Kapsch TrafficCom strives to achieve two-digit EBIT margin by 2015/16 with “Program 2020”.
- Revenue in the first half of 2014/15 slightly above the previous year’s level, EBIT significantly improved
- Program 2020 consists of short- and long-term structural and financial adjustments
- Goal: Initial successes in the current fiscal year, two-digit EBIT margin in the following year
|2014/15 H1: 1 April – 30 September 2014||2014/15 Q1||2013/14 Q1||+/- %|
|Revenues (in million EUR)||237.4||235.9||+1 %|
|EBIT (in million EUR)||17.6||7.6||+132 %|
|Profit for the period (in million EUR)||0.9||-0.7||-|
Vienna, November 20, 2014 – Kapsch TrafficCom AG (ISIN AT000KAPSCH9), listed in the Prime Market of the Vienna Stock Exchange, reports stable business in the first half of the fiscal year 2014/15. With a slight increase in revenue, it was possible to significantly improve the EBIT, which was also negatively impacted by one-time effects. At the same time, Kapsch TrafficCom announces that it will now quickly implement an intensive set of measures in order to improve profitability over the long term in the face of changed market conditions. The cancellation of the toll tender in Russia highlighted the urgency of this action.
The revenue of the Kapsch TrafficCom Group increased slightly in the first half of the fiscal year 2014/15 to EUR 237.4 million after EUR 235.9 million in the same period of the previous year. While an increase of 13.9 % was achieved in the segment Services, System Extensions, Components Sales (SEC) especially due to the toll systems in Belarus and South Africa that went into operation in the previous year, revenue fell by 40.2 % in the segment Road Solution Projects (RSP), which includes development services as well as the preparatory work for and the installation of projects. This is primarily due to the advanced level of completion of existing projects and the lack of new large projects.
In consequence, the segment RSP recorded an EBIT of EUR -23.7 million after EUR -13.1 million in the same period of the previous year. This result includes a goodwill impairment of EUR 12.3 million, while the release of a provision in the amount of EUR 16.2 million had a positive impact on the profit. The EBIT of the segment SEC increased by 97.1 % to an outstanding EUR 40.2 million. Overall, the EBIT of the Kapsch TrafficCom Group for the first half of 2014/15 was EUR 17.6 million, placing it significantly above the same value of the previous year of EUR 7.6 million.
A required impairment to the interest in Q-Free ASA amounting to EUR 12.2 million weighed down the profit for the period, which was nevertheless still positive at EUR 0.9 million (2013/14 H1: EUR -0.7 million).
The balance sheet depicts the solid basis of the Kapsch TrafficCom Group. In particular, the repayments in connection with the financing agreement for installation of the toll system in Belarus had a positive impact. The free cash flow, which was negative in the same period of the previous year, amounted to EUR 25.5 million. The net working capital and capital employed were reduced in comparison to 30 September of the previous year. The equity ratio as well as the cash and cash equivalents increased, while the net debt declined by roughly 24 %.
Kapsch TrafficCom is a globally recognized provider of electronic toll systems and a market leader in systems for multi-lane free-flow traffic. In addition, the company has expanded and demonstrated its competence in the area of intelligent transportation systems (ITS). As part of its long-term growth strategy, Kapsch TrafficCom is striving for a two-digit EBIT margin in order to continue innovating and growing.
In the last two years, however, new projects have been delayed due to the prevailing economic and political conditions, and several invitations to tender have been postponed or canceled. Furthermore, the demand for large, nationwide toll systems has declined in favor of regional, interurban and modularly designed solutions. The convergence of the ITS market predicted by Kapsch TrafficCom is now already taking place. Kapsch TrafficCom refers here to future intelligent mobility solutions, many elements of which must still be developed, and views itself at player who will help shape this future.
Kapsch TrafficCom is now responding to market changes with the rapid implementation of an intensive set of measures intended to quickly improve the earning power of its existing business while also establishing a long-term strategy to ensure a profitable and sustainable future for the Kapsch TrafficCom Group.
A variety of measures will be initiated and implemented by the end of the fiscal year 2014/15 under the title of “Program 2020”. These include the plan to achieve an EBIT margin of 10 % in the coming fiscal year 2015/16 on the basis of a cost structure adapted to the current revenue level – with the goal of a further increase in the following year. Kapsch TrafficCom views this as a basis for calculation that is independent of the desired growth. The set of performance improvement measures begun already in March will be continued, but structural and financial adjustments will also be made.
During the coming weeks, the planning for the global Kapsch TrafficCom Group will be finalized, and individual measures will be implemented immediately in order to achieve initial results as quickly as possible. Kapsch TrafficCom intends to remain a globally leading provider of intelligent mobility solutions capable of covering the entire value creation chain of its customers. In addition, the company plans to increasingly take advantage of potential synergies within the Kapsch Group in order to offer intermodal and interoperable solutions for individual and public transportation around the world.
The second half of the fiscal year 2014/15 will be marked by strategic adjustments to changed market conditions. On the operational side, Kapsch TrafficCom will continue to carry out existing projects, such as the expansion of the toll systems in Belarus and Poland. The implementation of the system in Texas should be completed in the next two quarters, and work continues unabated on improving the profit situation in South Africa. Furthermore, Kapsch TrafficCom expects its business to be expanded with new projects.
The outstanding results of the first half of the year will also be felt in the results of the entire fiscal year 2014/15, as will the initial effects of the structural measures. For the coming fiscal year 2015/16, Kapsch TrafficCom is striving for a level of profitability based on its Program 2020 that will enable an EBIT margin of 10 % even at current revenue levels.
Kapsch TrafficCom is a provider of intelligent transportation systems (ITS) in the application fields of road user charging, urban access and parking, road safety enforcement, commercial vehicle operations, electronic vehicle registration, traffic management and V2X cooperative systems. Kapsch TrafficCom covers with end-to-end solutions the entire value creation chain of its customers as a one-stop shop, from components and design to the installation and operation of systems. The solutions of Kapsch TrafficCom help to finance infrastructure, to increase traffic safety, to optimize traffic flow, and to reduce environmental pollution from traffic. The core business is to design, build and operate electronic toll collection systems for multi-lane free-flow traffic. References in 44 countries on all continents make Kapsch TrafficCom a recognized supplier of electronic toll collection worldwide. As part of the Kapsch Group, a family-owned Austrian technology group founded in 1892, Kapsch TrafficCom, headquartered in Vienna, Austria, has subsidiaries and representative offices in 33 countries, has been listed on the Vienna Stock Exchange (KTCG) since 2007, and generated with more than 3,300 employees revenues of EUR 487.0 million in fiscal year 2013/14.