- Consolidated sales at €16,119k, almost at previous year’s level (Q1/2019: €16,457k)
- Adjusted EBITDA at €820k (Q1/2019: €1,553k), adjusted EBIT at €13k (Q1/2019: €756k)
- Clean Energy & Mobility with sales increase of 71.2% to €5,126k (Q1/2019: €2,994k)
- Despite a dynamic first quarter, a detailed forecast for 2020 is still not possible due to the COVID-19 pandemic and the very volatile development of the oil price
Brunnthal/Munich – SFC Energy AG (ISIN: DE0007568578), a leading international supplier of fuel cells and stationary and mobile hybrid power generation, just published its figures for the first quarter of 2020.
Management Board Report
“The last weeks of the first quarter of 2020 were already influenced by the coronavirus pandemic. Against this background, we have achieved a robust business performance with consolidated sales roughly on a par with the previous year.
The health and safety of our employees and their families, as well as our customers and suppliers, have always been of the utmost priority in all considerations, decisions and measures since the beginning of the unprecedented situation that is COVID-19. However, at the same time, we are keeping a close eye on the development of our company over the coming weeks and months. It is essential that we minimize the long-term negative effects for SFC Energy AG with the greatest effort and sound judgment. For this reason, and because capacity utilization is still high, we have so far decided against the possibility of short-time work. Instead, we have adopted a package of more than 80 measures under the theme ‘Fit for the future’. The program will make our company crisis-proof and at the same time prepare it for the time after the pandemic. We are addressing essential issues such as targeted online sales and marketing campaigns to win customers and orders, the acceleration and finalization of development projects, and organizational issues that have not been addressed due to the high workload in recent months. At the same time, caution and prudence in all expenditures are a must and appropriate cost reduction measures have been initiated. Whether and to what extent we will then have to examine the possibility of short-time work in the summer will depend on the further development of business.
At business area level, we recorded a heterogeneous development. We are delighted to note the continued dynamic growth in the Clean Energy & Mobility segment, with both methanol and hydrogen fuel cells. A good example is the positive development of the business in Singapore with our partner Oneberry Technologies, which uses EFOY fuel cells for public health and safety infrastructures. Our EFOY Pro fuel cells power robots equipped with thermal imaging cameras and contactless situation awareness technology, which are being used to implement COVID-19 security measures. The roll-out of the supply of hydrogen fuel cells for a government digital radio network in Germany, together with our partner AdKor, also commenced in the first quarter. We are currently assuming that we will deliver at the least the quantities targeted for 2020 according to plan.
Although the unprecedented fall in the price of crude oil as a result of the OPEC+ dispute and the lack of demand due to the pandemic has been halted in recent weeks, normalization is not yet in sight. We therefore expect the environment in the Oil & Gas segment to remain difficult.
In the long term, however, the demand for clean and efficient energy supply with fuel cells will further rise out of social desire and will towards sustainable CO2 reduction and climate neutrality. The encouraging development of our civil fuel cell business and the significant increase in orders on hand are evidence of this trend. This allows us to look to the future with confidence,” says Dr. Peter Podesser, CEO of SFC Energy AG.
The Group generated sales of €16,119k in the period from January to March 2020, compared with €16,457k in the previous year, and was thus within its own expectations. With a slight decline of 2.1%, the previous year’s sales level was almost matched, even though a continued reluctance to invest in the Oil & Gas segment and the first signs of the impact of the COVID-19 pandemic on business development in individual segments were already apparent at the end of the first quarter of 2020. The Defense & Security segment also posted two major orders in the prior-year quarter. The Clean Energy & Mobility segment maintained the high momentum of the previous year with sales growth of 71.2%.
The order backlog as of March 31, 2020 increased by 16.3% from €13,653k in the previous year to €15,878k.
|Sales by segment in € k||Q1/2020||Q1/2019|
|Oil & Gas||6,137||6,226|
|Defense & Security||823||2,958|
|Clean Energy & Mobility||5,126||2,994|
Performance by segment
Oil & Gas
The Oil & Gas segment had a relatively strong first quarter as positive decisions on pipeline projects were made at the end of 2019, which directly led to the start of some major projects that were still having an impact on sales in the first quarter. On a quarterly basis, sales in the Oil & Gas segment remained almost constant at €6,137k (Q1/2019: €6,226k). In this context, it should be noted that sales of €350k were properly allocated to the Clean Energy & Mobility segment for the first time. Unfortunately, the momentum in the Oil & Gas segment slowed down again towards the end of the reporting quarter, partly due to the effects of the COVID-19 pandemic and also as a result of the negative development of the oil price in connection with the disputes of the OPEC+ group.
Growth in the EFOY applications business with our customers in North America was expanded further. Sales in this area represented 16% of Group company Simark’s product sales (Q1/2019: 13%).
In the first quarter of 2020, the Industry segment was unable to match the solid growth of the previous year, in particular due to incipient difficulties in the supply chain caused by the COVID-19 pandemic. As a result, sales decreased by around 5.8% to €4,032k in the reporting quarter (Q1/2019: €4,279k), while the margin improved slightly by 0.4% compared with the same period of the previous year.
Defense & Security
As expected, sales in the Defense & Security segment in the first quarter of 2020 were significantly lower than in the prior-year period. The year-on-year decline of 72.2% to €823k (previous year: €2,958k) is due to two major projects in India and Israel in 2019, which were not repeated in the first quarter of 2020. But SFC also sees a slowdown of decision processes in this segment resulting from COVID-19. Regionally imposed states of emergency and output restrictions are delaying national and international contract awards.
