Ladies and gentlemen, welcome to the Cardex Publication Annual Report 2018 Conference Call and Live Webcast. I'm Sherry, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by Q and A session. The conference must not be recorded for publication or broadcast.
At this time, it's my pleasure to hand over to Mr. Edwin van der Heest, Investor Relations. Please go ahead, sir.
Yes. Hello, everybody. Good day. Welcome to our year end conference call. We are happy to discuss our annual report and the outlook.
I hope that the ones that are not in the webcast but only in the call that they have found the presentation on the website in the IR section as well as the annual report. We start with our agenda. And as usual, we start with Thomas, who will lead us through the figures of 2018. Thomas, please.
Yes. Thank you, Edwin. Good day, and welcome also from my side. It's pleasure to guide you through the introduction and the financials of on the group level. First, we start with highlights on key achievements 2018.
For Cardex Group, it was another very successful year, not only based on the very good market conditions, but also on very solid sales performance, leading to double digit growth on all levels. Cardix and mSTAR successfully focused in the 2nd semester on the realization of net revenues and therefore could report a significant increase of volume and EBIT. Very positive was also Kartik Samok, which achieved an EBIT margin of 6.7% and reached a new profitability level. The order intake was also in the 2nd semester very strong and above previous year, this resulting into a comfortable level of backlog for both divisions. Based on the very strong results, the Board of Directors proposes to increase the distribution by roughly 11% from CHF3.60 to CHF4 per share.
Now let's have a look on the key figures of the past 5 years. I'm on Page 5 of the presentation now. Looking at the net revenues, there we see that compound annual growth rate has increased quite heavily from 5.6% of previous year to 8.2% this year. This is mainly due to the old proportional high increase of the net revenues in 2018. Looking at the EBIT margin, we also see here very good performance, an increase compared to previous year.
The compound annual growth rate of 16% has slightly decreased compared to last year, but anyhow, it is double as high as the compounded growth rate of the net revenues. Looking at the net cash flow from operating activities, we see that the ups and downs trend could be broken. This is due to the high level of customer prepayments. Net profit and payouts also here quite a heavy increase in 2018 of the net profit and the payouts this you see in the line graphics there, we report a yearly average increase of around 12%. Now let's have a look at the income statement.
So at the financials of the Cardex Group, The income statement, we see that the bookings have increased compared to last year by roughly 17%, mainly based on the performance of new business of both divisions, but also refurbishment section of Cardexamlog. There we report a book to bill ratio of 1.14. The order backlog has heavily increased by 32.5 percent or 56.5000000. This is representing roughly 6.5 months of net revenues. The net revenues increased by 12.6%.
This is mainly due to the new business of Kartex Remstar, while Kartex Amlog showed only a moderate growth. The gross profit margin remained on more or less the same level than previous year. The gross profit margin of Cardex Remstar reduced slightly, but was mostly compensated by good margin levels of Cardexamlog. The OpEx have increased by 10.4%, mainly based on investments in marketing
and
was at €53,200,000 The EBIT margin amounted to 12.6%, both representing once again record values. The financial result is €200,000 below previous year's results. This is mainly due to card exam log interest expenses for pension liabilities. Very positive news on the tax front. The tax rate has decreased by roughly 3% points from 28.5 percent to 25.6 percent, which is mainly based on the U.
S. Tax reform. Results for the period, dollars 38,300,000 or 9%. Also here, we report record high levels. EBITDA increased by roughly 15% to €59,000,000 Looking at the balance sheet, we see on the position non current assets that we have invested in our factories to address the capacity constraints.
The gross investments there amounts to €9,700,000 compared to last year's investments of €5,500,000 euros Also the current assets have increased by €20,100,000 mainly due to the increase of the cash and cash equivalents position of €14,300,000 Also, the equity has increased by the same amount and this despite reduction of the nominal value of €24,100,000 The equity ratio remained on exactly the same level of roughly 58%. Also, the liabilities position increased by $10,400,000 or 10.3%. This is mainly because of the increased position of POC over financed position. Coming to the cash flow statement. Here the net cash flow from operating activities have increased by €2,100,000 This is the result of the higher result of the periods, which was partially compensated by higher level of construction contracts.
