Yes. Thank you very much, operator. Hello, ladies and gentlemen. Welcome to our conference call. It's the 2nd time in this month.
We're here just on July 8 with the business update. Now we can present you the full set of half year figures. I hope you have also find all the documents on the website, the semi annual report and the presentation, which is also shown online. So let's go through the figures. We start with Thomas, who begins with the presentation.
Thomas, please.
Thank you, Edwin. Hello to everybody. Highlights of the first half year twenty twenty, As almost every company on the world also Kartex was hit by the corona crisis, and this is most visible in the order intake of Kartex Remstar, with less visible in the net revenues, but also there we have traces of corona. Amlog was less affected happily, but we come later to this view in the view on the division results. We stick to the strategic investment programs as we believe in the growth potential of the inter logistics industry.
Let's have a look at the KPIs of the first half year. Net revenues have gone down, but they amount to roughly 6.5% above the 2018 level. The compound annual growth rate also came down from 8.7% as per year end 2019 to now 5.1%. The operating result, the EBIT, is with €24,000,000 now on the level of 2018 and the EBIT margin is above 2017 level. Also, the compound annual growth rate went down from 14.4% as per 2019 to 7.5%.
The net cash flow from operating activities is very high with 26,000,000 euros The main effect there is that the accounts receivable has gone down based on the lower volume. Equity and equity ratio. The equity amounts to €153,000,000 This is more or less on the level of 2018 and the equity ratio amounts to 57.8%. The income statement here, we see the impact of the coronavirus almost on every level we have to report a minus at the end as a difference compared to previous year. On the bookings level, this minus amounts to 16.6%.
The order backlog went down by 14.5 percent to $210,900,000 dollars This represents a visibility of roughly 6 months, whereas last year we reported a visibility of roughly 6.5 months. So visibility went down by half a month. Net revenues, as explained before, a bit less affected by minus 9.5%. GP margin happily is more or less on the same level with 30 4.6% compared to last year with 34.9%. On the OpEx level, you see that we were able to reduce the OpEx.
We had there some initiatives and cost cutting initiatives. We could not travel because of the travel bans and we had partial hiring freezes, announced this reduced OpEx by 7.5%. The resulting EBIT amounts to $24,000,000 This is a down of 15.5 percent or 4,400,000 dollars EBIT margin amounts to 11.5%. This is roughly 1% point below previous year. Further down the income statement, you see that financial result is also less favorable than last year.
We had a negative effect in foreign exchanges, mainly based on the currency Swiss francs and British pounds. The other hand, we had a positive onetime effect or 2 onetime effects on the tax level. Therefore, the tax rate went down heavily to 24.3% compared to last year with 26.3%. The resulting result for the period amounts to $17,100,000 also here the down of 15.3 percent or 3,000,000 euros whereas net profit margin amounts to 8.2%, which is not significantly below previous year. If we look at the cash flow statement, there we see that net cash flow from operating activities went up, so $26,300,000 as mentioned before.
This is a plus of $2,400,000 Main effect is the reduced net working capital. There, mainly the accounts receivables went down heavily. This represents a plus of €9,900,000 On the other hand, investing activities went up. So we spent €10,000,000 more than in the last period, €16,300,000 This is mainly because of the investments in the U. S.
Factory. So the investments in the supply chain and infrastructure amounts to €12,500,000 Then we spent €1,800,000 on ERP systems and €2,000,000 on acquisitions. The free cash flow, the resulting free cash flow amounts to €10,000,000 We also spent a bit more in regards to Bernanke activities or dividend payments. Dividend payment compared to last year went up by €5,000,000 euros The resulting cash drain amounts to 24,400,000 euros Having a look at the balance sheet, compared to the year end 2019, there you see the investment activities. So the non current assets went up heavily by €11,800,000 Then the current assets went down mainly because of the cash drain, but also because the accounts receivable went down.
And as a result, the total assets have decreased significantly to a level of $265,000,000 representing a minus of roughly 25,000,000 dollars The equity ratio, as mentioned before, roughly 58%, higher than June 2019, but lower as per year end, where we reported 59.3%. Always, what I mentioned here at this time, do not forget that on our balance sheet, there is no goodwill or relevant interest bearing debt, so no such risk on our balance sheet. Thanks for your attention. With this, I would like to hand over to Jens Van Kallen.
