Glaston closed the sale of its pre-processing machines business as the second quarter ended.
As a result, it reported the sale of the pre-processing machines business in Discontinued Operations, not in the operating result of Continuing Operations. The overall outlook for the business remains unchanged but due to the change in reporting classification, Glaston has revised its outlook.
It expects that Continuing Operations’ 2015 net sales and comparable operating profit, excluding non-recurring items, will exceed the level of 2014 (in 2014 net sales were EUR 109.7 million and comparable operating profit, excluding non-recurring items, was EUR 5.5 million). Glaston had expected that 2015 net sales and operating profit, excluding non-recurring items, would exceed the level of 2014 (in 2014, net sales were EUR 124.5 million and operating profit, excluding non-recurring items, was EUR 4.9 million).
According to President and CEO Arto Metsänen “The single most significant event for Glaston during the second quarter was the disposal of pre-processing operations. The decision to sell pre-processing was influenced, in addition to the challenging market situation, by the fact that its profitability did not correspond to the targets we set for it and that achieving them would have required large investments in the business in question.
In the period 2012-2015, we have implemented a major restructuring at Glaston. By disposing of both the software and pre-processing machine businesses, we can now focus on high-technology heat treatment and services. In heat treatment technology and service business, our expertise is strong, and we consider growth conditions to be good in these product groups. In heat treatment, the product portfolio has been strongly updated in recent years and our market position is good. We will continue our goal-oriented product development investments in this segment. Our intention is to continue to grow both organically and through acquisitions.
Our Continuing Operations’ order book at the end of the second quarter was at a significantly higher level than the previous year. For the early part of the year and in respect of the following financial periods, we present in this report a comparable operating profit for Continuing Operations, which we will follow in future. Our comparable operating profit, excluding non-recurring items grew from EUR 1.5 million in the first half of 2014 to EUR 3.0 million. Second-quarter net sales and operating profit fell slightly short of both the previous year’s level and our target, due to project deliveries being moved forward.
During the period we renewed our financing agreement, which replaced the previous financing agreement, which was maturing. The financing agreement secures the company’s financing for the coming three-year period and reduces Glaston’s financing and administration costs. In addition, the new agreement removes restrictions on the company’s distribution of funds,” he said.
In the second quarter, the uneven development of markets continued. In the EMEA area and North America, the markets continued to develop in a more positive direction. In Asia and in South America, the markets remained quiet.
In the Machines business, the market situation continued to be challenging in the second quarter. The positive development of the North American market continued, but more moderately than before. In South America, the market continued to be quiet, with Brazil falling significantly short of expectations.
In the EMEA area, good development continued. In the second quarter, Glaston received several major orders including a deal worth EUR 2.4 million with Europe’s leading glass processor that included a Glaston FC500™ flat tempering line, a ProBend™ line for tempering high quality bent glass, and a Glaston Care service agreement. June closed with a EUR 2.6 million machine sale with a Kuwaiti customer.
In Asia, the market continued to weaken, and activity in China in particular was on a low level. In Australia and New Zealand however, markets showed signs of picking up.
The Services segment’s market continued its good development, with the second quarter being even more lively than the first.
In upgrade products, the order intake improved in all geographical areas. In the second quarter, significant upgrade deals were closed in Canada, Australia, the USA and Israel, where the transfer of a tempering machine from Austria to Israel was agreed, utilising the Glaston Move service.
The company’s markets are expected to grow moderately in 2015. Sales of new machines are expected to continue in the EMEA area and in North America. Meanwhile South American and Asian markets should remain at their present level in the short term.
Glaston’s expertise is strongest in heat treatment technology and service business, on which they intend to fully focus resources. “We consider growth conditions to be good in these product groups.”