You see that the net working capital has decreased by 700,000 this despite the higher volume we have reported. The net cash flow from investing activities is reduced, so the spendings were $1,100,000 lower than previous year. This despite the higher CapEx we reported, but the acquisition activities were lower than previous year. The net cash flow from financing activities shows the reduction of the nominal value and resulting net change in cash and cash equivalents amounts to CHF14,300,000 euros so €5,100,000 more than previous year. Thank you for your attention.
I would like to hand over to Jens Vankanen, which will guide you through the divisional report strategy and the outlook.
Good afternoon, everybody. It is for me to talk about the both divisions, Cardex Randstad and Cardex Enlog. If we first start with Cardex Remstar on the next page, We see a very good result for Cardex Remstar, which already was shown in the half year reporting and has continued through the 2nd part of the year with new business with another double digit bookings increase and a total bookings increase for the entire division of 13 point something percent. Net revenues grew even further with 14.8 percent to EUR 314 7,500,000. And major contributors to this growth have been Europe, against some of the expectations.
But I think Europe has shown a very strong performance also in 2018 throughout the year. North America, where all the investments and the restructuring of the organization now proved to be successful, and they produce the expected results. And also in China, we had a double digit growth. So all three of them being the major contributors. Due to some delays in net sales, in net revenues, the backlog increased to €157,000,000 which is a record high for the last year and provides very solid base for Cardex Remstar's development in 2019.
Service business, for the first time ever, achieves a €100,000,000 mark, which is part of our growth plan, but it actually came a little earlier than expected. So €100,000,000 for the first time, very solid number, very good number and a good achievement from the organization. We have continued investments in R and D. Approximately 3% of our net revenue went into R and D spend into the technology, but also the maintenance of our existing portfolio. And with that, the division achieved an EBIT of €51,000,000 14.9 percent higher than the previous year and an EBIT margin of 14.7%, which is the same margin as in 2017 and an EBITDA of 16% versus 16.2%.
We were able to also increase the number of employees in Cardex Remstar to 1511, an increase of 10%, a little less than the net revenues, which also shows some increase in productivity. So overall, the financial KPIs for Cardex Remstar are in the upper target range. EBIT margins, I mentioned, and a ROACE of 43%. We move on to CardX MLOG. In the next page.
Oh, sorry, Cardex Remstar division still with the key figure comparison, a CAGR of 8.5% over the last 5 years. In net revenues, operating results on the right hand side is 51% 14.7 percent EBIT margin with a growth of close to 15% over the same period. And the revenues mix is almost unchanged. I'd say almost because this is in marginal differences when you talk 68% new business, 30% on life cycle service and 2% in OEM. And in this year, in 2018, we show 69%, 29% and 2% in revenues mix.
So almost unchanged, which is important because we target the close to 30% life cycle service range as the backbone of our business. On the geographical side, some movement, some minor contribution from Europe on an increased number. Americas, actually here North, Middle and South Americas with the major contributor being North America, moved from 17% in 2017 to 20% in 2018. APAC did remain percentage wise at the same level. They grew double digit, but due to the growth of the other regions, they stood still at 8%.
And the other regions, Middle East and Africa, at 2%, respectively, 1%, mainly due to the political and economical turmoil in that region. Now we really move on to CardX MLOG. CardX MLOG, also with a very successful year when it comes to bookings and bottom line. Bookings for the first time hit the €100,000,000 mark in MLog, and it is exactly €100,000,000 It's not a manipulation of the numbers. It really came in exactly at the €100,000,000 mark, strong growth over 2017 with 33%.
The net revenues, actually much lower in growth, 3.1%. That's mainly due to project delays on selected customer sites, which is also shown in the order backlog that we carry forward into the Q1, Q2 and a little longer of 2019, the €73,000,000 which provides again similar to Cardex Remsa for a very good and solid starting point for 2019. Profitability levels increased. We were able to increase both the gross profit levels, but also the EBIT margins, as you can see, €5,100,000 in EBIT in absolute numbers, EBIT margin of 6.7 percent, and that is despite focused and increased investment into the product portfolio and also into the people development. Calixamloc exceeded the financial KPIs target ranges with the EBIT margin of 6.7 percent and the ROCE at a very healthy and solid 54.8%.
