Glaston’s Financial Statement Bulletin 1 January – 31 December 2022: Strong profit and cash flow in the final quarter of the year

GLASTON CORPORATION   FINANCIAL STATEMENT BULLETIN       9 FEBRUARY 2023 AT 8.30

This release is a summary of Glaston Corporation's financial statements bulletin for 2022. The complete report is attached to this release as a pdf-file. The stock exchange release is also available on the company's website at the address www.glaston.net.

October–December 2022 in brief

• Orders received totaled EUR 51.7 (59.1) million
• Net sales totaled EUR 59.8 (52.6) million
• Comparable EBITA was EUR 4.2 (3.5) million, i.e. 7.0 (6.6)% of net sales
• The operating result (EBIT) was EUR 2.5 (1.2) million
• The comparable operating result (EBIT) was EUR 3.3 (2.3) million, i.e. 5.6 (4.4)% of net sales
• Items affecting comparability totaled EUR -0.9 (-1.2) million
• Comparable earnings per share were EUR 0.027 (0.019)
• Cash flow from operating activities was EUR 8.7 (5.5) million

January–December 2022 in brief

• Orders received totaled EUR 253.0 (216.2) million
• Net sales totaled EUR 213.5 (182.7) million
• Comparable EBITA was EUR 13.6 (11.1) million, i.e. 6.4 (6.1)% of net sales
• The operating result (EBIT) was EUR 7.6 (5.1) million
• The comparable operating result (EBIT) was EUR 9.9 (6.6) million, i.e. 4.6 (3.6)% of net sales
• Items affecting comparability totaled EUR -2.3 (-1.5) million
• Comparable earnings per share were EUR 0.074 (0.051)
• Cash flow from operating activities was EUR 10.2 (19.3) million
• The Board of Directors proposes a capital repayment of EUR 0.04 per share

GLASTON’S OUTLOOK FOR 2023
In 2023, Glaston expects the overall market activity to remain at a good level despite some regional differences. Although the megatrends support the use of energy-efficient windows, demand in Europe could be affected by the slowdown in the architectural market. In the Americas, Glaston expects the demand to continue strong, whereas in China, the prospects of the architectural market are uncertain.

In 2023, Glaston continues to focus on the execution of its strategy, which will incur costs and capital expenditure ahead of the effect on revenue growth. As supply chain disturbances and geopolitical tensions continue, a higher-than-normal uncertainty is related to the development of economic activity and customers’ investments.  

Glaston entered 2023 with an order backlog 46% higher than in the previous year. This provides a strong starting point for 2023 and supports the company’s net sales and profitability development. Glaston Corporation estimates that its net sales and comparable EBITA will improve in 2023 from the levels reported for 2022. As is typical, Glaston expects the first quarter of 2023 to be the weakest of the year, additionally impacted by low upgrade net sales and a higher share of new products. In 2022, Group full-year net sales totaled EUR 213.5 million and comparable EBITA was EUR 13.6 million.

PRESIDENT & CEO ANDERS DAHLBLOM:
"For Glaston, last year was successful. Despite the increasing uncertainty in the business environment, demand for our products and services was strong with customer activity at a high level. Our net sales and profitability improved and we continued our good progress with strategy implementation. However, during the year the geopolitical and macroeconomic concerns increased, which had some impact on customers’ decision-making in the fourth quarter, especially in Europe.

Fourth-quarter orders received were down by 12% compared to the same period in 2021 and totaled EUR 51.7 million. With growing numbers in all segments, full-year orders received were up 17% from the previous year, totaling EUR 253.0 million.

Fourth-quarter net sales, as well as full-year net sales, increased. Net sales in the fourth quarter grew by 14% and totaled EUR 59.8 million. For the full year, net sales growth of 17% was recorded with all segments contributing to the outcome. The sales growth had a positive impact on the Group's profitability. Comparable EBITA for the fourth quarter was EUR 4.2 million, up 20% compared to the corresponding period of the previous year and EBITA margin reached 7%. Full-year comparable EBITA increased by 23% compared to the previous year.

For Services, the fourth quarter ended on a positive note with strong growth in spare parts and field services in all regions. Also, upgrades order intake improved from the low third quarter. Services net sales in the fourth quarter increased by 20%. However, the weak upgrade order intake in the latter part of the year will affect services’ net sales in the first half of 2023. Services’ profitability saw a strong and solid development.

We continued to work hard to mitigate the impact of the global supply chain challenges. The availability issues continued, especially for electrical components, which had an impact on delivery times. Additionally, delivery times for certain spare parts are still long. As we have learned new ways of working, our ability to manage the situation has further improved.

We made good progress in sustainability in 2022. We are committed to reducing our direct and indirect greenhouse gas emissions (Scope 1 + 2) in relation to net sales by 50% by 2025 from the baseline year 2020. In 2022, our greenhouse gas emissions in relation to net sales decreased by 57% compared to the baseline and we already met our strategic target. Therefore,  we are already working on setting a new emissions target covering our upstream and downstream value chain.

Safety was high on our agenda throughout the year and our Group-wide safety target is zero accidents by 2025. Safety awareness has increased, even though our lost-time accidents increased by one to a total of six and LTIFR was 3.9. In 2023, our systematic work to further develop the safety culture will continue. We also started the measurement of the strategic group-wide customer satisfaction target, Net Promoter Score (NPS), which was at 53 and exceeding our target of 40. We have every reason to be proud of this good benchmark result. In 2023, measurement and scope will be further developed.

I want to thank everyone at Glaston for their contribution throughout the year and our customers and partners for their continued trust in us.

