Jenoptik remains on course for growth and raises full-year revenue forecast again

Acquisitions successfully completed in the third quarter; strong growth – revenue up 12.6%; 8.5% excluding acquisitions; profit expanded significantly – EBIT up by 27.8% and EBITDA by 21.7%, despite substantial PPA effects.

Jenoptik remains on strong course for growth

Jenoptik remains on strong course for growth. All segments contributed to this encouraging performance in the first nine months of 2018. “Demand in our markets remains robust. In view of the positive business performance and the acquisitions of Prodomax Automation and the Otto Group, we expect a strong fourth quarter. The purchased companies already made a good contribution to revenue in the third quarter. Due to the acquisition and consolidation effects now we are raising our revenue guidance for this year to EUR 820 and 830 million. Despite substantial PPA effects, we are confirming our margin targets,” Stefan Traeger, President & CEO of Jenoptik AG, summarizes the business development and the outlook for Jenoptik.

Group revenue rose significantly, by 12.6% in the first nine months of 2018, to EUR 593.4 million (prior year: EUR 526.8 million). The organic growth was 8.5%. This increase was due to good demand for optical systems for the semiconductor equipment industry, as well as for systems from the Healthcare & Industry unit. The traffic safety area also contributed considerably to this growth. In addition, the acquisitions in the automotive area contributed EUR 21.8 million to the group revenue. In the German market, revenue increased by a total of 19.4% to EUR 180.1 million (prior year: EUR 150.9 million), in particular due to the delivery of toll monitoring systems in the Mobility segment. In the Americas, revenue rose by 24.7% to EUR 149.7 million, which was in part attributable to the acquisitions (prior year: EUR 120.0 million).

In the first three quarters of 2018, EBIT improved at a significantly faster rate than revenue. At EUR 66.7 million, the operating result was 27.8% up on the prior year (prior year: EUR 52.2 million). In addition to revenue growth, this is attributable to a slower increase in functional costs. All segments contributed to this good performance. The EBIT margin of 11.2% was significantly higher than in the prior year (prior year: 9.9%). EBIT of the newly acquired companies came to minus EUR 0.2 million. This figure includes impacts arising from the purchase price allocation (PPA), which according to provisional calculations amounted to minus EUR 6.3 million. EBITDA grew by 21.7% to EUR 89.0 million (prior year: EUR 73.1 million), and includes PPA effects of around minus EUR 4.8 million.

Until the end of September 2018, the order intake rose to EUR 588.4 million (prior year: EUR 576.2 million). In the third quarter the order intake grew by 11.9%. The book-to-bill ratio came to 0.99, compared with 1.09 in the prior year. At EUR 480.9 million, the order backlog reached a new record figure (31/12/2017: EUR 453.5 million).

Cash flows from operating activities grew to EUR 72.8 million (prior year: EUR 50.2 million). Due to a significantly higher operating cash flow, the free cash flow also increased to EUR 57.2 million (prior year: EUR 32.2 million). This improvement was possible despite the revenue-related rise in expenditure for working capital and higher investments than in the prior year. Despite the payments made for the acquisitions and the higher dividend amount, net debt came to just EUR 16.6 million (31/12/2017: minus EUR 69.0 million).

Revenue in the Optics & Life Science segment rose by 10.4% to EUR 211.2 million (prior year: EUR 191.3 million). As in the prior quarters, this development was driven by a continuation of good business with solutions for the semiconductor equipment industry. Sales in the Healthcare & Industry unit also continued to see positive development. EBIT improved significantly by 23.3% to EUR 45.5 million, which was in particular attributable to a positive product mix and good capacity utilization (prior year: EUR 36.9 million). The segment thus increased its EBIT margin on the prior year, to 21.6% (prior year: 19.3%). Due to growth in the field of optical systems, the order intake rose by 4.8% to EUR 233.4 million (prior year: EUR 222.8 million).

Revenue in the Mobility segment grew by 23.7% to EUR 223.4 million (prior year: EUR 180.6 million). The organic growth of the segment was 11.6%. Both areas, systems and machines for the automotive industry and traffic safety technology, saw growth, the latter in particular due to deliveries of toll monitoring systems. The acquisitions of Prodomax Automation Ltd. and the Otto Group also contributed EUR 21.8 million to revenue growth. On the basis of this good performance, the segment again posted a significantly improved quality of earnings, with EBIT of EUR 16.9 million (prior year: EUR 8.6 million). The EBIT margin climbed up to 7.6% (prior year: 4.8%). The operating result of Mobility already includes the described PPA effects in the amount of minus EUR 6.3 million arising in connection with the takeovers. Acquisitions costs came to EUR 1.8 million. The order intake was worth EUR 212.3 million (prior year: EUR 200.7 million).

In the first nine months of 2018, the Defense & Civil Systems segment generated revenue of EUR 160.9 million (prior year: EUR 155.1 million). Despite a revenue figure only slightly up on the prior year, EBIT grew significantly to EUR 15.4 million (prior year: EUR 12.3 million), in part due to a changed product mix and cost savings. Over the reporting period, the EBIT margin consequently increased to 9.6% (prior year: 7.9%). At EUR 144.0 million, the order intake was 6.7% lower than in the prior year (prior year: EUR 154.4 million). An improvement in the order intake compared to prior quarters is, however, expected in the fourth quarter of 2018. In September Jenoptik launched the new VINCORION brand, under which the Group will in future market its range of mechatronic products and services for the aviation, security, defence, and rail markets.

On the basis of the successful acquisitions and continuing good business performance, the Executive Board is raising its former revenue forecast of EUR 805 to 820 million from July to a new range of between EUR 820 and 830 million. Despite substantial PPA effects in connection with the takeovers and the acquisition costs, the Executive Board expects the margin targets for 2018 to reach the figures raised in summer, i.e. an EBITDA margin

Jenoptik is a globally operating technology group, which is active in the three segments Optics & Life Science, Mobility and Defense & Civil Systems. Optical technologies are the very basis of our business with the majority of our products and services being provided to the photonics market. Our key target markets primarily include the semiconductor equipment industry, the medical technology, automotive and mechanical engineering, traffic, aviation as well as the security and defence technology industries. Jenoptik has about 4,000 employees and generated revenue of approx. EUR 748 million in 2017.