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Carel Group: First semester results approved

The board of directors of Carel Industries S.p.A. has approved the results as of 30 June 2020 and revenues are steady for the first six months of the year.

Financial Highlights

  • Consolidated revenues of EUR161.0-million, -3.6% compared to the first six months of 2019 (-3.1% at constant exchange rates);
  • Consolidated EBITDA of EUR30.9-million (19.2% of revenues), -8.4% compared to the six months of 2019;
  • Consolidated net income of EUR16.3-million, -14.0% compared to net income in the first six months of 2019;
  • Negative consolidated net financial position of EUR65.3-million, compared to EUR62.1-million reported on 31 December 2019.

CEO statement

Francesco Nalini, Group Chief Executive Officer, commented: “We are proud to present results that, despite the unprecedented scenario we experienced in the first half of the year, are not far from those reported in 2019. This is in relation to revenues, which came in at the high end of the guidance range previously given by the Group (single-digit percent decline) and in terms of profitability, substantially in line with that recorded at 31 December 2019. This enabled considerable cash flows of approximately EUR18-million to be generated from operating activities. These results highlight the Group’s ability to react swiftly and highly effectively to exceptional adverse scenarios and the resilience assured by its diversification both at the geographical level and in terms of its business portfolio. Within such a challenging scenario, a fundamental role was played by technological mirroring, i.e. the strategic decision to replicate production processes at various facilities, which enabled production of certain product families to be relocated rapidly from plants affected by lockdown measures to their fully operational counterparts, thus reducing the inconvenience for our clients. In any event, the backlog accumulated during the lockdown was largely handled in June, and a residual part in July. Innovation, commitment and a focus on the Client will remain the key elements of our strategy in the second half of such a challenging year”.

Consolidated Revenues

Consolidated revenues amounted to EUR161.0-million, compared to EUR166.9-million in the period ended 30 June 2019, marking a slight decline of 3.6% (-3.1% at equivalent exchange rates). This decline was entirely due to the effects of the lockdown in China and the shutdown of the Group’s Italian production hub (located in Brugine, Padua) following the spread of the Covid-19 pandemic.

The shutdown of the Italian facilities resulted in the creation of a significant backlog, primarily in March and April, which was completely resolved in June and July. The effects would have been much more negative if the Group had not reacted promptly by exploiting the particular flexibility offered by its portfolio of facilities, and in particular their location on almost all continents and the ability to produce a significant share of Carel product platforms simultaneously at a minimum of two facilities.

This made it possible to shift some production from one production site to another, thereby limiting the further expansion of the backlog beyond what in effect occurred. The exchange rate effect had a negative impact of approximately 50 basis points.

The geographical area with the greatest weight for the Group, EMEA (Europe, the Middle East and Africa), which generates approximately 70% of revenues, recorded essentially stable performances compared to the first half of 2019, despite the total and then partial shutdown of the Italian production hub.

The phenomena underlying this performance, in addition to those of a logistical nature relating to the lockdown, relate mainly to a rapid expansion of CAREL’s presence in Eastern Europe, which acted as a counterweight to the decline in demand in several important applications such as the automotive sector for HVAC and the HO.RE.CA. sector for refrigeration. APAC (Asia-Pacific) showed a 7.5% decline in revenues on the same period of the previous year, while also representing a sharp improvement on the first quarter of the current year (-17.5%).

This was due to the recovery of the backlog accumulated during the lockdown and the strong performance in China. North America posted a decrease in revenues of 10.6%, in line with the performance in the first quarter of the year, due to natural consolidation after the robust gains recorded in 2019 (+20%), in addition to the decline in the macroeconomic scenario owing to the health emergency.

Finally, South America, net of the negative foreign exchange effects, reported a decline in revenues of 6.2%, mainly due to the negative performances achieved outside of Brazil as a result of the intensification of the COVID-19 epidemic.

At the level of the individual business areas, Refrigeration, net of the foreign exchange effect, was in positive territory (+1.1%): the sound performance in the Retail Food sector (supermarkets, hypermarkets and convenience stores) was partially offset by the strongly negative performance in the Food Service sector (restaurants, hotels, etc.). The result in the HVAC market was due not only to the lockdown of the Italian production hub but also to the negative performance of several industrial sectors (such as automotive), which was only partially offset by the positive trends witnessed in both the high-efficiency heat pumps segment (primarily in Northern Europe) and the data centre segment.