Strong order intake with improved profitability and cash flow

APRIL–JUNE 2024

• Order intake increased 11.0% to EUR 40.3 million (36.3)
• Revenue decreased -7.0% to EUR 42.6 million (45.7)
• EBIT increased 101.5% to EUR 2.4 million (1.2) and the EBIT margin improved to 5.5% (2.6%)
• Net result for the period increased to EUR 0.7 million (-0.9)
• Operating cash flow improved to EUR 5.0 million (-4.6)
• Earnings per share, basic and diluted, increased to EUR 0.006 (-0.009)

JANUARY–JUNE 2024

• Order intake increased 2.5% to EUR 80.2 million (78.2)
• Order backlog decreased -15.6% to EUR 118.3 million (140.3)
• Revenue increased 0.2% to EUR 85.5 million (85.3)
• EBIT increased 191.9% to EUR 4.3 million (1.5) and the EBIT margin improved to 5.0% (1.7%)
• Net result for the period increased to EUR 1.2 million (-2.3)
• Operating cash flow improved to EUR 5.0 million (-7.5)
• Earnings per share, basic and diluted, increased to EUR 0.011 (-0.022)
• Net debt decreased to EUR -13.7 million from EUR -18.6 million at year-end 2023 and the leverage ratio improved to 0.82x from 1.29x

KEY EVENTS DURING THE SECOND QUARTER

• Order worth about USD 5 million signed for shore power with global shipping company.
• Two-year service agreement signed with Port of Salalah for Cavotec’s installed MoorMaster vacuum mooring units.
• The first MoorMaster system in South America inaugurated.
• Existing bank credit facility extended to 2027.
• A cyber incident occurred early in the quarter and incurred some costs and delayed certain deliveries. The full impact of the incident is EUR -0.6 million on the operating result in the second quarter and no further impact will occur. The incident is under control and closed. Cavotec is covered by cyber insurance.

KEY EVENTS AFTER THE END OF THE SECOND QUARTER

• The Board has decided to assess the possibility of moving the registered office from Switzerland to Sweden.
• New production facility in India inaugurated.

Comment from the CEO

Steady profitability improvement driven by the Ports & Maritime segment

The order intake increased 11.0% in the quarter, mainly due to good demand for Ports & Maritime’s product and service offerings. Our profitability has improved steadily since the start of 2023 thanks to our extensive change programs. It is within our Ports & Maritime segment that we see the strongest improvements being realized and we are increasing our focus on implementing the same change work within the Industry segment. We continue to see a strong interest in our climate-friendly solutions, driven by customers’ need to decarbonise as well as new environmental regulations.

Revenues decreased -7.0% to EUR 42.6 million in the quarter, which reflects our project-driven business where revenues can fluctuate between quarters depending on which projects have been completed and milestones achieved. Currency effects did not impact revenue in the quarter.

EBIT increased also in this quarter and doubled to EUR 2.4 million. The EBIT margin improved to 5.5% from 2.6% in the second quarter 2023. The steady improvement in profitability we have seen over the past six quarters is a result of the intensive and successful work with the change programs within the Ports & Maritime segment. We are not satisfied with the development in the Industry segment and the new president that we are in the process of recruiting will continue the implementation of the ongoing change programs to improve performance.

As previously communicated in the first quarter report, a cyber incident occurred early in the second quarter which delayed certain deliveries and incurred some costs. The impact on EBIT in the quarter is approximately EUR -0.6 million. Cavotec is covered by cyber insurance.

Order intake was strong in the quarter and increased 11.0%, mainly due to good demand for Ports & Maritime’s product and service offerings. We have a large untapped market potential within service and have therefore hired more service engineers to continue growing this part of our offering.

We are pleased to report positive operating cash flow for the fourth consecutive quarter. Operating cash flow improved in the quarter to EUR 5.0 million following the increased results and our group-wide internal focus on improving working capital. The leverage ratio continues to move in the right direction and decreased to 0.82x from 3.73x, a great improvement year-over-year. The development of our working capital and the further strengthening or our financial position remain key focus areas during 2024.

Inauguration of South America’s first MoorMaster units
A few weeks ago, I attended the inauguration of our recently installed MoorMaster units at DP World San Antonio, the largest multipurpose port in Chile. Our unique mooring solutions have attracted a lot of interest in Chile and the inauguration was attended by Chile's Minister of Transport and Telecommunications, among others. At the inauguration, the CEO of DP World Chile told us that the port had been hit by a big storm a few days earlier and the only part of the port that could stay open were the quays where our MoorMaster units are installed. This is yet another testimonial that strengthens our brand and our position as a leading supplier of solutions that are both efficient and safe.

Strengthening of supply and sourcing
At the beginning of July, I had the pleasure of cutting the ribbon of our new facility in Chennai, India. This new facility will serve the large and growing market in India, with an array of products, including various types of reels designed for both industrial as well as ports and maritime customers. It will also improve our supply chain and sourcing, enhancing our production capacity of shore power solutions and will function as a supply hub supporting our operations across the globe.

New strategy and sustainability functions
To further strengthen our future-oriented work and increase the insights into our existing and potential customers' preferences, we have strengthened the company with Erik Lyrvall, head of strategy. Sustainability is an area that is growing in importance also at Cavotec, not least driven by our customers' demands. We have therefore recruited John Sorber as head of sustainability, and he and Erik will join Cavotec after the summer.

Assessment of moving the registered office
The Board has decided to assess the possibility of moving the registered office from Switzerland to Sweden. The reason for the assessment is that Cavotec's investors are largely based in Sweden and that the company is listed on Nasdaq Stockholm in Sweden.

Strong position and large installed base
We continue to see a strong interest in our climate-friendly solutions, driven by customers’ need to decarbonise as well as new environmental regulations. I am excited by the momentum I see in the organisation and Cavotec’s ability to exceed customers’ expectations. Cavotec has a strong position, based on its efficient, leading solutions and a large installed base. This, together with the clear strategic priorities, makes me confident in Cavotec's continued ability to grow and create value.

David Pagels
Chief Executive Officer

Webcasted presentation and telco
CEO David Pagels and CFO Joakim Wahlquist will present the interim report on Thursday 25 July at 10:00 am CEST. If you wish to participate via webcast, please use the link https://ir.financialhearings.com/cavotec-sa-q2-report-2024. Via the webcast you may submit written questions. If you wish to participate via teleconference, please register on the link https://conference.financialhearings.com/teleconference/?id=50048866. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference. The presentation is in English.

Interim reports on cavotec.com
The full report and previous interim and annual reports are available on https://ir.cavotec.com/financial-reports.

Next report
The third quarter report is published 8 November 2024 at 7:00 am CET.