Solid development in 3rd quarter – Management confirms forecast for 2020

Gelsenkirchen, 11 November 2020 – In the nine-month period, the Masterflex Group (ISIN DE0005492938), exceeded its earnings forecast for the 2020 financial year, increased its liquidity and reduced its net debt despite the expected downturn in revenue. This was mainly due to the stable development in the third quarter and the systematic implementation of the measures forming part of the “Back to Double Digit” (B2DD) optimisation programme that was launched in the previous year.

In the first nine months of the current financial year, the Masterflex Group generated revenue of EUR 55.8 million, down 10.8% on the figure of EUR 62.5 million recorded in the same period of the previous year. This places Masterflex at the upper end of its full-year forecast, which anticipated a downturn in revenue of between 10% and 15% as a result of the coronavirus pandemic. The demand situation in the aviation, automotive and mechanical engineering industries remains challenging. This development is being partially offset by the positive demand trend in the promising growth industries of medical technology, food and pharmaceuticals, where Masterflex Group's hose systems are experiencing growing demand, due in part to the coronavirus pandemic. The focus on these sectors gives the Masterflex Group a degree of stability in challenging times.

On the earnings side, a combination of strict cost discipline and extensive efficiency measures as part of the “B2DD” optimisation programme meant that, while Group operating EBIT in the first nine months of the current financial year declined to EUR 3.5 million as expected (9M/2019: EUR 5.3 million), it was well in excess of the full-year forecast for 2020 (EUR 1.0-2.5 million). Accordingly, the operating EBIT margin amounted to 6.3% after 8.4% in the previous year. EBITDA amounted to EUR 6.6 million in the first nine months after EUR 8.3 million in the same period of the previous year. As expected, consolidated net income declined to EUR 1.4 million in the first nine months (previous year: EUR 3.1 million).

At the same time, the Group succeeded in further reducing net debt and increasing liquidity. Cash increased from EUR 6.9 million in the previous year to EUR 8.2 million as of 30 September 2020. Among other things, the rescheduling of the syndicated loan - with a reduced repayment agreement in the 2019 financial year - had a positive effect here. Together with the repayment of the working capital line of credit, the Masterflex Group’s net debt improved considerably. After exchange rate differences, consolidated equity as of 30 September 2020 amounted to EUR 42.0 million, matching the level as of the 2019 balance sheet date (EUR 42.0 million). With total assets decreasing at the same time, the consolidated equity ratio rose from 51.5% as of 31 December 2019 to 53.4% as of 30 September 2020.

In light of the dynamic development of the COVID-19 pandemic at present and the accompanying containment measures, the figures for the fourth quarter of 2020 and the first quarter of 2021 are now expected to be down on the previous year. However, this does not affect the full-year forecast. Thanks to solid development in the third quarter and the fact that the results for the first nine months of the financial year were in line with expectations, the Management is confirming its forecast for 2020 as a whole, which involves a 10-15% downturn in consolidated revenue. At the same time, the operating EBIT is expected to be between EUR 1.0 million and EUR 2.5 million.

Dr Andreas Bastin, CEO of the Masterflex Group: “Although we find ourselves in challenging times as a result of the coronavirus, our Back to Double Digit programme and our flexible and rapid response to the conditions resulting from the pandemic mean that Masterflex is mastering these challenges extremely well. At the same time, our focus on high-growth industries like medical technology and life science gives us a certain degree of stability against economic fluctuations. The fact that we are still profitable despite lower revenue serves to underline what we will be able to achieve once we return to our established solid growth path. We have laid the foundations for permanently returning to a double-digit EBIT margin, which is why we are optimistic about the future even in the face of the current uncertainty.”