PSI grows by 13 percent in the 1st half of 2019
by Hans Diederichs
PSI Group increased new orders by 5 % to the new record value of 142 million euros in the first six months of 2019 (30 June 2018: 135 million euros). The order book volume on 30 June 2019 was, at 171 million euros, 4 % above the figure for the previous year (30 June 2018: 165 million euros). Group sales improved by just about 13 % to EUR 106.6 million thanks primarily to organic growth in the Production segment and the takeover in the Energy segment (30 June 2018: 94.6 million euros). The EBIT increased by 5 % to 6.5 million euros (30 June 2018: 6.2 million euros), the group net result improved only slightly to 4.4 million euros due to a lower financial result as a result of the application of IFRS 16 (30 June 2018: 4.3 million euros).
Energy management (energy grids, energy trading, public transportation) attained 13 % higher sales of 53.2 million euros (30 June 2018: 46.9 million euros) and a constant EBIT of 2.5 million euros in the first six months. The BTC Smart Grid division in Germany, which was taken over on 1 January 2019, contributed incoming orders of 5.9 million euros in the first six months, including 3.2 million euros in annual maintenance extensions, external sales of 3.3 million euros and a burden of -1.8 million euros (-1.1 million euros in the first quarter, -0.7 million euros in the second quarter) due to underutilization and integration costs. In view of the somewhat higher integration burden than planned, the Executive Board brought forward the second stage of integration in the second quarter, in which the previously unutilized employees were not only assigned to project work but were now also disciplinarily assigned to the responsible profit centers. While the first quarter was still characterized by extensions of maintenance orders, customer confidence stabilized and led to important new and follow-up orders, which mainly will be booked in the third quarter. For the third quarter, the Management Board expects integration costs of a few hundred thousand euros. This special charge was offset by better results with PSI control systems for gas and electricity networks in the first six months. In the gas network business PSI increased incoming orders, sales and earnings due to the further rollout of the upgrade subscription business and the further recovery of the Russian business. The public transport business continues to benefit from emission-related investments in electric buses. On the other hand, energy trading and the Asian business burdened the result.
At 53.4 million euros, sales in production management (raw materials, metals, industry, logistics) in the first six months were 12 % over the figure for the previous year (30 June 2018: 47.6 million euros). The business’ EBIT of 4.5 million euros was 6 % above the figure for the previous year (30 June 2018: 4.2 million euros). The metals business continues to feel uncertainty among European customers about US customs duties, imports, energy costs and the CO2 discussion. By contrast, demand is rising in North America, China and Russia. The Automotive, Industry and Logistics businesses continued the strong development in incoming orders, sales and earnings based on the products for Industry 4.0, electric vehicle production and Internet logistics migrated to the Group platform. Brexit is also driving industry and trade to make additional investments in logistics. As announced, PSI Poland took over the Polish Smart Grid division of BTC AG with 29 employees on 1 May 2019.
The number of employees in the group increased to 1,947 (30 June 2018: 1,722), due to new hires and the acquisition of the BTC smart grid business. In the second quarter, a high six-digit amount was spent on the anniversary and training. Cash flow from operating activities decreased to -1.4 million euros (30 June 2018: 5.0 million euros) due to an increase of working capital. Cash and cash equivalents decreased to 31.4 million euros (30. June 2018: 35.8 million euros), also due to increased investments in the acquired business, and will be used for sales financing in the seasonal course.
PSI continues to record strong demand, particularly for control technology for electricity and gas grids as well as in the logistics and automotive sectors, and therefore expects further increases in the high-margin license, maintenance, upgrade and cloud business in the coming quarters. Despite the deteriorating economic forecasts in Germany and the integration burden, the PSI Executive Board continues to expect sales growth of 10 % to 220 million euros and an increase in the operating result to around 17 million euros for 2019.
Source: PSI Group Photo: Fotolia