In the next page, we see the same development of numbers like we just saw for Cardex Remstar. Division MLOG, the key figures. We saw a relatively moderate growth in the 1st years, with 2014 2015. And then we somehow stagnated a little bit on revenues. If you see 75%, 73%, 75%, 75.9%.
But I think Cardexammerlacht has now reached a level from which we can grow in a more profitable way. The operating results, EBIT margins, they show that with the increase to EUR 5,100,000 respectively, 6.7%. The revenues mix has certainly something to do with the very good EBIT margin levels. If you look into the comparison on the left lower side, the revenues mix in 2017 was 55% new business and 37% service, whereas in 2018, that changed to 46% in new business and 49% in service. And that obviously helps improving gross profit and also the EBIT margin levels.
From a geographical split point of view, the focus in Germany has not lowered, but rather increased in 2018. So there was less business outside the German market, which on one hand is good because it shows a very healthy and steadily growing German market environment. On the other hand, that is one of the negatives of 2017 that we have not been able to grow the AMLOG business outside the German market according to our own expectations. And I probably will come back to that when we look into the outlook. We now go one page further.
We go to the strategy and outlook. The system is just not playing with me, so I keep going with my own presentation. On Page 18, we see the updated position of both divisions with regards to strategic play areas. If you remember, we did explain the chart on the slide where Cardex Remstar is positioned with automated products and in the Cardex M log with the integrated subsystem. And all of you who have read the strategy papers and the investor reports know that we are striving to actually play in the areas where we expect the highest profitability levels.
And that is right in the middle of what we call standalone subsystem. So for both divisions where they are positioned well, so for caudexremstar in automated products, the growth will be upwards, increase business of what we are doing well today, mostly through geographic expansion, but also through different industry segmented approaches. And then on the other hand, move caudex ramps a little further to the sensor, the stand alone subsystems. And the same goes for caudexmlog, growth both in industry segments and to some level extent with geographic expansion in the vertical direction and in the horizontal direction move Cardex Amdocs a little closer to Cardex Remstar. If you look into where we are today, the geographical expansion for Cardix Remstar has worked quite well.
We saw that especially with the numbers from the North American market. However, the move towards the middle part, we have some room for improvement, as I would call it. And the same goes for CardX MLOG. There is substantial room when it comes to geographic expansion and industry segmented approaches and also for the move towards the center, the stand alone subsystem, which is not developing according to our expectations with the right speed. And that will be a focus area for 2019 2020 as we go along with our business.
Next page is the main focus areas that I already started touching on. For Cardex Renstar, the most and utmost important thing will be to keep the positive momentum up that we currently see both in Europe and North America. We should really start pushing harder for geographic expansion and growth in Asia Pacific. Despite China, China's development that I reported on, we are not entirely happy with development in other parts of Asia. And this will be a focus area for us in 2019 and further.
And with that, we need to also look into our capacities. We did already talk about quite a few capacity constraints in the organization. On one hand, finding the right people, have the right people readily available when it comes to execution and implementation of our backlog on one hand, but also when it comes to manufacturing. And that has 2 elements. 1 is capacities in our European facilities, in our German facilities and also looking into getting closer to the customers, hence enhancing our supply chain capabilities in the continent, mostly starting with the U.
S. And some manufacturing capabilities in the U. S, followed by a later step then in Asia Pacific. For Amlog, it will be to maintain and improve, first to confirm and maintain and then hopefully also to improve 2018 margin levels. It will be to grow business outside the German market, adjacent countries to actually focus on established customer base in some of these countries and leverage on those.
And last but not least, we saw that in the revenue split, focus also to review the go to market strategy for products on one hand and stand alone subsystems in order to be more successful in that area of our strategic plan. For the group, I think us being a technology focused company, we need to look into where can we possibly enhance our technology base, increase our portfolio in order to provide our customers with better technology base and solutions. We urgently need to develop a comprehensive employer branding concept to better position Cardex as the employer of choice. And we also will continue on a focused people development across the whole group, mostly to retain people in the company, but also to recruit people to the company, recruit talent that we urgently need in various parts of our organization. On the next page, I think most of you have read the announcements that we made earlier this year.
