019: 12.1%) share of POLYTEC GROUP consolidated sales. Despite the sales revenues from the production of logistics boxes for the foods industry, which were also generated during the months affected by COVID-19, in the first six months of 2020 non-automotive products showed a fall of 9.3%.
In the first six months of 2020, POLYTEC GROUP EBITDA was reduced to EUR 10.7 million (H1 2019: EUR 33.2 million), primarily as a result of COVID-19-related falls in demand. Other operational earnings in the first half of 2020 were doubled to EUR 3.5 million, due amongst other factors to the sale of closed plant facilities. As compared to the same period of the previous year, the EBITDA margin declined by six percentage points from 10.4% to 4.4%. Group EBIT in the months from January to June totalled minus EUR 7.0 million (H1 2019: EUR 16.1 million), which corresponded with an EBIT margin of minus 2.9% (H1 2019: 5.0%).
The financial result for the first six months of 2020 amounted to minus EUR 1.7 million (H1 2019: minus EUR 2.1 million). The POLYTEC GROUP tax ratio in the period from January to June 2020 stood at minus 1.6% (H1 2019: 25.6%). The group net profit amounted to minus EUR 8.9 million (H1 2019: EUR 10.4 million), which corresponded with earnings per share of minus EUR 0.42 (H1 2019: EUR 0.46).
As compared to 31 December 2019, on 30 June 2020 the group’s balance sheet total fell slightly by EUR 10.2 million to stand at EUR 595.4 million. The finances of POLYTEC Holding AG would permit the payment of a dividend at any time. Nevertheless, on 8 July 2020, the Board of Directors decided not to distribute a dividend. As compared to the 31 December 2019 reporting date, net debt fell by EUR 2.6 million to EUR 153.4 million.
Apart from steering production, since the March of this year preservation of financial liquidity has been the most important objective of the POLYTEC management. By means of proactive cash flow management, payment flows could be flexibly adjusted and optimised to both internal and external demands at any time. As at 30 June 2020, the POLYTEC GROUP disposed over liquid assets totalling EUR 66.1 million and had a robust equity ratio of 40.0%.
Outlook
In view of the gradual improvement in the business trend since June 2020, as far as the course of the second half of the year is concerned, the POLYTEC GROUP management is cautiously optimistic and on the basis of the currently communicated call-offs, anticipates sales revenues of around EUR 520 million. Nonetheless, owing to the COVID-19 pandemic the business environment continues to be characterised by uncertainties and customer behaviour with respect to call-offs remains extremely unpredictable. Therefore, apart from the fulfilment of call-off expectations, the operating result is largely dependent upon the effects of further capacity adjustments, the success of important negotiations with customers, developments in the UK and the actual implementation of governmental instruments for the amelioration of the COVID-19 crisis. Consequently, a reliable outlook with regard to results remains impossible.
The interim half-year report of POLYTEC Holding AG for the reporting date 30 June 2020 is available on the group website under “Investor Relations, publications”.
https://www.polytec-group.com/en/investor-relations/publications