Okay. Good afternoon, everybody. Typical format, I'm going to quickly go through the division, starting with Remstar, followed by Amlok and then last but not least, a short outlook as much as we can say at this stage in this point in time. Cardex Remstar division, the main driver for our booking decline over the 1st 6 months of this year, the 26% down, mostly allocated or attributable to Europe, where we saw a sharp decline. It started in China, as expected, or in Asia.
And then the decline happened in Europe. And 2 months later, it also reached the U. S, North America. So we saw the wave going across the world. And this is now resulting in 26 percent down on bookings.
Net revenues, good order backlog that we started the year with, resulted in okay net revenues. The main difference to the first half year in 2019 was the partial excess restrictions that we had with net revenues that could have been realized, but we were not able to access customer sites. So we had to put projects on hold, service on hold, like many other companies as well. So net revenues down by 8.4%. Gross profit, a little better than in the previous year period with 38.1% versus 30 7.9%.
The main reason here is efficiency gains in the supply chain. I would also rather call it the elimination of the previously reported capacity costs. So our supply chain in the 1st month went back to, I would say, a normal temperature. And therefore, margins achieved in the supply chain were slightly higher than in the previous year period when we had the capacity issues and therefore, extra costs to cover the volumes then. And the second thing is also the net revenues mix between service and new business, which also helped secure the gross profit margin.
EBIT, €25,000,000 as opposed to €27,000,000 almost in line reduced with the net revenues. And this is mostly because we continued with our investments in the strategic programs, ERP landscape, digitalization and the U. S. Manufacturing. We did not stop that on purpose because we believe in the necessity to doing these things to actually make Remstar fit for the coming future and the upswing in the market.
And therefore, we decided to continue and did not put a complete stop on these projects. So EBIT decreased almost in line with net revenues, I already mentioned, and EBIT margin with 14.4 percent in line with our target ranges. Next one. The key figures, we can I think they are now more a summary? The CAGR now 6.5% due to the decline in net revenues.
CAGR on the EBIT margin down to 8.7%, which is also due to the reduced number in the first half. And the revenues mix, you can see it on the lower side with a slight shift towards life cycle services in terms of percentages, 30% compared to the 29% last year. The rest remains relatively unchanged. 1, Cardix AMLOG. Cardix AMLOG, as Thomas already mentioned in the in his introductory comments, showing a slightly different picture.
Bookings were up by 54% 55% compared to the first half of twenty nineteen. Everybody who was in the calls the last year knows that the bookings specifically in the first half year last year they are extremely low. And therefore, one has to neutralize that. And therefore, this is bookings in line with our expectations for MLOC, I would say. They already started picking up in Q4.
Some orders shifted into the first half of 2020, and therefore, we were able to achieve the 44%. And that goes for new business as well as for our refurbishment project and service. Order backlog slightly increased, giving us a better visibility for KARDEX MLOG. Net revenues, slightly lower than first half last year with 15%. Reason being that due to the lag in order intake last year and the relatively low order backlog we took into 2020, the revenues were affected.
And also, to some lesser extent, then in Cardex Randstar, we had site restrictions as well where we were not able to actually conduct the projects or provide the services, and therefore, this had an impact as well on the net revenues. Gross profit, you see the 17.1% as opposed to the 20.9%. I would say a normal gross profit, if it wasn't for the valuation adjustment that you see on the right hand side, impacting the overall profitability. And that goes through all levels, from gross profit through to EBIT. And therefore, we see the lower gross profit margin, which we believe and we know is a one off effect and it should help bring mLog back to normal levels because the operating margin itself before that write off was very well in line with our expectations.
EBIT with €200,000 way too low. We know that, but this is the same effect that I just explained in terms of valuation adjustment. All right. The comparable figures. Net revenues on the left hand side, I already mentioned, affected thus lower than the first half of twenty nineteen.
EBIT also affected by the one off valuation write off and then the net revenues mix. You see the same healthy pattern with 50 percent, so half of the business being the after sales work, which is pretty healthy to also support Cardexamlog's business model. And it shows the right efforts are made to secure this business, never mind what the new business does. Next one. The outlook.