We have slightly changed the management structure as per 1st January 2019. The major change was that I gave up on my double function as Head of Division, Karl Erik Remsgaard and CEO in parallel. We promoted Urs Segenthaler. We've been with the company since 2011 to the Head of Cardiacs Remstar division. Urs has a very well proven track record in the organization and before.
And with that, he will focus on the further development on of Cardex Remstar. And I will focus more on strategic tasks within the group management to actually do these things that I just highlighted on the page before, which is strategic projects, further development of the group, additions to the group and similar type of things. And last, not least, on the last page for now, what is our assumptions and expectations for 2019? First of all, we currently see no real cooldown in global demand for efficient intralogistics solutions. We are aware this is a slightly different to maybe other companies' reports.
However, this we are monitoring very closely what's happening in the various markets. And despite some indicators that show some negative trends, our current order pipeline and offer pipeline sales funnels is pretty intact. It's not shrinking. And the level of demand in the market we see is currently quite stable. That doesn't mean it will not go down, but so far, we do not see it.
And we obviously also benefit from a continued relatively positive economic environment. We will continue in investments in people development. I said it before, this is our asset in the company. Our people make the difference between us and some competitors. So we have to continually invest in our people.
We want to continually invest in our people. We also will invest in our technology in order to keep our market position up and alive. And last not least, into digitalization to become more efficient and to become a partner of choice for our customers also when it comes to interfacing with CardX and make their life easier in interfacing with us. And that is usually also helped by digitalization. We expect Cardex Remstar to continue its profitable growth based on elimination of bottlenecks in the organization, hence some capacity increases.
We should focus and we will focus on our growth markets and leverage in our position there. And with some adjusted industry segment approach, we should also be in a position to actually benefit from some strong positions in some key verticals for CardXRamskar. Cardex MLOG looks into a year with a very solid order backlog that should actually give them some pretty good tailwind into the year. We expect the consolidation of the new profitability level, and we should also look into focusing on the revenue mix, not losing the service side of things and the service progress they've made. But on the other hand, also look into the new business side to increase our installed base, which gives the base in the end of the day for later service levels and a continued profitability.
So overall, a fairly optimistic outlook into 2019, at least with a visibility of 3 to 6 months based on the solid backlog and the strong market position of both divisions. And with that, I would like to thank you for your attention and would like to hand back to Edwidge. Thank you.
Yes. Thank you very much, Thomas. Thank you very much, Jens. Now we give back to the operator, and it's up to you to shoot some questions, and we are happy to answer
The first question comes from the line of Claudia Lance, Finance from Birtschaft. Please go ahead.
Thank you for taking my question. I have 2, in fact. The first would be, can you talk a little bit about opportunities you see for an organic growth? And second is your EBIT margin target on a group level hasn't been changed. Can you tell me why?
I would say Jens, it's
Part 1. The famous question of acquisition. Yes, we see opportunities and this is now I know, a little tiring for you to listen to you guys who've been in the calls for the last years. We had another well, we had other opportunities again in 2018. And unfortunately, none of them materialized in terms of a positive successful acquisition.
So yes, we see some. But with the current overheated market in terms of pricing for the targets, as we call them, we have not been successful because either it was not the right strategic fit in the end when you dig a little deeper or the price ranges were so crazy, excuse my harsh word, that it was not worth for us to pursue the deal.
Yes. Then maybe I answered the 6% more than 6% EBIT level because that is the board. The board doesn't want to increase that level. It is not saying it's a minimum of 6%. It's more than 6%.
And it's important to understand the message of the Board is that this company will do everything to defend a minimum of 6% EBIT level even in difficult times. And I think for investors as you it's more important since we are organized as a company with 2 divisions with full responsibility, it's more for you to look on the target range we have set on the divisional level. That's why we have the 6% plus.
Next question comes from the line of Michel Lichtbar, Benfon Toebel. Please go ahead.
