- Rising revenue share of medical, laboratory and food technology
- Solid equity and liquidity position extended by purely precautionary covenant suspension
- Financial forecast 2020
Gelsenkirchen, 13 May 2020 – As already announced in advance on 27 April 2020, the Masterflex Group recorded largely stable business development in the first quarter of 2020 and, at EUR 20.5 million, almost maintained revenue at the previous year's level (EUR 21.1 million). Further revenue growth in medical, laboratory and food technology was a key driver. Responsible for the slight decline were the closure of production in China for several weeks due to the COVID-19 pandemic and the weakening of demand in the automotive and mechanical engineering industries that was already evident in the fourth quarter of 2019. In the quarterly statement Q1/2020 published today, the Masterflex Group reported operating EBIT of EUR 2.1 million, which was thus maintained at the level of the prior-year quarter, not least due to the optimisations and cost savings successfully implemented in the fourth quarter of 2019. The EBIT margin in the first quarter of 2020 was 10.0%, compared with 9.8% in the prior-year period. Consolidated result improved slightly from EUR 1.2 million to EUR 1.3 million. This corresponds to earnings per share for the three-month period 2020 of EUR 0.14 after EUR 0.13 in Q1/2019. Operating cash flow rose to EUR 0.9 million after EUR -0.1 million in the previous year.
Regarding the further course of business in the coming quarters and the corresponding financial forecast for the fiscal year 2020, Masterflex assumes that the COVID-19 effects on the economy will take a U-shaped course. The Masterflex Group therefore expects the strongest impact on its own business development in the second and third quarters of 2020. The Management Board expects a gradual improvement in the environment only in the third or perhaps even fourth quarter. By the end of the year, an upturn should then return to almost the level planned. Under this premise, Masterflex expects a decline in revenue of between 10% and 15% for the year 2020. Accordingly, EBIT will be between EUR 2.5 million and EUR 1.0 million at Group level. The Masterflex Group continues to adhere to its medium-term forecast and aims to achieve organic growth to EUR 100 million in revenue by 2023/2024 and a sustained double-digit EBIT margin from 2022 onwards.
Despite a possible significant decline in revenue in 2020 because of the pandemic, liquidity is ensured for the next few quarters even in these scenarios. Lower investment volume, short-time work, reduction of working capital, lower tax payments as well as strict spending discipline largely compensate for the possible loss of liquidity due to the decline in revenue.
Mark Becks, CFO of the Masterflex Group: “We are very robustly positioned for the challenges ahead. A cash balance of currently EUR 6.9 million and the positive and intensive exchange with the syndicate banks are also contributing to this. As a purely precautionary measure, we have agreed a suspension of the debt-equity ratio covenant in the syndicated loan agreement with our bank partners until the end of Q3/2021. This gives us additional security in possible different scenarios for the course of the corona crisis. At the same time, however, I expect that we will not, or hardly at all, increase our debt during the rest of the year. Only in the positive case of a very rapid economic upturn could higher liquidity requirements be necessary in the short term to temporarily increase working capital in line with demand. As things stand today, we will not apply for a KfW corona assistance loan either. However, the instrument of short-time work remains an option to enable us to react quickly and flexibly to fluctuations in demand and production.”