Clean Energy & Mobility
The Clean Energy & Mobility segment continued the strong growth of the previous year. The segment again reported the strongest growth in the reporting quarter with a 71.2% increase in sales to €5,126k (Q1/2019: €2,994k). This dynamic development was driven by a growing demand for public health and safety infrastructures as part of COVID-19 security measures in international business and the roll-out of the project for emergency power supply of mobile phone stations with hydrogen fuel cells. While the Consumer sub-segment recorded a slight decline of 5.8% in the reporting quarter, sales in Industrial Applications improved by 120.9% year-on-year due to an expansion of the customer base. The positive sales development in the EFOY applications business reported in the 2019 financial year was therefore continued.
Gross profit in the first quarter of 2020 amounted to €5,245k, and was thus 8.2% below the previous year’s figure (€5,716k). The gross margin dropped from 34.7% in the same quarter of the previous year to 32.5% in the first quarter of 2020. The significant improvement in the margin in the Clean Energy & Mobility segment was unable to compensate for the expected margin reduction in the Defense & Security segment.
In the Oil & Gas segment, the gross margin decreased from 29.3% in the previous year’s quarter to 24.3% in the reporting period. This is due to changes in the product mix and the proper allocation of EFOY sales (€350k) in the Non-Oil & Gas segment to the Clean Energy & Mobility segment. At 30.6%, the Industry segment reported a slight improvement in margins compared with the prior-year period (Q1/2019: 30.2%). At 31.6%, the margin in the Defense & Security segment was significantly below last year’s figure (43.3%) as a result of the lack of sales. The Clean Energy & Mobility segment maintained its gross margin at a consistently high level of 44.1%. This was particularly due to the higher share of sales with industrial customers, as the industrial business traditionally has a higher margin than the consumer business.
Gross profit by segment
|Segment in € k||Q1/2020||Q1/2019|
|Oil & Gas||1,489||1,827|
|Defense & Security||260||1,280|
|Clean Energy & Mobility||2,263||1,317|
EBITDA for the Group decreased to €375k in the reporting quarter, compared with €778k in the prior-year quarter. EBITDA adjusted for non-recurring effects was €820k in the first quarter, after €1,553k in the same period of the previous year.
The Group’s EBIT decreased to minus €432k in the first quarter of 2020 (Q1/2019: minus €19k), due to the lack of high-margin earnings contributions in the defense market and the declining margin in the Oil & Gas segment. Taking into account non-recurring effects, adjusted EBIT in the reporting quarter amounted to €13k (Q1/2019: €756k).
For the first quarter of 2020, the consolidated loss for the period was €630k, after €320k in the same period of the previous year. Accordingly, earnings per share in accordance with IFRS (basic and diluted) amounted to minus €0.05 (Q1/2019: minus €0.03).
Statement of the financial position
The equity ratio declined to 54.7% at the end of the first quarter of 2020, primarily as a result of the quarterly loss (December 31, 2019: 55.3%). As of March 31, 2020, available cash and cash equivalents came to €18,531k (December 31, 2019: €20,906k). In the first quarter of 2020, Harbert exercised a bond with warrants with a net cash inflow of €750k. The SFC Energy Group had 283 permanent employees as of March 31, 2020 (December 31, 2019: 282).
Despite the current very challenging and dynamic situation, SFC Energy AG’s solid capital base enables it to stably go through a turbulent phase, press ahead with essential product developments, tap into new market segments and achieve sustainable growth in the medium term.
Guidance for 2020
Even before the presentation of the 2019 Annual Report, the Management Board had withdrawn the guidance for the 2020 financial year published with the preliminary figures for 2019 due to the uncertainty and lack of visibility resulting from the COVID-19 pandemic and the negative development of the oil price. A stable and sufficiently reliable guidance for the current financial year within the previously estimated bandwidths is still not possible in the current environment.
Against this background and the current high level of uncertainty, the Management Board is expecting – subject to a recession – revenues and profitability to be significantly lower than in the previous year. The fundamental premise is the weakening of COVID-19 effects after the third quarter of 2020. SFC Energy AG continues to confirm its medium-term forecast and expects to achieve sales of over EUR 100 million with an adjusted EBITDA margin of well over 10% in the next three to four years.
Key figures Q1/2020
|In € k||01/01-31/03/2020||01/01-31/03/2019|
|Gross margin||32.5 %||34.7 %|
|EBITDA-margin||2.3 %||4.7 %|
|EBITDA-margin underlying||5.1 %||9.4 %|
|EBIT-margin||-2.7 %||-0.1 %|
|EBIT-margin underlying||0.1 %||4.6 %|
|Consolidated net result||-630||-320|
Detailed financial information
The interim report of the first quarter 2020 of SFC Energy AG is available for download under https://www.sfc.com/en/investors/finance/.
About SFC Energy AG
SFC Energy AG is a leading provider of hydrogen and direct methanol fuel cells for stationary and mobile hybrid power solutions. With more than 45,000 fuel cells sold worldwide, SFC Energy is a sustainably profitable fuel cell producer. The Company has award-winning products and serves a range of applications in Clean Energy & Mobility, Defense & Security, Oil & Gas and Industry markets. The Company is headquartered in Brunnthal/Munich, Germany, operates production facilities in the Netherlands, Romania, and Canada. SFC Energy AG is listed on the Deutsche Boerse Prime Standard (GSIN: 756857, ISIN: DE0007568578).