Glaston interim report 1 January – 31 March 2017: Slow quarter as expected, outlook unchanged

JANUARY-MARCH 2017

• Orders received totalled EUR 21.6 (25.0) million.

• Order book at end of March grew by 31% to EUR 45.1 (34.5) million.

• Net sales declined to EUR 22.8 (29.4) million.

• Comparable EBITDA was EUR 0.8 (1.4) million, i.e. 3.5 (4.7)% of net sales.

• The comparable operating result was EUR 0.0 (0.7) million, i.e. 0.1 (2.4)% of net sales.

• Return on capital employed (ROCE) was 0.5 (6.0)%

• Earnings per share were EUR -0.00 (0.00)

• Net interest-bearing debt amounted to EUR 3.0 (10.9) million.

GLASTON’S OUTLOOK UNCHANGED
Glaston’s outlook remains unchanged. We expect the full-year comparable operating result to improve from 2016. (In 2016 the comparable operating result was EUR 2.8 million.)

PRESIDENT & CEO ARTO METSÄNEN
“In the first quarter, the glass processing market was quiet and the number of new orders was relatively low. The large number of orders in the final quarter of the previous year also affected the order intake in the early part of the year. In addition, as customers’ decision-making times lengthened, a number of service and machine deals were postponed in the first quarter until the current quarter.

Due to the low number of deliveries, January-March net sales were low and totalled EUR 22.8 million. The comparable operating result was EUR 0.0 (0.7) million. The order book was at a good level, EUR 45.1 million, up 31% from the corresponding period of the previous year. This creates a good foundation for rest of the year.

The anticipated quiet first quarter does not change our assessment of the year as a whole. Conditions for operational development and profitable growth are good. Our short-term focus is on new orders and ensuring a first-class customer experience.

As a pioneer in our field, we want to be involved in developing the glass technologies of the future. In emerging glass technologies, we are actively seeking new business opportunities, because we expect this market to grow strongly in the next few years. To support our growth objective, we established the Emerging Technologies unit in January. This brings clarity to our operating model and distinguishes us from our competitors. Our investment in a Californian nanotechnology company is part of the Emerging Technologies unit’s activities. In the nanotechnology project, the development work of a pilot line progressed. In addition to this project, we are actively engaged in discussions with a number of companies on the development of new glass technologies and their practical application.”

KEY FIGURES

OPERATING ENVIRONMENT
As expected, the glass processing market was quiet in the first quarter. Despite good market activity, in the EMEA area customers’ purchasing decisions were delayed. The market in China was still on a downward trend, but in a few other Asian countries market development was positive. The North American market was relatively active. In South America, the market remained subdued.

MACHINES
In the first quarter, the EMEA area was the strongest area for Glaston’s Machines business. After a quieter period, demand picked up in the Middle East market. Glaston's FC™ product series particularly attracted the interest of glass processors in the area.

The slowdown in investment decisions as well as the general political situation in Europe impacted customers’ decision-making in Eastern Europe and in certain Central and Southern European countries.
 
The North American market remained active and demand for machines was relatively good. In addition to the FC™ product series, there was also interest in laminating lines, in which Glaston has a new, very competitive product series.

The laminated glass market in particular is expected to grow in North America. The competitive situation in the market intensified further, resulting from the activity of Chinese competitors in the market and customers’ extended decision-making times. In South America, the market overall was subdued.

In China, the downturn in construction continued, and demand for glass processing machines remained weak. In Australia and New Zealand, the market environment continued to be good. In the Philippines, Indonesia and Thailand, the market developed positively. Demand for low-emissivity (Low-E) glass, in particular, began to grow.

SERVICES
Following a strong fourth quarter of 2016, the Services business market levelled off in January-March. In the EMEA area, activity continued at a satisfactory level. The North American market continued to be challenging. The pick-up in the South American market seen in the latter part of the year continued in the first quarter. The service market in Asia remained subdued.

The market for modernisation products continued to be stable. There was demand, in particular, for lamination process products, such as the ProL zone. In the review period, Glaston agreed sales of upgrade products for the United States, the Baltic countries and South America. Sales of tools were at a good level.

OUTLOOK UNCHANGED
In the first quarter of 2017, the glass processing market was quiet, as anticipated. The prolonged uncertainty in the global economy and increasing political tensions in some regions will impact customers’ willingness to invest, and decision-making times have lengthened. There are no visible signs of a permanent change in the market, however. We expect that positive market development will still continue.

A higher order book than the previous year, positive market development and the cost-saving measures undertaken create good conditions for the development of operations in 2017. We expect the full-year comparable operating result to improve from 2016. (In 2016 the comparable operating result was EUR 2.8 million.)