Good afternoon, gentlemen. I would have several questions, maybe starting with the first one. Just in terms of MLOC, we've seen basically your new business, the product business falling kind of double digit. On the other side, the service business grew double digit, which more than compensated for the fall in kind of acquiring new business. Is this kind of the fall reason or is it because of some economic softening?
And could we see also going forward a similar trend? Or do you expect this to reverse? And then also another question regarding this, how does the margins look between the services and the product business? And then also given your outlook, where you want to grow outside of Germany, so probably that means less services you have to first start with new business. That means that in going forward the split of the pie chart would look more like what we were used to in the past and then the margins could come under pressure again since you have more new business and less of the services?
So that would be my first question. Can you repeat the question because it was multiple in one, I believe?
Yes. Yes. So first, can you just explain the dynamics why your new business is falling and why service is growing so much? And then the second part of the question, how the margins look between the services and the product business? And then given the outlook, it seems that the new business should grow faster than services again given that you want to grow outside of Germany?
Omid, you want? Yes.
I will take this question. Hi, Michael. Thanks for the questions. So first question, why is new business falling at Kartik's Hamburg and why life cycle services has increased so heavily? This is based, as we mentioned, due to time issues of the customer sites.
So there's no capacity issue we have at the Cardiacs Amlog. We have no capacity issue at Cardiacs Amlog. It's purely on customer side that there have been postponements on existing projects and this will come back. So this is no trend for the future. We try to keep the level of service business we had last year to grow in both sectors.
The margin split between life cycle service and new business, we are not commenting. We are not giving the figure out. And your last question was where do we want to grow outside of Germany? We established kind of an OEM business in Italy, Turkey and also in other countries, but mainly in Italy and Turkey. We have a good relationship with partners there.
This is a very good business where we provide products and stand alone subsystems. And this is the kind of geographical expansion we want to accomplish in a first step. So this means true, we will not have a service business or at least not have standard service business in these kind of markets. But anyhow, there is no dilution of the margin expected due to this geographical expansion.
Okay. Thank you very much. Yes, yes. If I can
If you just add, Michal. In the I mean, if the bookings could have been realized this year, then you would have seen another picture. It was just more difficult to realize the greenfield businesses than the modernization businesses and that led to this mix.
Okay. That's clear. But it's not
that the market would go down. It is there, but all the performance delays were on the customer side where they had problems with the buildings, with the whole preparations for these new distribution centers. So they are this is just a postponement of some orders in 2019.
Okay. Thank you. And another question just regarding your exposure to Americas or North America business. I was happy to see that you are growing quite strongly in Remstar 25% even in MLOG small sales this year. So it seems that the strategy that you applied a couple years back is working.
Can you tell us a bit more what happened last year? Why the growth was so strong? And what do you expect in 2019 in the Americas region?
What happened last year is that the team finally delivered according to the expectation. And that was across multiple industries. Government performed quite well, our government sector in the U. S, but also the typical industries that we sell into. We've been able to close some gaps in the network.
And that was mainly by replacing non performing dealers with direct salespeople in some territories. So it's the mix that I've been talking about for the last years, how we would change the network in the U. S, North America, sorry, not just the U. S. And leverage from the market position.
And that's finally coming to fruition effectively. I mean, if you calculate the numbers, that's quite a substantial increase in net sales. And it's also in terms of market leader position, a clear move forward in our niche market, obviously. But in that respect, I mean, we've done quite well. So the team has delivered.
That's what I would summarize it with.
And just maybe a follow-up here. Do you think there is more improvement to come from North America? Or are you now happy with the structure you have there? Or are there still some gaps to fill that can fuel more growth and more performance in North America? There's always room for improvement.
And I mean, I don't think that in North America,
we are reaching the ceiling. I think the market itself for it being not so mature, like for instance, the European market to provide for more growth in itself. I mean, it obviously needs a solid economic environment that we all understand. But as long as the environment is stable, I think from the market leader position, we can also create demand. It's not just the market that we have to follow.