As usual, pretty cautious and qualitative outlook only from our side. What's very clear is, and I think we made that statement already 2 weeks ago with our publication then, the impact of the global corona prices will be reflected in our full year results. That is unrealistic to assume that we will recover from that so quickly. So we see that Kartik Randstad's order backlog that we currently having with a lower visibility than at the same time last year will result in significantly lower net revenues and profitability in the second half of twenty twenty. Products MLOG, less affected because they have this higher order backlog, and we also expect them to go back to normal operational profitability.
And therefore, we believe that Cardex Amlog will deliver a second half in line with our expectations, so a steady outlook for half 2 for CardexamLOC. Intralogistics, we keep repeating this, but we should also be aware that Intralogistics is a key element for our customers' logistics costs. And therefore, we believe that this intralogistics industry will return to solid growth rates in the midterm. It's shaken up like every other industry these days, but we believe that Intralogistics might come out a little faster than other, let's say, more traditional industry segments once the rebound is to be seen in the market. And we therefore also decided to continue also in half year in the second half year with our strategic investments in the supply chain, technology and digitalization, so that we are really ready for the future and not miss the boat when the market bounces back.
And that is it for now. And I guess I hand back to Edwin and we will run into the Q and A. Thank you.
Yes. Thank you very much, Jens. Thank you very much, Thomas. May I ask the operator to start the Q and A session now?
We have the first question from Tavia Bono from AWP. Please go ahead.
Yes. Hello, everybody. You are saying that the long term financial goals remain the same. Can you be more specific about these goals? Do you mean the EBIT margin between 8% 16% for Randstar and 4% to 8% for mLog?
Or are there are these other goals?
No, this is our communicated target ranges that we will now stick to. I think we see that Rhemsar has delivered within the range. Cardexamlog, this is difficult to explain, would have stayed in the range. And we also believe that and we are sure that both divisions will deliver similar type of ranges in the future. And I think our ranges are now just are really put to the test with a difficult market environment, and this is really the tester.
Not that we have been waiting for it, but this is the real test to our communicator ranges that we are really able to stick within those ranges even in a very difficult environment.
Welcome.
Maybe just to add, the financial targets are those that are in our investor handbook Chapter 5.2. It's this margin ranges, balance sheet ranges and growth ranges. They are all unchanged and they are all over the cycle as mentioned by Jens before.
Thank you very much.
We have a question from Sebastian Vogel from UBS. Please go ahead.
Hello. I got a couple of questions. The first one would be, if I compare your pre release numbers with regard to MLOG and the order intake, by the time you mentioned that order intake at MLOG would be like something around plus 70%, This number was a fair bit lower at least on a relative number. I was wondering what has changed in the meantime?
Well, Sebastian, when we published the business update, we that was all based on the I mean, we only had the May figures available. We were still full in the accounting phase of the June figures. It was then just an estimate and we did the causes estimate for mSTAR, so it came a bit better. For mLog, you see that the order intake is a bit lower, orders that the orders are in. But then at the end of the day, whether they are in the first half of the year, second half, it depends on the date of the signature on the contract.
And if a signature comes in with July 1, then it's from second half and not from first half. And that was still a bit unclear when we published in the 1st week of July. But there are no I mean, important to say, there are no specific issues that one off gains or one off, it's more an overall as mentioned before, an overall due to mix, cost, capacity, etcetera. And in MLOG, we are on track with the orders, as we said, 3 weeks ago.
And the same applies, and I assume also to the EBIT margin because in the pre release, you mentioned that the margin could be down by 200 basis points, if I'm not mistaken. Now you're just 100 basis points down, right?
That's the same thing, Sebastien. Here's the end. Net revenues came in a little stronger than expected just because we were able to get customer acceptance before 30th June. And that resulted in net revenues, relative gross profit, which then went through to the EBIT line. So it's really sometimes it's a matter of when the same happens at the end of the year, are we able to close out these projects and finally calculate those projects or are we not?
So we had to make a guess. And we, in the end of the day, came in a little stronger than we did believe early July before we had the full visibility on that.
Understood. In an earlier part of the presentation, you mentioned the FX impact that was quite unfavorable. Can you be a little bit more precise how many millions were lost on the FX side in the first half, either for the group or for Ramstar?
Yes. Hi, Sebastian. This is Thomas. The FX effects amounts roughly to 400,000.
