Polytec Holding AG (PYT) Earnings Call Transcript & Summary

Good afternoon, everybody, to our Annual Results 2022 analyst call. Sorry for the delay in the afternoon. Usually, we are in the morning. But I have been on a business trip, and it was good that we reserved some time in between because, as usual, the flight was delayed again. So sorry for that. Next time, I hope we can manage to be in the morning again. Coming to the 2022 results in the year and some information around it. Again, after several other years, also this year was massively demanding with all impacts that are still overlapping from Dieselgate and subsequent electrification of the powertrain, significant price increases on all raw materials and energy, chip shortages and shortages on other material. All of these created a high volatility of demand and therefore additional challenges in our production, but it's not different to the years before. As a result of all of this, the European car production, which is the major impact on our volumes, the car production is still roughly 25% lower than before the crisis 2020. 25% below a normal year precrisis, which has significant shortfall of volume. The unpredictable development during the last years and the resulting on-and-off production in our plants means now a massive shortage of labor. We always tend to contract new people, train the people on the machinery, had to release them when the volumes went down or the customer plants were shut down for a short-term work. We needed new people, trained them again, released them again. And ultimately, some other industries, we are constantly performing, we had got more and more difficult to get new people from temporary working agencies as the predictability is very low in the automotive sector. All of this created impacts on productivity and quality, but also this is not significantly new to the years before. And however, we positively need to say the predictability in quarter 4 improved strongly. So the short-term reduction of collars since late autumn improved far better than it was before. Volumes improved slightly in quarter 4, but still far below precrisis. And honestly, I see no recovery, or a more short-term recovery to a level it was 2020 [ 9, what ] before. Stepwise recovery as said should come but not on a short term. Alongside with this first improvement, it was the first time that POLYTEC is directly hit by chip and electronic shortages in Q4, not directly in terms of supplies to our product, but we were impacted. As for the volume increases, necessary machinery was not able to be supplied because it's [ ancient of all ] units, Siemens controlled mainly, are not able to deliver, and therefore, we received not to [ divergently-needed ] machines. The supplies could be kept upright, but at an extensive extra cost. And it impacted our Q4 results negatively to what would have been possible on the recovery. And we also need to say that this machinery usually has delivery times of 1 to 3 months. Currently, we are faced with 12 to 18 months, but still this is uncertain. However we achieved, by a strong management that we step-by-step, get one or the other machine a bit earlier. But time will tell how we are really able to get all capacity up within the next months. It will definitely also impact our first month's results in 2023, but however, it is not a broad issue. It's very specific in a certain plant on a certain type of machinery. So only bad news for the industry and for POLYTEC? Not really, to be honest, and that's the good side of it. The major question for us was, is POLYTEC able to realize the opportunities out of this multiple crisis and of the transformation of mobility in the broader way. And the massive good news and promising news for us is, yes, we could confirm that our market position, which we started the transformation in 2020 called the POLYTEC SOLUTION FORCE is a major success. This success is underpinned by an all-time high order intake during 2022. And not only an all-time high order intake, but also with products that are absolute future-proof, if it is in terms of battery electric cars, if it is in nonautomotive areas like energy storage or infrastructure, while if it is also in new mobility aspects where we have more and more development projects as we have also released a collaboration with FlyNow, a personal fully automated flight drone. Further away than the serial parts, but still. Moreover, we also achieved 2 major awards which we are very proud of, and which confirms that the position of POLYTEC SOLUTION FORCE as the continuous innovation is valued by our customers. The one is Silver Star Award for the -- for Jaguar Land Rover for the development of a massive important product for JLR. And the other one is a technical level award given by JEC, the most important composite field, which we received together with Audi for underbody solution shielding the battery pack of Audi e-tron. All together, we managed to forward the essential cost increases to balance the results -- balance the results even at low volume. Moreover, we managed to achieve a positive free cash flow by a focused working capital management, resulting in EUR 55 million cash reserve after EUR 27 million, which we only had at Q3 2022. And not less important, but most important, we managed to remain all major customer relationships with significant order intake and the confirmation of our market positioning. So the later is the most promising. Nonetheless, the actual results are, for sure, not satisfying yet. The sales was roughly EUR 600 million after EUR 555 million the year before, mainly resulting of cost forwards. The volume is slightly lower than it was the year before. The EBITDA was 5.5% and an EBIT of close to 0, [ plus ] 0, after 2.2% in last year. We still remain -- we have a solid equity ratio of 43%. And based on this balance sheet and on the outlook of the order intake, we also proposed to a dividend proposal of EUR 0.10 per share. As we mentioned on the results, there are special one-off expenses included aside from what I mentioned, the operational issue around capacity. We have additional EUR 4.6 million spent, which are mainly attributable to the introduction of a software solution and in 2 major POLYTEC location and some payment around pension scheme. 2022 shows less volatility -- sorry, not 2022. 2023 shows less volatility. Here, there are some volume shortfalls, but specific shortfalls, not in [ mobility ] area as it was at the years before, very individual products, so all able to be managed. And depending on the availability of the machines, the current extra cost will reduce during the first half of the year. Together with all the other impacts, where none of those has disappeared, this leads us to our expectation of an improvement on results in the full year based on a turnover of EUR 650 million to EUR 700 million. So far, the most important phase around the annual result. Thanks for listening.