It can also be developed in terms of demand generation by getting in front of more customers, by doing a better marketing job, reputation of CardX to be improved. And with all of that, more leads to be generated. And from those leads with a higher sales efficiency, also more volume to be produced. So I believe given a solid economic environment, I would expect another good growth in that region. And of course, you always have to look into the organization, is it fit for the target and make changes as we go.
It actually never stops to some extent.
Okay. Thank you. And my last question just regarding the Remstar OEM business. Before you basically always said that basically are you using unused capacities for this OEM business and now Remstar is kind of running on over capacities. Is this kind of the explanation why the OEM business is not picking up?
And once you have these capacities, we will also see the OEM business in Remstar growing much faster.
I thought you are going to ask me whether we stop the OEM business now. No, it's not it's totally unrelated. It's a mix of non satisfactory performance by some of our partners, not to blame those, but that's reality. And also a lack of performance of an internal team, our OEM team. I think we saw some changes there, the more organizational changes.
And these two things together mean that we are not growing according to our expectation and own business plans. We did grow year on year, but on a very small level still. So it's got nothing to do with the capacities in our factories.
Okay. Thank you.
You're welcome.
Next question comes from the line of Remo Rosenau, Helvetica Bank. Please go ahead.
How much capacity have you left?
Yes. Hello. Thank you.
Hi, Reimer. Hi. I would come back to the theme of capacities. I mean, you mentioned in the press release as well that you are running on very high capacity utilization. On the other hand, you just said that there were also a few inefficiencies here and there internally, also with suppliers, but also internally.
Then you mentioned that capacity will be gradually increased through targeted investments in the plants. So do I interpret that correctly that this will be kind of, let's say, soft CapEx increases, not involving major CapEx? Or well, how much CapEx will be involved? And what exactly will you do when you talk about this capacity increase? And how much will it cost?
Is that Thomas going to answer or yes? Thomas?
The CapEx, yes. Capacity probably back to Jens, but CapEx relates to me. Remo, you have seen that we invested this year almost double as we have invested in the previous years. So €9,700,000 compared to €5,500,000 gross investments. And this will further increase in the upcoming years.
So we expect that the CapEx will increase to between €15,000,000 to €16,000,000 per year for the next couple of years. So this is a bit more than just soft investments. We are investing in machines and equipment, and we are also a bit expanding our buildings. Is this answering the part of CapEx?
Yes. I didn't understand for how many years? Euros 15,000,000 to €60,000,000 for
I didn't say it. We expect that this will last for the next 2 to 3 years.
Okay, okay. Great.
And it obviously, again, I have to repeat that, means solid economic environment because we have plans in place. Obviously, you always look into it with a positive view. And then you say, okay, if everything goes to plan and everything goes according to the last year's development, we probably need quite substantial capacity increases as you may imagine. Now there's also the downside of things. If the negative guys in the market take the upper hand, then you also have to have a plan in place where we say we don't just increase the capacities and then we sit in there with idle capacities.
So it's the opposite to what we are seeing now. And that needs careful consideration. So what we're doing in terms of capacities is obviously in our main factory in CartagenaRemstar in Belheim. I would call that actually soft increases of capacity. And that's possible because the this is one product line and that's pretty well running, the lift systems.
And then goes another discussion around our German that we need to look into very carefully because it's linked to 2 elements. It's one linked to the market itself, our sales volumes in the market, sales success for these product lines that we are doing in Neuburg that we are manufacturing there, but also to the product mix, because it's substantially different if one line increases or both lines increase, we have actually 3 lines there. If 3 lines would increase in parallel because they have different manufacturing methodologies to some extent, and therefore, the need to do manufacturing would look totally different. And that needs year on year planning or actually we look into it on a quarterly base before we commit to further CapEx. On the one hand, we don't want to be too late like we probably had in the last year.
On the other hand, we don't want to be too quick if the economic downturn would start kicking in. And then comes the 3rd element, which is closer to the continents, and that is what I talked about before, considerations about local value add in the U. S. To get closer to our customers because one of the main elements of our of keeping our competitive position is delivery times. And that is probably the biggest hurdle for us these days to actually gain more volume is our delivery times.
