Sanlorenzo: the half-yearly financial report as at 30 june 2020
Monday, August 31, 2020 2:30 PM
Ameglia (SP), 31 August 2020 – The Board of Directors of Sanlorenzo S.p.A. (“Sanlorenzo” or the “Company”), which met on today’s date, examined and approved the Half-yearly Financial Report as at 30 June 2020.
Massimo Perotti, Executive Chairman of the Company, stated:
«The results for the first half of 2020 once again confirm the validity of Sanlorenzo’s business model, which has proven its resilience in the different phases of the economic cycle. In particular, the growth in profitability in the first few months of 2020 was extremely positive and solid in the current context, also benefitting from the effects of significant investments already made to increase production capacity, which have enabled a notable increase in the efficiency of all sites.
Important factors in the future stability of these results were Sanlorenzo’s ability to respond to the restrictions connected with COVID-19 and the speed with which the measures were adopted. The initiatives which the Company put in place actually made it possible to limit the suspension of activities to just 28 days - partially already recovered in August - and to confirm the current orders, as with the deliveries of yachts in the summer period.
At the same time, the growth trend in the order portfolio continues, which, as at 30 June, reached €566 million - an increase of €65 million compared to March - and is distinguished for being covered almost entirely by end customers. This provides excellent visibility over the coming months and enables us to again confirm the forecasts for the performance of the current year in line with the results in 2019».
ANALYSIS OF CONSOLIDATED NET REVENUES NEW YACHTS
Net Revenues New Yachts for the first half of 2020 amounted to €184.1 million, marking a drop of 10.4% compared to €205.4 million as at 30 June 2019, due to the restrictions imposed by Governments to limit the spread of COVID-19. On a like-for-like basis, excluding Net Revenues New Yachts generated by GP Yachts S.r.l., whose equity investment was sold by the Company in July 2019, the downturn in Net Revenues New Yachts came to 6.9%.
In the first half of 2020, the Yacht Division generated Net Revenues New Yachts of €110.0 million, equal to 59.7% of the total, down by 11.6% compared to the same period of 2019.
The Superyacht Division generated Net Revenues New Yachts of €59.1 million, corresponding to 32.1% of the total, down by 10.3% compared to the first half of 2019.
The Bluegame Division generated Net Revenues New Yachts of €15.0 million, corresponding to 8.2% of the total, up by 103.3% compared to the first half of 2019.
In the first half of 2020, Europe, which is the Group’s historic market, recorded Net Revenues New Yachts of €112.6 million (of which €19.8 million generated in Italy), accounting for 61.2% of the total, marking a decline of 12.2% compared to the same period of 2019.
The APAC area recorded Net Revenues New Yachts of €34.5 million, accounting for 18.7% of the total and essentially stable compared to the first half of 2019, thanks to a solid recovery of sales in the second quarter.
The Americas recorded Net Revenues New Yachts of €19.9 million, a decrease of 34.9% compared to the first half of 2019, accounting for 10.8% of the total, a result more impacted by the pandemic.
Significant growth was recorded in the Middle East and Africa, with Net Revenues New Yachts up by 54.6%, reaching €17.2 million, corresponding to 9.3% of the total, mainly thanks to the growth of the Superyacht Division.
ANALYSIS OF CONSOLIDATED OPERATING RESULTS AND NET PROFIT
Adjusted EBITDA in the first half of 2020 stood at €25.8 million, essentially stable with respect to the result in the first half of 2019, showing an increase of the margin as a percentage of Net Revenues New Yachts, sitting at 14.0%, compared to 12.6% in the same period in 2019.
The significant increase in operating margins is linked to the progressive increase in prices of new orders thanks to the strengthening of the Company’s commercial positioning and the efficiencies generated by the implementation of new production capacity following the investments made in the course of 2019 and the early months of 2020.
EBITDA , including the non-recurring items mostly relating to the portion of non-monetary costs for the period of the 2020 Stock Option Plan and the expenses incurred due to COVID-19, amounted to €25.1 million, down by 2.9% compared to €25.8 million in the first half of 2019, against an improvement in the incidence on Net Revenues New Yachts, which went from 12.6% as at 30 June 2019 to 13.6% as at 30 June 2020.
EBIT amounted to €15.9 million, down by 14.6% compared to €18.7 million in the first half of 2019, corresponding to 8.7% of Net Revenues New Yachts, mainly due to the growth in amortisation/depreciation, which rose from €7.2 million in the first half of 2019 to €9.1 million in the first half of 2020 as a result of the implementation of investments targeted at increasing production capacity and developing new products.
Net financial expenses amounted to €1.1 million, marking a decrease of 50.5% compared to €2.2 million in the first half of 2019. The reduction compared to the same period of 2019 is linked to the better financial conditions applied to the Company by credit institutions and the reduction in debt compared to the first half of 2019, achieved also thanks to proceeds from the share capital increase connected to the IPO.
Income taxes fell from €5.8 million as at 30 June 2019 to €4.6 million in the first half of 2020, corresponding to 30.9% of the pre-tax result.
Group net profit for the first half of 2020 amounted to €10.5 million, essentially stable with respect to the figure in the first half of 2019, amounting to €10.6 million. The incidence on Net Revenues New Yachts rose from 5.2% as at 30 June 2019 to 5.7% as at 30 June 2020.