Okay. And one last one with regard to the impairment. Is it fair to assume then if the impairment hadn't taken place at MLOG, then the EBIT margin would be somewhere between 4% 5%?
Can you repeat your question please? Sorry.
Assuming the impairment at MLOG hadn't taken place, is it fair then to assume the EBIT margin would have been at between 4% 5% or at the lower end of your range of your guided range?
It is in the range, yes. If we do not consider this value adjustment, but it would have been at the lower end of the range.
Perfect. Many thanks. That were all my questions.
Welcome.
The next question comes from Erwin Dutt from Kempen. Please go ahead.
Yes, good afternoon. I remember in the preliminary call, you said you were fast on costs and you said we're going to wait until end of the summer to see whether we have to go do another round of cost cuts and what we're going to do about ramping up the American facility. Are you still in that wait and see mode to see how orders come in the next couple of weeks? Or do you have a bit more visibility in terms of whether you want to move ahead in the U. S.
And whether want to take another look at costs, maybe do another program. And maybe in line with that, maybe you can talk a little bit about how in Q2 the on a monthly basis things have developed on what your exit rates are in June, whether things have normalized a little bit or whether it is still well below normal levels and therefore you tend to look at another cost ramp? Thank you.
It's a little challenging when it's too many questions in one. I try to remember your questions, Evan. I think we talked about it in the other call as well when we had the pleasure of talking 1 on 1 the other day. Number 1, I would say we never sit on cost and just wait because we do everything possible to adjust as we go. So certain programs are still in place, certain programs are looked at.
And I guess it's fair to say that there is not a one fits all approach for all of Cardex at this stage, especially not for Cardex Remstar. It will be a more regional, local approach where we look into each country, see how the country is likely to develop and what we need to do to meet those developments. This is how we handle this. And this is not a wait until Q3, and then we decide on that. So it's really running in parallel.
To do the best possible in terms of adjustments, holding out on recruitment, whatever you call it. The Q3 is more of a discussion when we go into a more structural discussion in terms of our supply chain, what capacity do we have to tailor the supply chain to for the foreseeable period. So the rest of the organization is an adjustment on the go as we go, I would say. We don't have much more visibility. This is, I believe, your other question.
It's up and down right now over the weeks even, not just the months, but also the weeks, good weeks, not so good weeks, new messages from the U. S, potential second wave. So you see it like everybody else in this market. It's a real up and down challenge right now. So I would not say that our clarity when it comes to market environment and then rebounds or not has significantly improved over the last, I would say, 3 weeks.
Very clear. Thank you.
Sorry. And Thomas just mentioned to me the U. S. Factory. We continue to build it.
But what we have decided, and I think it's been in the information as well, we decided to shift the start of operation in the U. S. To early 2021. Main reason being is not so much the business environment. It's COVID related.
Simply the fact that we cannot get people into the U. S. To commission these machines that we need because we have vending machines from an Italian company, from Salvanini. The Italian mechanics cannot travel to the U. S, and therefore, we cannot send our people to jointly commission these machines.
So we're sitting on a factory right now. We're having the machines themselves on-site, but they cannot be put in operation right now. And therefore, we said rather than wait another week and wait another week, we made a call to push the start of operation, the planned start of operation into 2021.
The next question comes from Stefano Camile from 1 Investments. Please go ahead.
Hi, hello. I'm Stefano from One Investments. Just a couple from me. So the first one would be, can you give an indication for your July sales rate, maybe for Remstar, if you could be specific on that one? And then the next one would be, could you speak a bit more about maybe the furlough schemes expecting to go forward into the year and how they go into your cost cutting measures?
Thank you very much.
Number 1, we cannot and we do not want to comment on the July bookings yet. Typically, the last week of the month is usually the one where we book the most during a month. So let's wait and see until we have the results in. The second one, I think I just answered or I tried to answer to Erwin. Unless I misunderstood your question.
Yes. My question was merely about the furlough schemes and if you maybe have are going to expect that they will be going forward in the next, say, until December?
Sorry, I did not hear what you said. Which schemes?
Furlough schemes, grants given from the government for your work?
Yes. Yes,
exactly. Sorry. I didn't know the term. Sorry.
Sorry. No, my thoughts. I should have explained better.