And if we can get closer to the customers by local value add, I think you guys know well enough that if you can deliver in 5 weeks or 6 weeks to the customer as opposed to 20 weeks, that is a big competitive argument. And I think we are now virtually at a point where we need to do something there in order to stay competitive in the U. S. Market and also gain more market share in the U. S.
Market.
So could I sum it up in a sense that you have an overall plan, which you just outlined now, but that you will divide this play into kind of 3 steps? And along with the implementation of these steps, you look how the markets develop and you could also stop 1 or 2 elements of this expansion plan if the market would turn sour?
It's a very fair and very good summary, Remo. Yes, that's exactly what we now have to do. We have it on hand, this plan that you're talking about. It's well outlined, and it stretches out for 4 years. But with clear trigger points on one hand, that's commitment to CapEx on one hand, but also review points before we actually hit the point of no return and then we are committed to the investment.
And it's actually more than 3. It's actually I think 5 or 6 of such trigger and stop points in the overall plan.
Okay. Very good. Yes, got it. Makes sense. Thank you.
Welcome.
Next question comes from the line of Juan Tseng, Nanshan. Please go ahead.
Yes, thank you and congratulations on the strong results. Just some of my questions have been answered already, but just to see if I really understood well. So revenue growth in the second half of last year, it looks like it has accelerated quite a bit, 16% year over year compared to single digit in previous half years. So this is because of the U. S.
Breakthrough, right? That's the first question. The second question is the bookings for Remstar, looks like it's a bit slower in the second half. I mean, it's still growing, but a bit slower compared to previous half years. Is that because of capacity constraints?
And the last thing regarding last question regarding Remstar also. So the slight very slight weaker EBITDA margin for Remstar, could you just elaborate a little?
What was the first question? Sorry, you guys have to bear with us. If you do 1 by 1, it would be a little easier. The first one was which one? Sorry.
Okay. I'll just start with the first one then. So revenue growth in second half increased quite a bit to up 16% year over year compared to single digit in the previous half years. And I was wondering whether that's precisely because of this U. S.
Breakthrough that you've seen that you had?
No. Revenue growth in the second half is actually all regions. Pretty traditional in the Randstad business that the second half has a very strong net sales growth. If you look in the previous years, the strongest month ever is December normally for some funny reasons. It's mostly also related to customers who want to close the deals, who want to close their budgets before they lose the budgets.
So it's a very simple and traditional pattern in the Randstad business that the second half year is usually much stronger in terms of net sales than the first half year. Your question regarding bookings, I now remember. Now it's not slowing down. It's a simple year on year, half year comparison. In 2017, we started extremely slow when it came to bookings.
In 2018, we had a much better distribution of bookings across the throughout the year. So I was more happy with the first half year in 2018 than I was with the first half year in 2017. So that's the half year half year comparison, if you know what I mean. If you have a weak 2017 half year, first half year, then it's easier to exceed that and probably be at 16% above where if you have a strong second half year, it's a little harder to get to the same 16%.
Right.
Does it make sense?
Okay. Yes, yes, yes. Okay. But my first question, actually, I think maybe I don't know if I got the numbers wrong, but when I compare each when I look at each half year, each semester over the past few years, your growth tends to be single digit year over year, but in the second half, it jumped to 16%. I understand the seasonality, but the seasonality wouldn't be playing into year over year comparisons.
May I step in? Yes, you're absolutely right. In the just compare first half year 'eighteen to first half year 2017, the net revenues have increased by 9.2%. Whereas in the second half, also compared to the second half of twenty seventeen, the half year on half year comparison amounts to 15.6%. So absolutely right.
This is as I mentioned in the call that the sales organization has really focused in the 2nd semester to realize the bookings we have in the backlog. So the realization was more in the backlog in the focus than gaining more order intake. This is quite a simple explanation.
Does it
make sense? Okay.
Thank you. And just last yes, that's very much. Thank you very much for the explanation. And just last question is regarding the slightly lower EBITDA margin in Remstar.
Jens, would you like to take this one?
No, I don't have Jens. Okay.