At the moment, there is market uncertainty and both positive and negative drivers impacting our customers’ decision-making. The year has started well and as far as we can see, the market activity seems to continue at a good level in 2023.”
 

GLASTON GROUP’S KEY FIGURES

EUR million	10−12/2022	10−12/2021	Change%	1−12/2022	1−12/2021	Change%
Orders received	51.7	59.1	-12.5%	253.0	216.2	17.0%
of which service operations	18.5	17.4	5.8%	72.5	68.0	6.7%
of which service operations, %	35.7%	29.5%		28.6%	31.4%
Order book at end of period	138.3	94.8	45.8%	138.3	94.8	45.8%
Net sales	59.8	52.6	13.8%	213.5	182.7	16.9%
of which service operations	21.1	17.6	20.2%	76.4	66.8	14.4%
of which service operations, %	35.3%	33.4%		35.8%	36.5%
EBITDA	4.3	3.2	34.2%	15.3	13.0	17.6%
Items affecting comparability1)	0.9	1.2	-26.1%	2.3	1.5	55.6%
Comparable EBITDA	5.2	4.4	18.2.%	17.6	14.5	21.4%
Comparable EBITDA, %	8.7%	8.3%		8.2%	7.9%
Comparable EBITA	4.2	3.5	20.6%	13.6	11.1	22.8%
Comparable EBITA, %	7.0%	6.6%		6.4%	6.1%
Operating result (EBIT)	2.5	1.2	114.6%	7.6	5.1	49.7%
Profit/loss for the period	1.3	0.1	1200.0%	3.1	1.1	178.2%
Earnings per share
Comparable earnings per share, EUR 2)	0.027	0.019	42.1%	0.074	0.051	45.1%
Cash flow from operating activities	8.7	5.5	-58.2%	10.2	19.3	-47.2%
Return on investment (ROI), %, (annualized)				6.9%	2.8%
Comparable return on capital employed (ROCE), %, (annualized)				10.5%	6.1%
Equity ratio, %				44.0%	42.3%
Net gearing, %				19.5%	26.9%
Number of employees at end of period				783	750	4.4%

1) + cost, - income
2) change in comparable EPS formula, net of tax added

SHORT-TERM RISKS AND BUSINESS UNCERTAINTIES
For Glaston’s business operations, supply chain disruptions are the main short-term risk, and these are expected to continue well into 2023. Glaston continues to actively mitigate the higher-than-normal risks related to raw materials and component prices and availability. Major supply chain disruptions may impact the company’s performance as component scarcity may cause revenue recognition delays, whereas heavily increasing prices of raw materials may add to short-term profitability pressure. Additionally, inflationary pressures combined with tighter monetary control could have a negative impact on customers’ investment decisions. Amid increasing market uncertainty, customers may also want to postpone or cancel their orders.

Increasing uncertainty in the global markets has impacted on economic growth and could lead to a recession. This would affect Glaston’s business environment, with short-term risks mainly linked to the development of global investment demand. Glaston continuously monitors the development outlook of the global economy and its impact on the progress of its markets. If the demand environment deteriorates substantially, this will mainly affect Glaston’s net sales and earnings with a delay of six to nine months.

In Europe, the glass industry, as an energy-intensive industry, is severely impacted by the ongoing energy crisis. In previous months, the sector has already seen glass manufacturers closing down or reducing their production in Europe. Soaring energy prices and availability concerns in Europe in particular may impact the willingness of Glaston’s customers to invest in new machinery. Furthermore, the significant price increase of float glass has impacted customers’ short-term profitability. For the energy-intensive float glass industry, an uninterrupted supply of energy is crucial. The industry is dependent on fossil fuels, mainly gas, which in Europe partly came from Russia. Significant rationing of natural gas could lead to serious or even permanent damage to float glass producing equipment. In the longer term, the energy-related risks could lead to general energy consumption awareness and drive demand for investments in energy-saving technologies and renewable energy solutions.

Even though the impact of the COVID-19 pandemic has further decreased, there is still a risk of new virus variants spreading, causing severe business challenges like those experienced in previous years. In the event of new lockdowns and travel restrictions, service work and the spare parts business as well as machine installations would be affected. Due to the above mentioned circumstances, there is higher than normal uncertainty related to customers’ investment behavior in regions potentially affected by the pandemic. 

Labor shortages and rising employee turnover are growing concerns in the market. Glaston’s ability to maintain a high level of job satisfaction among its employees and also to attract new employees is further emphasized.  

ANALYST AND PRESS MEETING

Glaston’s President and CEO Anders Dahlblom and CFO Päivi Lindqvist will present the financial result to analysts, investors and media representatives on the publication day at 11.00 in a live webcast that can be joined through this link: 
https://glaston.videosync.fi/q4-2022-result/register

A recording of the meeting including the presentation will be available on the company’s internet pages www.glaston.net after the meeting.

For further information, please contact:
President & CEO Anders Dahlblom, tel. +358 10 500 500
Chief Financial Officer Päivi Lindqvist, tel. +358 10 500 500

Glaston Corporation
Pia Posio
VP, Communications, Marketing and IR
Tel. +358 10 500 500

Glaston in brief
Glaston is the glass processing industry’s innovative technology leader supplying equipment, services and solutions to the architectural, automotive, solar and appliance industries. The company also supports the development of new technologies integrating intelligence to glass.

Glaston is committed to providing its clients with both the best know-how and the latest technologies in glass processing, with the purpose of building a better tomorrow through safer, smarter, and more energy efficient glass solutions. Glaston operates globally with manufacturing, services, and sales offices in nine countries and its shares (GLA1V) are listed on Nasdaq Helsinki Ltd.
 

Distribution: Nasdaq Helsinki Ltd, key media, www.glaston.net.