No, it's okay. It's fine. As far as I know, this varies by country. Some countries already announced this to at least last until the end of the year. Some even announced continuation in 2021, at least for the better part of the first half of the year.
And for others, we don't have any information yet. So for instance, the German government, as far as I know, they made sure that this goes throughout 2020 or the whole year. And therefore, we try to, of course, leverage as much as we can and benefit as much as we can from that. But it also goes in line. I mean, this only brings us over a certain period of time.
And what we need to have, this is linking back into Erwin's question. We need to rebound in the Q3 in order to be sure that we don't have to go into structural measures because once the subsidies or grants stop, we need to have the right and tailored suit in terms of capacities to then meet next year's demands.
Okay, understood. Thank you very much.
The next question comes from Alexander Koller from ZKB. Please go ahead.
Good afternoon, gentlemen. Could you give us an indication of how sensitive costs are to a declining top line? Because so far I was a little bit surprised. On the positive side that profitability at Remstar has not yet declined disproportionately. So is it realistic to maintain this in the second half of the year without major cost adjustments?
Maybe a bit light on that.
Hi, Alex. This is Jens again. Unfortunately, not. And the main reason being until let's say, for the better part of the first half, we had a fairly good order backlog, as you've seen the order backlog that we took into the year. And that helped fill the factories, which is one of our main profitability drivers, as you know.
And what we see now in our order backlog, the reduced one is a lower than expected factory utilization. And that is exactly what we've been highlighting that we expect a lower margin level for Cardex Remstar in the second half of the year compared to the first half of the year. How much? Again, it's dependent how quickly we can rebound and refill the factories again in terms of delivery to the customers. And therefore, it a little hard to predict, but this is where we cannot simply adjust the costs in line with the lower top line.
That would necessitate major structural things like cutting people and health.
And maybe to add, Alex, as Jens mentioned in the presentation, we were also taking in comparison to last year, remember last year we had quite a high cost base in the 1st whole year due to the capacity restraints we had and that's so there is also a certain basis effect in the first half that made the figures looking quite good.
We have a follow-up question from Tabia Vonov from AWP. Please go ahead.
Yes. Thank you. Sorry, it's me again. You stated that Renstar's traditional customers active in production and assembly were primarily responsible for the decline in orders. In contrast, there was less reluctance in the emerging areas such as e commerce, for example.
Does this maybe lead to a strategic change with regard to the target customers?
No need to apologize for questions. This is what we're here for. No, that's fine. Yes, your understanding is correct, and this is from our report. This is the traditional industries, automotive, machinery, these type of customers who put a hard stop on some of their investments.
In contrary, retail, e commerce, these type of industry segments did not experience so much. And yes, there is a strategic focus on these things. But what it also needs is the range the product ranges and the solution ranges to meet these customer demands. And therefore, this is something I think we decided to change the focus for Randstar specifically in the course of last year to more focus on these extra segments, the newer segments. But it also needs then products to be redesigned to be prepared for this, certain solutions to be defined, what we call standalone subsystems, so that we can meet these customer demands.
And if you really look into more detail in the retail e commerce, it's not the traditional retail market. I read an article yesterday where the North American retail market is substantially affected. They're closing store after store these days. So this is not where the dynamics are. The dynamics are in their online channels, where certain new things come into play.
Micro fulfillment centers is the buzzword of the last, let's say, at least quarter of a year, if not half a year. And that differentiates again into dark stores. This is an area Remstar does not play in and most likely has challenges to play in because this is fully automated warehouses as such with robots in there and everything else. This is not the typical solution portfolio that REMS starts in. And then it goes to open floor, men used machines like pickup stations and supported operations.
And this is where we have the first successes. There are certain customers in the U. S, but also in the Scandinavian market, where we sell more traditional solutions like solutions based on the Remstar standard product lines, color pick, frame pick. This is typical solutions that are used in emerging companies in the e commerce market. So we're starting to grab some hold of this market, but this is a slow process as expected.
Thank you very much. That was very interesting.
We have no further questions at this time.
Okay. It seems that we are at the end of the call. Further questions may arise. So please contact us. We are happy to answer them.
Now I hope that some of you are going to have some nice weeks of holidays, and I hope to hear you soon in autumn and latest with our full year frequency in March next year. Thank you very much, and have a good day. Bye bye.