DMG MORI with positive results in the first half year 2020
- Order intake reaches € 784.0 million (previous year: € 1,412.3 million)
- Sales revenues are € 838.0 million (previous year: € 1,276.4 million)
- EBIT amounts to € 33.2 million (previous year: € 103.4 million)
- EBIT margin reaches 4,0% (previous year: 8,1%)
The corona pandemic continues to impact the overall economic situation and is causing a strong decline in the global demand for machine tools. Also DMG MORI has not been able to avoid its consequences: order intake, sales revenues and earnings in the first six months of 2020 were significantly below the high figures of the previous year. Order intake reached € 784.0 million (previous year: € 1,412.3 million). Sales revenues were € 838.0 million (previous year: € 1,276.4 million). Despite the difficult market and economic conditions, the results of operations were positive: EBIT amounted to € 33.2 million (previous year: € 103.4 million). The EBIT margin was 4.0% (previous year: 8.1%). Christian Thönes, Chairman of the Executive Board: “Due to the corona crisis, our customers are speeding up the transition to the digital factory. This strengthens our intention to further expand our future fields of Automation, Digitization and Additive Manufacturing. Investing in innovations, and especially in digitization, is the only way out of the crisis. The economic situation is and remains challenging. But we are well positioned and will continue to have positive results.”
Order Intake
Demand for machine tools declined significantly, due in particular to the corona pandemic. In the second quarter of 2020, and under severely difficult market and business conditions, DMG MORI recorded order intake of € 343.8 million (-51%; previous year: € 704.0 million). The previous year’s figure includes orders from the Energy Solutions division, which was divested in 2019. The adjusted, comparable order intake for 2019 amounted to € 595.1 million. Thus order intake fell in the core business with machine tools and services in the second quarter of 2020 by -42%. In the first half year we achieved order intake of € 784.0 million (-44%; previous year: € 1,412.3 million).
Adjusted for Energy Solutions, order intake amounted to € 1,280.8 million in the previous year. This corresponds to a decrease of -39%. Domestic orders were € 220.5 million (previous year: € 402.9 million). International orders amounted to € 563.5 million (previous year: € 1,009.4 million). Thus the share of international orders amounted to 72% (previous year: 71%).
Sales Revenues
Sales revenue development was also affected by the corona crisis and temporary part-shutdown at the European production plants in April. The resumption of production and assembly took place as planned on 4 May 2020. Sales revenues in the second quarter of € 380.0 million were significantly below the high figure of the previous year (-41%; € 647.2 million). At the end of the first six months, sales revenues reached € 838.0 million (-34%; previous year: € 1,276.4 million). The decline is due not only to the temporary part-shutdown of plants, but also to the fact that machines could no longer be delivered owing to the closure of international borders and factories, and to bottlenecks in transport and logistics. Our services and spare parts business was also negatively impacted. Domestic sales revenues were € 270.0 million (previous year: € 388.9 million). International sales revenues amounted to € 568.0 million (previous year: € 887.5 million). The export share amounted to 68% (previous year: 70%).
Order Backlog
On 30 June 2020, the order backlog amounted to € 1,082.8 million (31 Dec. 2019: € 1,197.4 million) – a calculated production capacity of an average of five months. In this regard the individual production companies report different capacity utilisation.
Results of Operations, Financial Position and Net Worth
The DMG MORI group’s results of operations were positive both in the second quarter and at the end of the first half year despite the difficult environment: In the second quarter EBITDA reached € 24.8 million (previous year: € 69.7 million). EBIT amounted to € 7.9 million (previous year: € 53.0 million). EBT amounted to € 7.4 million (previous year: € 52.7 million). EAT amounted to € 5.2 million (previous year: € 37.1 million). Earnings were also positive at the end of the first half year: EBITDA reached € 68.0 million (previous year: € 143.0 million). EBIT amounted to € 33.2 million (previous year: € 103.4 million). The EBIT margin was 4.0% (previous year: 8.1%). EBT amounted to € 32.2 million (previous year: € 101.9 million). As at 30 June 2020, the group reported EAT of € 22.4 million (previous year: € 71.8 million).
The financial position was also heavily influenced by the corona crisis: free cash flow amounted to € -79.7 million (previous year: € 81.9 million). In April 2020, DMG MORI was able to extend the existing syndicated credit line early for another five years at improved conditions. The balance sheet total decreased to € 2,257.4 million (31 Dec. 2019: € 2,469.6 million). The equity ratio improved to 56.7% (31 Dec. 2019: 51.9%).
Employees
As at 30 June 2020, the group had 7,074 employees, of whom 287 were trainees (31 Dec. 2019: 7,245). The number of employees has thus decreased by 171 when compared with year-end 2019. At the end of the first half year, 4,374 employees (61%) worked for our domestic companies and 2,700 employees (39%) worked for our international companies. Personnel costs decreased to € 253.3 million (previous year: € 307.0 million).
Research and Development
With dynamic and excellence we are forging ahead with our future fields of Automation, Digitization, Additive Manufacturing and DMG MORI Qualified Products (DMQP), as well as with Sustainability and Technology Excellence and are developing into an integrated solutions provider in the manufacturing environment. Automation and digitization solutions have gained even more in importance owing to the corona pandemic. This confirms and strengthens us in the consistent further development of our future fields. In financial year 2020, together with DMG MORI COMPANY LIMITED, we are presenting 35 innovations, including 10 world premieres, 3 automation solutions, 20 digital innovations and 2 new DMG MORI Components. Since May 2020, DMG MORI has been climate-neutral and has thus as one of the first industrial enterprises worldwide a balanced CO2 footprint.
Forecast 2020
The global economy and the worldwide market for machine tools are currently in a recession following the global spread of the corona virus. The global market for machine tools is therefore expected to decline sharply in 2020. In their April forecasts, the German Association of Machine Tool Builders (VDW) and the British economic research institute, Oxford Economics, are expecting growth in global consumption to fall significantly by -28.3% to € 52.3 billion (October forecast: -0.6%; € 71.7 billion). The next forecast of the professional associations will be published as scheduled in October.
The duration and the negative impact of the corona pandemic are currently not fully foreseeable, neither for the overall economy nor for the machine tool industry. Due to the complete change in the global economic conditions, DMG MORI is expecting a sharp decline in order intake, sales revenues, earnings and free cash flow in the financial year 2020. Nevertheless, the earnings will remain positive. The cost reduction and flexibilization measures initiated early in all areas should support the performance and profitability of DMG MORI. These measures – in addition to the further expansion of our future fields Automation, Digitization and Additive Manufacturing – make DMG MORI more resilient.
From today’s perspective and despite the ongoing recession, for the whole year we are planning order intake of around € 1.6 billion and sales revenues of around € 1.65 billion. EBT is expected to amount to around € 60 million. We also expect a balanced free cash flow. The forecast 2020 assumes that there will be no second lockdown in the further course of business due to the corona pandemic.
