Picanol Posts Strong Results In 2021 As Global Machinery Market Recovers

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Highlights

  • Construction works at the new production facility in Rasnov (Romania) were completed at the end of 2021 (Machines & Technologies segment) and some of the production already started in January 2022. Transferring all production to the new plant is planned to take place in the third quarter of 2022.
  • In the fourth quarter of 2021, Picanol launched its customer platform PicConnect. This is a new, fully digital platform offering a wide range of features from industrial IoT to service-related applications. In addition, Picanol introduced its latest generation of airjet and rapier weaving machines, which have been called the Connect generation. These new generation weaving machines focus on connectivity and an increased level of data availability (Machines & Technologies segment).
  • At the end of 2021, Picanol Group announced the construction of a new head office for its Machines & Technologies segment in its hometown of Ieper (Belgium). Construction work in Ieper is planned to start in the second quarter of 2022, with the new head office scheduled to open in 2024.

Following the launch of the new Connect generation weaving machines in 2021, Picanol introduced the OmniPlus-i TC Connect in January 2022. This dedicated execution for the weaving of tire cord fabrics has now been upgraded to the latest airjet technology and combined with the Connect generation features.

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Revenue
2H21 revenue increased by 32% compared to the same period last year. The Machines & Technologies revenue increased by 30% as the global machine market continued its strong recovery after Covid-19. The 2021 revenue increased by 25%. The revenue increased in all business segments: Machines & Technologies +46%, Agro: +29%, Industrial Solutions: +21%, Bio-valorization: +12% and T-Power: +2%.

Adjusted EBITDA
The 2H21 Adjusted EBITDA amounts to 194.3 million EUR compared to 166.2 million EUR one year earlier, or a 17% increase. The Adjusted EBITDA of segment Machines & Technologies decreased by 8.8 million EUR (-26%) as the unprecedented increase in raw material prices could not be fully re-charged to the customers. While the contribution of the operating segments Agro (+76%) and Industrial Solutions (+20%) increased, the contribution of Bio-valorization and T-Power remained stable.

The 2021 Adjusted EBITDA amounts to 430.3 million EUR, an increase by +19% compared to 361.7 million EUR in 2020. The Adjusted EBITDA of Machines & Technologies (+62%), Agro (+17%) and Industrial Solutions (+44%) increased, while the contribution of Bio-valorization (-4%) and T-Power (-4%) to the group Adjusted EBITDA was in line with prior year.

Net financial debt
As per year-end 2021, group net financial debt amounts to 34.9 million EUR, which implies a leverage of 0.1x (2020: 97.1 million EUR or a leverage of 0.3x). Short-term borrowings for 215.3 million EUR and 196.2 million EUR long-term borrowings are partially compensated by cash and cash equivalents (366.7 million EUR) and short-term investments (10.0 million EUR of short-term bank notes with maturity date in January 2022). The short-term borrowings include the bond, issued in 2015 with a maturity of 7 years, for an amount of 167.7 million EUR, which will mature in July 2022. Excluding the IFRS 16 lease liabilities, the group net cash position would have amounted to 21.6 million EUR compared to a net financial debt of 40.8 million EUR as per year-end 2020.

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Profit/loss
2021 profit amounts to 160.7 million EUR compared to 55.4 million EUR in 2020. The profit was positively impacted by exchange gains and losses, mainly on non-hedged intercompany loans and cash and cash equivalents in USD (+15.3 million EUR) and by the non-realised profit on the Rieter shares, resulting from the fair value revaluation at the share price of December 31 (+35.9 million EUR).

Operational free cash flow
The 2021 operational free cash flow amounts to 304.0 million EUR, compared to 323.1 million EUR in 2020. This decrease, despite the increase of the Adjusted EBITDA (+68.6 million EUR), can be explained by the movement of trade working capital, which increased by +65.2 million EUR in 2021. This increase is impacted by the higher activity and increasing purchase and sales prices. Capital expenditure amounted to 112.5 million EUR in 2021, in line with prior year (113.0 million EUR).

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Outlook
The group anticipates a continued high level of uncertainty in 2022 due to the current conflict in Eastern Europe, the difficult supply chain circumstances, and other challenges following the coronavirus pandemic. The group is faced with higher logistics, energy and raw materials costs, and this implies that our sales margin could come under pressure during the coming months. Based on currently available information, the group expects that the 2022 Adjusted EBITDA will be lower than that of 2021. This guidance does not include the risk of further deteriorating economic and financial market conditions.

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