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SW Umwelttechnik Stoiser & Wolschner AG

EANS-Adhoc: SW Umwelttechnik third-quarter results show marked recovery

  ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
  distribution. The issuer is solely responsible for the content of this
  announcement.
9-month report
26.11.2009
* Sharp year-on-year increase in Q3 earnings
* Q3 EBITDA margin back to normal
* Restructuring shows positive effects
SW Umwelttechnik — a Vienna-listed family firm — beat all 
year-earlier earnings figures in the third quarter, despite a 34% 
decline in revenue. The EBITDA margin was back to normal at 13%, 
demonstrating the effectiveness of the action taken to adjust to the 
current harsh trading environment.
The decline in revenue has eased in the course of the year (Q1: 55%; 
Q2 44%; Q3: 34%) and earnings have steadily improved. "During the 
third quarter demand began bottoming out at a low level in our key 
Hungarian and Romanian markets, both of which have been particularly 
hard hit by the recession," said SW Umwelttechnik CEO Bernd 
Wolschner. The restructuring programmes rapidly launched in response 
to changed market conditions are now showing positive effects. The 
company has taken tough action to cut fixed costs and strengthened 
its focus on winning local government business. SW Umwelttechnik has 
adapted to current conditions, and anticipates further improvements 
in earnings despite lower revenue.
Third-quarter earnings up Revenue for the first three quarters was 
42.5% down at EUR47.0 million (m) (Q1-Q3 2008: EUR81.7m). Revenue 
slumped by 55% in Hungary and also fell heavily in Romania; only in 
Austria was it largely stable. Despite the massive decline in 
revenue, cumulative EBITDA for the first three quarters was positive 
by EUR2.0m as a result of the cost reduction programmes (Q1-Q3 2008: 
EUR7.1m). EBIT for the first nine months of the year was negative by 
EUR2.5m (Q1-Q3 2008: + EUR2.8m).
Results for the third quarter alone reflect the recent improvement in
the company´s fortunes. Revenue was down by only 34% year on year at 
EUR20.2m (Q3 2008: EUR30.5m). Due to the success of recent 
restructuring measures EBIT jumped to EUR1.1m in the third quarter 
(Q3 2008: EUR0.4m), and EBITDA advanced to EUR2.6m (Q3 2008: 
EUR1.9m). A significant feature of quarterly performance was the fact
that the EBITDA margin for the period returned to the level recorded 
in recent years, at 13%. With net finance costs of only EUR0.6m due 
to reduced interest expense, the Company returned a third-quarter 
profit on ordinary activities (POA) of EUR0.5m, compared to a loss of
EUR1.9m for the like period in 2008.
There was a marked shift in the segmental composition of revenue in 
favour of the company´s Water Conservation sector over the first 
three quarters, and it accounted for EUR24.4m (Q1-Q3 2008: EUR23.8m) 
or 52% of the total. The Infrastructure sector was impacted by the 
plunge in sales to industrial and commercial clients — which was 
especially severe in Hungary but also affected Romania — and its 
revenue contribution slid to EUR15.5m (Q1-Q3 2008: EUR46.4m) or 33% 
of the total. The anticipated pick-up in municipal environmental 
investment has taken longer than expected to materialise, especially 
in Romania, where it has been held back by funding delays. However 
the Engineering sector´s contribution held steady at 15%, although it
dropped to EUR7.1m in absolute terms (Q1-Q3 2008: EUR11.5m).
Although sales in Hungary more than halved year on year, to EUR20.7m 
(Q1-Q3 2008: EUR45.5m), it remained the main market for SW 
Umwelttechnik, generating 44% (Q1-Q3 2008: 56%) of total revenue. 
Thanks to the relatively stable trading environment in Austria, this 
market´s revenue contribution rose from 19% to 29%. Romania´s revenue
share edged up to 21% from 18% in the comparative period. Slovakia 
made up 2% (Q1-Q3 2008: 4%) and other countries such as Slovenia, 
Italy and Germany 5% (Q1-Q3 2008: 3%) of overall revenue.
The changed market environment is apparent in the 28% year-on-year 
fall in order books. Order backlog was EUR31.6m as at 30 September 
