Kapsch TrafficCom enjoys a stronger balance sheet despite weaker results in the first quarter of 2012/13.
- Decline in sales and negative result
- Balance sheet figures improved significantly due to project completion
- Focus remains on large projects in Poland and South Africa
- Growth strategy confirmed by new orders
|2012/13 Q1: 1 April – 30 June 2012||2012/13 Q1||2011/12 Q1||2010/11 Q1|
|Revenues (in million EUR)||106.4||134.7||66.3|
|EBIT (in million EUR)||-5.6||22.2||4.8|
|Profit for the period (in million EUR)||-4.4||13.9||4.5|
|Profit per share (in EUR)||-0.46||0.91||0.22|
|Free cash flow (in million EUR)||74.6||-9.0||3.2|
Vienna, August 24, 2012 – Kapsch TrafficCom AG (ISIN AT000KAPSCH9), listed in the Prime Market of the Vienna Stock Exchange, experienced a heterogeneous first quarter in fiscal year 2012/13. While the developments in the two ongoing projects in Poland and South Africa led to disappointing revenues and results during the reporting period, the significant improvement in the key balance sheet figures reconfirmed the financial strength of the Kapsch TrafficCom Group.
The revenues of the Kapsch TrafficCom Group amounted to EUR 106.4 million, or 21.1 % below the value of the same period in the previous year (2011/12 Q1: EUR 134.7 million). The EBIT in the first quarter of 2012/13 was negative at EUR -5.6 million, down from EUR 22.2 million in the first quarter of 2011/12.
In South Africa, the start of the electronic toll collection system for multi-lane free-flow traffic in the Gauteng province was suspended indefinitely shortly before the planned commissioning at the end of April due to a lawsuit. The government has appealed this decision, and the first hearings were held on 15 August 2012.
The nationwide electronic toll collection system in Poland went into operation in July 2011, and the system acceptance took place on 21 February 2012. In the first quarter of the current fiscal year, Kapsch TrafficCom was contracted with an extension of 320 km, and additional route sections are expected to follow in 2013. The company also received payment for the final milestone of the system installation. However, performance related issues resulted in higher operating costs during the reporting period, which had a negative impact on the result.
The developments of both of these major projects had a pronounced effect on the first quarter of 2012/13. At the same time, the changes to the key figures reflect the project-related volatility in the balance sheet and results. Comparisons between individual quarters are therefore of only limited value, and the company itself evaluates its success based on the year-end result.
Revenues and earnings.
In the segment Road Solution Projects (RSP), the two implementation projects in Poland and South Africa were associated with high revenues in the first quarter of the previous year. The newly begun projects were unable to compensate for this during the reporting period, and revenues declined as a result by 36.3 % from EUR 54.8 million to EUR 34.9 million. In consequence, the company was not able to fully cover its costs, and the EBIT in the segment RSP was therefore negative at EUR -7.2 million.
In the segment Services, System Extensions, Components Sales (SEC), revenues declined by 13.8 %, from EUR 78.5 million in the same quarter of the previous year to EUR 67.7 million. The contract negotiations with the individual authorities of the E-ZPass Group for finalization of the ten-year agreement resulted in on-board unit sales lagging behind the expected quantities. The competitive pricing, which brought the margins in the U.S.A. down in line with typical global margins, for this order also weighed on the result. The volume of delivered on-board units in the first quarter of 2012/13 was 1.7 million, following 2.8 million in the same period of the previous year. The suspended commissioning of the project in South Africa also negatively impacted revenues. The operation project in Poland, on the other hand, made a considerable revenue contribution. The decline of the segment EBIT from EUR 18.5 million in the previous year to EUR 1.6 million can be attributed largely to the reduced sale of on-board units, the lost revenues from the South African project and the performance related higher operation costs in Poland.
Financial position and cash flows.
The key balance sheet figures improved significantly in the first quarter of fiscal year 2012/13 owing to conclusion of the implementation project in Poland and the associated payment. The total assets declined due to the reduction of trade receivables as well as, in particular, due to the decrease in current financial liabilities with respect to the year-end closing date of 31 March 2012, falling from EUR 557.7 million to EUR 499.0 million. Total equity declined only slightly, producing an increase in the equity ratio from 45.9 % to 49.6 %.
The free cash flow grew to EUR 74.6 million as a result of these developments, whereas this figure was negative at EUR -9.0 million in the comparison quarter of the previous year. Despite the corporate bond due in 2017, the Kapsch TrafficCom Group had net assets of EUR 0.2 million at the end of the first quarter, while the net working capital decreased from EUR 285.7 million as of 31 March 2012 to EUR 199.1 million on 30 June 2012. Cash and cash equivalents at the end of the quarter had increased to EUR 77.4 million. These significant changes demonstrate that Kapsch TrafficCom enjoys a solid balance sheet structure that will enable the company to maintain its focus on investments in research and development as well as new projects despite a short-term dip in profit.
At the end of July, Kapsch TrafficCom was selected as supplier for a complete system in Texas. In the coming years, two highways in northern Texas will see implementation of what is called a "managed lane" system, which encompasses a toll collection system, an intelligent transportation system and a network communication system. It will be one of the newest and most modern transportation systems in North America. The executive board views this as a reinforcement of the growth strategy as well as confirmation of the assumption that, in addition to toll collection systems, demand for integrated systems consisting of various ITS applications will increase in the future.
As part of a large project in Belarus, the installation of a nationwide electronic toll collection system will begin in autumn, and associated revenues will be reflected on the balance sheet as of the second half of the current fiscal year. In addition, the company expects decisions on other potential projects during the course of the current fiscal year. In order to continue the planned growth with regard to new projects and new markets, the Kapsch TrafficCom Group is also working intensively on implementation of the 2016 strategy and the new company structure this entails.
Kapsch TrafficCom is a provider of high-performance intelligent transportation systems (ITS) in the application fields of toll collection, urban access management and traffic safety and security. Kapsch TrafficCom covers the entire value creation chain of its customers as a one-stop shop by providing products and components as well as subsystems as open market products, by integrating them into turnkey systems or by developing end-to-end solutions, including services for the technical and commercial operations of systems. Within its current core business of electronic toll collection (ETC), Kapsch TrafficCom designs, builds and operates ETC systems, in particular for multi-lane free-flow traffic. With 280 references in 41 countries on all five continents and with almost 70 million on-board units delivered and about 18,000 lanes equipped, Kapsch TrafficCom has positioned itself among the internationally recognized suppliers of electronic toll collection worldwide. Kapsch TrafficCom is headquartered in Vienna, Austria, and has subsidiaries and representative offices in 30 countries.