Glaston’s half-year financial report January─June 2023: Second-quarter order intake and profitability holding up

GLASTON CORPORATION             HALF-YEAR FINANCIAL REPORT            1.8.2023 AT 13.00

This release is a summary of Glaston Corporation's Half-Year January-June 2023 financial report. The complete report is attached to this release as a pdf-file. The release is also available on the company's website at the address www.glaston.net.

APRIL–JUNE 2023 IN BRIEF

• Orders received totaled EUR 53.6 (56.2) million
• Net sales totaled EUR 55.2 (53.5) million
• Comparable EBITA was EUR 3.4 (3.5) million, i.e. 6.2 (6.6)% of net sales
• The operating result (EBIT) was EUR 1.9 (1.8) million
• Comparable earnings per share were EUR 0.020 (0.016)

JANUARY─JUNE 2023 IN BRIEF

• Orders received totaled 110.5 (115.2) million
• Net sales totaled EUR 106.5 (105.8) million
• Comparable EBITA was EUR 6.4 (7.0) million, i.e. 6.0 (6.6)% of net sales
• The operating result (EBIT) was EUR 3.8 (4.0) million
• Comparable earnings per share were EUR 0.039 (0.037)

GLASTON SPECIFIES OUTLOOK FOR 2023

In the first half of 2023, signs of increasing market uncertainty and more cautious customer behavior were visible. Due to the slowdown in the architectural market, the demand environment is expected to be softer in Europe and China during the rest of the year, while demand prospects are better in the Americas. Despite the softening of the markets, demand continues to be supported by the strong megatrends driving interest in energy-efficient glass solutions.

In 2023, Glaston has continued to focus on the execution of its strategy, which will incur costs and capital expenditure ahead of the effect on revenue growth. With ongoing geopolitical tensions and increasing uncertainty in the global business environment, a higher-than-normal level of unpredictability is related to customers’ investment decisions.

Glaston’s net sales and profitability development in 2023 continue to be supported by a healthy order backlog.

Despite the prevailing uncertainties, Glaston Corporation estimates that its net sales will increase in 2023 from the levels reported for 2022 and specifies its outlook for comparable EBITA, which is estimated to increase to EUR 13.7−15.7 million. In 2022, the Group’s full-year net sales totaled EUR 213.5 million and comparable EBITA was EUR 13.6 million.

(Previous outlook: Glaston Corporation estimates that its net sales and comparable EBITA will improve in 2023 from the levels reported for 2022.)

PRESIDENT & CEO ANDERS DAHLBLOM:

“During the past three months, we have seen a slowdown in market activity in the architectural glass segment. Given the current market environment, our second quarter performance can be characterized as reasonably good.

Despite the softening of the architectural market, especially in Europe, second-quarter market activity was largely in line with our expectations and our order intake totaled EUR 53.6 million down 5% from the previous year. Second-quarter net sales were up 3% and totaled EUR 55.2 million. As in the previous quarter, profitability was fairly good with comparable EBITA at EUR 3.4 million, corresponding to an EBITA margin of 6.2%. The production ramp-up of automotive pre-processing lines in China continued to burden profitability, but to a lesser extent than in the previous quarter. In addition, the modest second-quarter performance in the Services business affected profitability development.

The weakening market sentiment affected the Services business in EMEA and China, in particular. For upgrades, markets were globally low, especially in the Americas. The order intake for the Services business decreased by 9% year-on-year. Despite improvements in delivery times, supply shortages continued to have some effect on the fast-moving Services business. Services’ second-quarter net sales were down by 3%.

We have consistently made progress on our journey toward reaching the 2025 strategic targets. To accelerate the strategy implementation, we announced in June a plan to reorganize the company structure to better serve our customers in the architectural, automotive, display and solar glass processing markets. The reorganization will allow us to tap into our efficiency potential, which is expected to accelerate profitability improvement towards the 10% comparable EBITA margin target by 2025. With the new structure, we plan to have two Business Areas that are formed according to customers’ end-use segments: Architecture and Mobility, Display & Solar. With a focus on improving the scalability and efficiency of our business processes as well as speeding up the time-to-market of development projects, we plan to create two new global Business functions: Automation & Innovation and Sourcing & Supply Chain Management (SCM). The plan is for the new organization to be up and running on October 1, 2023.