ANALYSIS OF CONSOLIDATED BALANCE SHEET AND FINANCIAL RESULTS
Net working capital as at 30 June 2020 was positive for €31.3 million, compared to €11.5 million as at 31 December 2019 and €66.7 million as at 31 March 2020. The decrease compared to the figure as at 31 March 2020 amounted to €35.4 million.
Net trade working capital as at 30 June 2020 was positive for €41.0 million, compared to €(1.2) million as at 31 December 2019. Compared to the figure as at 31 March 2020, amounting to €56.6 million, net trade working capital recorded a decrease of €15.6 million.
Net financial position as at 30 June 2020 was €23.5 million, compared to €9.1 million as at 31 December 2019 and €60.7 million as at 31 March 2020. The reduction in net financial position compared to 31 March 2020 was €37.2 million.
Cash and cash equivalents as at 30 June 2020 came to €80.7 million, an increase of €20.5 million compared to 31 December 2019 (€60.2 million) and €17.4 million compared to 31 March 2020 (€63.3 million), leading net current financial debt to show a net cash position of €30.1 million.
The changes in net working capital and the net financial position compared to the first quarter were positively influenced by the trends relating to the seasonal nature of orders typical of the industry, which see deliveries of yachts concentrated in the summer months.
As at 30 June 2020, the Group also had bank credit facilities to cover its liquidity requirements of €110.4 million , showing an increase of €28.5 million compared to 31 December 2019 and of which €92.3 million available.
Investments made in the first half of 2020 amounted to €12.4 million compared to €19.1 million in the first half of 2019, of which €6.6 million were dedicated to product development and to the creation of models and moulds, and €3.4 million linked to the programme to increase production capacity launched in 2017.
The strategy to expand the product ranges and introduce innovations and technologies in the market heavily geared towards sustainability principles was reconfirmed. Investments in research and development and the creation of new products actually rose by 13.8% compared to €5.8 million in the first half of 2019.
The backlog as at 30 June 2020 amounted to €565.6 million (€381.5 million net of production increases recorded as revenue during the period), growth of €64.8 million compared to €500.8 million as at 31 March 2020 and in line with the figure as at 30 June 2019, €567.6 million.
The actions undertaken to handle the restrictive measures linked to COVID-19 and the commercial and operational initiatives intended to rapidly restore activities, in the absence of any additional interruptions, will enable the Company to make up for the period during which activities were suspended, limiting the impact on results, also thanks to the operations of the sites in August. This, along with the current order portfolio, makes it possible to confirm the estimates of substantial stability in Net Revenues New Yachts for 2020 with respect to the 2019 result. The backlog as at 30 June 2020 actually amounts to roughly 90% of Net Revenues New Yachts forecast for 2020.
The order intake is supported by a plan of targeted marketing and commercial initiatives starting from September, including “Sanlorenzo Elite Weekends”, private boat shows arranged in the Company’s shipyards in La Spezia. The participation of the Company to the Genoa Boat Show scheduled for 1 to 6 October 2020 is also confirmed. During this event, the new SX112 and BGX60 models are expected to be presented.
Forecasts relating to EBITDA are also confirmed in line with the previous year, thanks to the plan for an additional cut of operating costs, enacted since the emergence of the current circumstances, the effects of which are partially already reflected in the results for the first half of 2020. This plan kept investments referring to the development of new products, innovation and sustainability unchanged, while postponing further initiatives not deemed priorities or necessary at this time.
ORDINARY SHAREHOLDERS' MEETING
The Ordinary Shareholders' Meeting of the Company was held on first call on today’s date. Considering the current health emergency situation linked to COVID-19, as set forth in the “Cura Italia” (Heal Italy) Decree, participation in the Shareholders' Meeting was permitted exclusively through the designated shareholders’ representative Spafid S.p.A..
The Ordinary Shareholders' Meeting approved the request for the authorisation, pursuant to the combined provisions of articles 2357 and 2357-ter of the Italian Civil Code, as well as of article 132 of Legislative Decree no. 58 of 24 February 1998 and the associated implementing provisions, to purchase and dispose of Company treasury shares.
The authorisation to purchase and dispose of treasury shares is targeted at allowing the Company to purchase and dispose of ordinary shares for the following purposes:
(i) operating on the market with a view to medium and long-term investment;
(ii) investing excess liquid resources;
(iii) optimising the capital structure;
(iv) having a “securities depositary” to be used as part of extraordinary transactions in Sanlorenzo’s interest;
(v) having shares to service any future management equity incentive plans approved by the Company.
The authorisation was approved for the purchase, including in several tranches, of ordinary shares with no nominal value, up to a maximum of 3,450,000 shares.
The treasury shares can be purchased at a price that is no more than 10% higher or lower than the reference price recorded on the Mercato Telematico Azionario (the screen-based equity market of the Italian Stock Exchange) organised and managed by Borsa Italiana S.p.A. in the trading session prior to each individual transaction, in observance, in any case, with the terms and conditions established by the legislation in force and the permitted market practices, where applicable. The authorisation to purchase treasury shares was approved for a period of 18 months from the date of the relevant authorisation resolution of the Ordinary Shareholders’ Meeting.
Disposals of treasury shares will be carried out according to the methods deemed most appropriate by the Board of Directors in the Company’s interest, on and off the stock exchange, and in any case, in observance of the legislation in force and the permitted market practices, where applicable. The authorisation to dispose of treasury shares was approved with no time limits.