exceet Group SE

Financial Results First Quarter 2017 Improving Group Performance Step-by-Step - Seite 2

ECMS experienced a favorable sales trend and progress in the segment's business development. The combination of a longstanding good reputation and the gradually improving economic environment along a cautiously optimistic customer base supported the increase of revenues, especially in the area of customer-specific electronic modules and systems. This was supported by the increasing brand awareness of exceet electronics which was confirmed by the interest of customers and prospects for exceet's system-on-board (SoM) baseboards at the early year trade shows. At the same time, the good economic climate helped ECMS to experience a good sales progress in the field of complex client-specific micro- and opto-electronics. Customers take advantage of a unique range of high-end chip-level technologies realized in state-of-the-art cleanroom facilities. However, the PCB business was more difficult in the first quarter as order releases turned out moderate and showed a higher than expected volatility.

exceet Secure Solutions (ESS) generated revenues of EUR 2.6 million (3M 2016: EUR 1.7 million), accounting for 7.2% of total group sales. The EBITDA remained negative with minus EUR 0.6 million.

Thanks to the improving economic conditions and the high demand for IoT solutions, the segment realized an increase of revenues in the field of industry routers and gateways associated with mobile communication and remote services. These products are used for security technology particularly for secure IoT projects in all segments of the industrial market.

ESS has launched "exceet connect" as a bundled and structured product series based on its competencies in secure connectivity. This solution ensures secure communication between users and devices and guarantees protection against tapping and manipulation of data. With exceet's modular solution portfolio the customer has the choice of different security levels.

Outlook

Based on an encouraging start into 2017, reflecting the promising order backlog figure recorded at 31 December 2016, the management maintains at this early stage of the year its cautiously optimistic assumptions concerning growth and profitability as published in the last annual report. Although the general economic sentiment is still characterized by a certain fragility related to political, geopolitical and economic concerns, the group is prepared to improve its performance step-by-step. Latest order backlog data are supporting this expectation while a certain volatility of quarterly data will remain typical for exceet's project-driven business. One specific macro-economic issue to be watched closely is the latest imbalance on the global copper market where rising demand from the renewable energy and electro-mobility industries is absorbing higher volumes which in turn could delay deliveries into the classical electronics industries where exceet and exceet's clients are operating. The execution of a clear customer orientation in development, industrialization and manufacturing of smart and secure electronics is now gradually bearing fruits. The sales progression most probably will follow a similar pattern as in 2016 with a better cumulative second half compared to the first half. Operational profitability as measured by the EBITDA margin should visibly improve from the 6% average annual level of last year although further structural measures could eventually trigger some additional restructuring costs and value adjustments. The ongoing transformation process of the operations in Rotkreuz (Switzerland) and Ebbs (Austria) is monitored carefully and the still unprofitable ESS unit in Dusseldorf (Germany) might be subject to further cost optimization measures.