Our progress in sustainability continued. One of Glaston’s material sustainability topics is ‘Responsible member of society’ and we are actively and diversely involved in developing our industry. Organized by Glaston, the Glass Performance Days (GPD) conference serves as a perfect example of this, as the conference brings together the global glass industry to discuss and share knowledge on innovations and new trends. After a four-year break, GPD met in June in Tampere, Finland with sustainability as a prominent conference theme. It was clearly noticeable that there is a commitment and effort from the industry toward a sustainable future. Introduced by Glaston at GPD in 2017, Step Change has established itself as an integral pillar of the conference. To further accelerate sustainable innovation in the glass industry, the Step Change program once again brought together startup and scaleup companies and industry professionals.

Our work to improve safety at work is progressing and in April, the second group-wide Safety Week was organized with various initiatives to further develop safety at work. Safety awareness has increased even though our lost-time accidents, unfortunately, increased during the first half of the year. Our efforts to further develop the safety culture will continue.

In the review period, we calculated our indirect Scope 3 emissions for 2022. Due to the emissions of the high-volume solar glass tempering lines, that were launched to the market in 2022, our emissions increased significantly compared to the previous year. However, these emissions contribute to global emissions reduction as fossil energy is replaced by solar energy.

In the January−June period, the market environment weakened, especially in Europe. For the second half of the year, our key target is to secure our order intake in a more challenging market environment and to implement the new organizational structure. Supported by the order backlog, our net sales outlook for 2023 remains unchanged: it is estimated to increase from the levels reported for 2022. For comparable EBITA, the specified outlook is an increase to EUR 13.7−15.7 million.”

GLASTON GROUP’S KEY FIGURES

MEUR	4–6/ 2023	4–6/ 2022	Change%	1–6/ 2023	1–6/ 2022	Change%	1-12 /2022
Orders received	53.6	56.2	-4.6%	110.5	115.2	-4.1%	253.0
of which service operations	17.5	19.2	-8.9%	35.9	38.0	-5.4%	72.5
of which service operations, %	32.6%	34.1%		32.5%	33.0%		28.6%
Order book at end of period3)	115.2	106.0	8.7%	115.2	106.0	8.7%	138.3
Net sales	55.2	53.5	3.3%	106.5	105.8	0.7%	213.5
of which service operations	17.2	17.7	-3.1%	35.1	36.1	-2.5%	76.4
of which service operations, %	31.1%	33.1%		33.0%	34.1%		35.8%
EBITDA	3.8	3.7	3.4%	7.5	8.0	-6.0%	15.3
Items affecting comparability1)	0.7	0.8	-19.8%	1.0	1.0	0.7%	2.3
Comparable EBITDA	4.5	4.5	-1.0%	8.5	9.0	-5.2%	17.6
Comparable EBITDA, %	8.1%	8.4%		8.0%	8.5%		8.2%
Comparable EBITA	3.4	3.5	-2.5%	6.4	7.0	-8.1%	13.6
Comparable EBITA, %	6.2%	6.6%		6.0%	6.6%		6.4%
Operating result (EBIT)	1.9	1.8	6.8%	3.8	4.0	-4.7%	7.6
Profit/loss for the period	0.9	0.4	135.5%	2.0	1.6	23.2%	3.1
Comparable earnings per share, EUR2)	0.020	0.016	25.0%	0.039	0.037	5.4%	0.074
Cash flow from operating activities	0.3	4.4	-93.2%	-0.1	-2.3	95.7%	10.2
Return on capital employed (ROCE), %, (annualized)				7.5%	7.1%		6.9%
Comparable return on capital employed (ROCE), %, (annualized)				9.9%	9.7%		10.5%
Equity ratio, %				44.8%	43.3%		44.0%
Net gearing, %				32.2%	34.6%		19.5%
Number of employees at end of period				817	781	4.6%	783

1. + cost, - income
2. change in comparable EPS formula, net of tax added
3. The June order backlog for Insulating Glass Technologies was adjusted for the partial cancellation of orders with one customer, totaling EUR 19.4 million

PRESS MEETING

Glaston’s CEO Anders Dahlblom and CFO Päivi Lindqvist will present the financial result to analysts, investors and media representatives TODAY at 15:00 (Finnish time) in English.

The live webcast can be accessed through the link: https://glaston.videosync.fi/q2-2023 . An on-demand version of the presentation will be available on the company's website later during the same day.

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 5076

Glaston in brief
Glaston is the glass processing industry’s innovative technology leader supplying equipment, services and solutions to the architectural, automotive, solar and display 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.