2009 (end of Q3 2008: EUR44.1m), reflecting the shift between market 
segments; as expected, this has led to an increase in short-term 
contracts.
Smaller balance sheet Non-current assets as at 30 September 2009 were
down to EUR70.7m (end of Q3 2008: EUR79.5m) due to exchange rate 
movements. Current assets shrank from EUR49.4m to EUR35.6m over the 
period, reflecting improved inventory and receivables management. 
Total assets were EUR108.7m as at the interim balance sheet date (end
of Q3 2008: EUR130.5m).
The main liabilities category is EUR79.0m in borrowings, most of 
which were taken up to fund the investments made in connection with 
the expansion programme. Ensuring that the Company has access to 
adequate liquidity during the coming year has already been discussed 
with the lending banks, and they have confirmed that sufficient 
credit lines will be available. Total liabilities decreased to 
EUR95.4m as at 30 September 2009 from EUR102.1m a year earlier.
Equity fell to EUR13.3m at the interim balance sheet date from 
EUR20.5m at year end 2008, and the equity ratio slid from 17.4% to 
12.2%. The company plans to include surplus land, valued in 
accordance with IAS 40, in its balance sheet for 2009. This will 
increase reported equity by some EUR5m, which would have had the 
effect of raising the IFRS equity ratio to 16% as at 30 September 
2009T.
Recognising the intrinsic value of the non-current assets by applying
the exchange rates ruling at 31 December 2007 lifts equity to 
EUR24.1m, and this would result in an equity ratio of about 20%.
Management is currently evaluating other means of increasing 
liquidity and strengthening the company´s equity base, and is 
examining the feasibility of another capital increase.
Outlook It is hard to make reliable predictions about the outlook for
SW Umwelttechnik´s markets because of wide discrepancies between 
recent economic forecasts.
Since mid-2009 SW Umwelttechnik´s markets have been bottoming out at 
a low level, as shown by recent order intake. They will gain 
additional momentum from the implementation of the promised stimulus 
packages which has been held up in Hungary and Romania. Management 
therefore expects revenue to remain on its present trajectory and 
sees earnings continuing to improve in line with the positive trend 
in the third quarter.
The company´s long-term strategy of aiming for top-three positions in
the markets it serves and capitalising on the growth opportunities in
CSE countries remains in place, and in management´s view current 
trends show that it is working. The EUR60m invested in modern plant 
and equipment over the past few years means that SW Umwelttechnik is 
particularly well placed to profit from the anticipated upswing in 
2011.
Financial highlights
|EUR m         |Q3 2009       |Q3 2008       |Q1-Q3 2009    |Q1-Q3 2008    |
|Revenue       |20.2          |30.5          |47.0          |81.7          |
|EBITDA        |2.6           |1.9           |2.0           |7.1           |
|EBITDA margin |13%           |6%            |4%            |9%            |
|EBIT          |1.1           |0.4           |-2.5          |2.8           |
|POA           |0.5           |-1.9          |-5.8          |-0.3          |
Founded in 1910, SW Umwelttechnik remains a family business, though 
it has been listed on the Vienna Stock Exchange since 1997. The Group
is known for its commitment to sustainable enterprise and rapid 
expansion in Central and Southeastern Europe (CSE). Its innovative 
environmental products are contributing to infrastructure renewal in 
CSE.
end of announcement                               euro adhoc

Further inquiry note:

Bernd Wolschner
Member of the Management Board
Tel: +43 (0)7259 31350
Mobile: +43 (0)664 3413953

Michaela Werbitsch
Investor Relations
Tel: +43 (0)7259 31350
Mobile: +43 (0)664 8117662
Fax: michaela.werbitsch@sw-umwelttechnik.com
Web: www.sw-umwelttechnik.com

Branche: Technology
ISIN: AT0000808209
WKN: 910497
Index: WBI
Börsen: Berlin / free trade
Frankfurt / free trade
Wien / Regulated free trade

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