Well, this is result on the slightly lower gross profit margin we have at Carrick Sorensen. This is based on the higher material cost. So the material costs have increased, also the salary costs have increased. And I've mentioned several times also capacity constraints. So we have this 3rd shift being in place in one of our factories.
And this is increasing the cost base, which is reducing the gross profit margin, as a result, the EBITDA and also the EBIT margin.
Thomas, the EBIT margin is the same. That's why I think he's asking about the difference of 14.7% to 14.7%. And then we have 16.0% EBITDA margin versus 16.2% EBITDA margin in 2017. The 0.2% you're talking about, right, the difference?
Yes, it's very little, but
Yes. That's why I didn't have the answer on hand. Everything else, I could have explained, but that's exactly the one I'm sorry, I cannot explain.
Very, very small.
Yes. We have an increased current asset space. We have invested more and more and this is increasing the depreciation, which makes the difference between the EBITDA and the EBIT margin.
It's a very small difference.
It's a very small difference, yes.
Sorry. Yes, it is.
Didn't realize here where you're heading
to. Next question comes from the line of Sebastian Vogel, UBS. Please go ahead.
Good afternoon. I have also a couple of questions. The first one, you talked a little bit about H1 and H2. I was wondering if I look more within H2, can you differentiate a little bit between Q3 and Q4 in terms of top line and order intake growth? What you have seen there, that would be my first question.
Not on the top of my head.
No. And on the qualitative phases? Was the business getting stronger over the course of second half? Or was it actually evenly spread or actually moderating totally or closer to the end of the year?
That's very
On the quality statement, I would say it was pretty similar. It was not decelerating, if that was question number 1.
That was question number 1 indeed, yes.
We saw pretty strong order intake even in December bookings, which kind of was a little unexpected. We before that with all the turmoil in the market and the negative indications some people mentioned that bookings would actually drop a bit. They didn't. And also net sales was as strong as ever in the Q4. But we also had very solid Q3 because we saw very strong September October, traditionally the case anyway, but it was reconfirmed.
So from a qualitative statement, and I hope you don't hold me for it, I would say it's almost the same, the 2 quarters.
Perfect. The second one would be on organic growth. I'm not sure if you can share that, but would definitely appreciate it. If you can talk about organic growth for the full year for Remstar, for AMLOQ and for the group. Do you have a number there?
Organic growth? Yes. I mean, the only inorganic or not organic was the minor acquisition, Thomas, in the U. S?
Yes.
That came into play. Everything else is organic. And the FX impact? FX was actually to our disadvantage last year, right, Thomas?
The effect in total was about €3,000,000 top line.
For the full year for the group?
Full year on group and Remstar. Amlog had no organic growth.
Okay, got it. Perfect. And then one quick one on Amlog. These construction delays you were referring to, can you share a little bit more like what were the drivers there and how or where you take the confidence that these sort of drivers will turn around and then you will see this orders coming through and not getting canceled at some stage later in the process?
Maybe here's Edna speaking. Sebastian, what we heard from Emiluc, it's maybe I mean, there is not only a machinery boom in Germany, but also there were building construction delays So that projects take longer to be realized due to the booming marking in Germany. But these projects are all underway, but it takes a bit longer to build the buildings and to whatever it needs to build the infrastructure before we can come and then do the installation of the Intel Logistics.
Got it. Perfect. And one very last one from my side would be on net working capital. You alluded to that shortly in the presentation. How should we think on that going forward in particular with regard to advanced payments, credit accounts receivables in that regard?
Yes. It's hard to further reduce net working capital in the end. We had a very positive effect because we had good bookings, especially at the AMLOK and the prepayment position sort of has increased quite heavily. This is a spot effect at the year end. And whenever the volume increases, the capital should also increase in the same proportion.
So it should be the net income cap intended, it should be rather getting higher going forward? I mean, not exactly, but steadily.
Correct. Absolutely. Perfect. That's all
from my side. Many thanks.
Welcome.
That was the last question.
Okay.
No more questions? No. Okay. Then we are happy to answer further questions whenever you send us an e mail or give us a call. Thank you very much for being with us and hope to hear you again in 5 months.
Thank you very much and have a good day. Thank you. Bye bye.
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