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FP achieves revenue of EUR 104.8 million and grows by 3.3% to EUR 107.9 million (currency adjusted)
EBITDA reaches EUR 12.8 million, and increases by 22.1% to EUR 15.5 million (currency adjusted)
Consolidated net income increases by 48 % to EUR 3.1 million
Adjusted free cash flow at EUR 3.5 million
ACT project JUMP gains momentum – announced non-recurring expenses expected in the second half of the year
Forecast for 2018 fiscal year confirmed
Berlin, 23 August 2018 - Francotyp-Postalia Holding AG (FP), the expert in secure mail business and secure digital communication processes, increased its revenue and EBITDA in the first half of 2018. Adjusted for currency effects, consolidated revenue increased by 3.3% to EUR 107.9 million compared with EUR 104.4 million in the same period of the previous year. Adjusted for currency effects, EBITDA and initial expenses for the ACT project JUMP increased by 22.1 % to EUR 15.5 million compared with EUR 12.7 million in the first six months of 2017. In the first six months of 2018, consolidated net income reached EUR 3.1 million compared with EUR 2.1 million in the same period of the previous year. Thus, earnings per share increased to EUR 0.20 compared with EUR 0.13 in the first half of 2017.
ACT results in sustainable profitable growth for FP
FP began implementing the ACT growth strategy 18 months ago. FP is attacking in the core business, supporting its customers from the analogue to the digital world and transforming the Group into a dynamically growing company. Business development in the first half of 2018 shows that the key assumptions of the ACT strategy continue to be appropriate and the measures taken lead FP in the direction of sustainable profitable growth and accomplishing its announced goals: In 2020, FP intends to generate consolidated revenue of EUR 250 million with an EBITDA margin of 17% and revenue is expected to increase to EUR 400 million and the EBITDA margin to 20% by 2023.
The plans for the realignment of the Group as part of the central ACT project JUMP have been completed. FP is now starting to implement the measures it has decided on. As planned and announced, the expenses required for this will have an increased negative impact in the next two quarters. JUMP provides additional potential to make better use of growth opportunities and increase profitability on a sustainable basis.
In addition to JUMP, FP is currently implementing nine other projects to increase revenue and earnings as part of the ACT growth strategy. These include the development of a new generation of PostBase franking machines, the further development and global roll-out of the discoverFP customer portal, in addition to innovative solutions that are expected to be provided, the expansion of the functional scope of the FP Sign signature solution and its marketing, as well as the market launch of products for the Internet of Things.
Growth in core business despite currency effects
As in the first quarter of the 2018 fiscal year, the strong euro vis-a-vis the US dollar in particular is also reflected in the reported figures for the first six months of 2018. Exchange rate effects across all currencies were negative on revenue level, totalling EUR 3.1 million in the first half of 2018. Taking account of exchange rate effects, the FP Group generated revenue of EUR 104.8 million. This corresponds to an increase in revenue of 0.3% compared with the same period of the previous year. The positive growth trend remains intact.
Revenue in the Franking and Inserting segment increased by 1.1% in the first six months of 2018 to EUR 65.3 million as against EUR 64.6 million in the same period of the previous year. Adjusted for currency effects, revenue in core business increased by as much as 5.9% to EUR 68.4 million. Compared with the industry norm, FP can continue to score points and continue its growth trajectory as planned. In the first half of 2018, FP continued to increase its portfolio of franking systems in four countries, including in the strategically key markets of the US and France.
Revenue in the Software segment increased by 9.3% to EUR 7.4 million in the first six months of 2018. In particular, hybrid mail services recorded a positive course of business. As at 1 June, the newly acquired IoT specialist Tixi.com was consolidated for the first time. As a result, although it was a small amount, the IoT business contributed to the revenue of this segment for the first time.
In the first half of 2018, revenue in the Mail Services segment, the segment for the consolidation business, amounted to EUR 32.0 million, compared with EUR 33.0 million in the same period of the previous year. As reported, the decline in revenue is due primarily to the largely completed realignment of this product area and to changes in the customer and product mix. Thus, the volumes of processed letters remained stable in the reporting period.
Rüdiger Andreas Günther, CEO of the FP Group, explains: “Even though we still have a lot ahead of us with our ambitious projects: After 18 months of the ACT strategy, our half-year results for 2018 are positive. We continue to increase our market share in our core business. In the first half of 2018, we achieved key milestones with our new digital products and business models. Thanks to the acquisition of the IoT specialist Tixi.com, we are recording the first contributions to revenue in the future market of the Internet of Things. For our FP Sign signature solution, we gained new sales partnerships and customers. Thus, we are just at the beginning of market launch. We are driving the projects forward to quickly turn the great opportunities in these growth markets into sustainable business success.”
EBITDA above previous year’s level
The successful business development in the first half of 2018 is also reflected in robust earnings development. In the first six months of 2018, FP generated EBITDA of EUR 12.8 million as compared to EUR 12.7 million in the first half of 2017. This corresponds to an EBITDA margin at the level of the previous year of 12.2%. Adjusted for currency effects of EUR 1.8 million and expenses for the ACT project JUMP, EBITDA amounted to EUR 15.5 million (corresponding to an EBITDA margin of 14.4%).
At EUR 0.9 million, the expenses for JUMP remained at a low level in the first half of the 2018 fiscal year. For the 2018 fiscal year overall, non-recurring expenses of EUR 6.0 - 8.0 million are planned. With the transition from the planning to the implementation phase, these will be incurred in the third quarter, but in particular in the fourth quarter of the 2018 fiscal year. The measures required to transform FP will negatively impact the result of the 2018 fiscal year, but will result in annual improvements of EUR 6.0 million from 2020 onwards.
EBIT and consolidated net income increased
As planned, amortisation and depreciation decreased in the first half of 2018 in absolute terms and in relation to revenue compared with the previous year. EBIT improved markedly to EUR 4.2 million after EUR 2.9 million in the previous year. Consolidated net income climbed to EUR 3.1 million compared to EUR 2.1 million in the same period of the previous year. Earnings per share (EPS) increased to EUR 0.20 and was thus significantly above the previous year’s level of EUR 0.13.
As part of the ACT growth strategy, FP is increasingly investing in new products and business models. In the second quarter of the 2018 fiscal year, the Group acquired the IoT specialist Tixi.com. As a result of these expenses and investments among other factors, free cash flow amounted to EUR 0.0 million in the first six months. In the same period of the previous year, free cash flow of EUR 4.0 million was generated. Adjusted for investments in finance lease assets, investments in M&A and initial expenses for the ACT project JUMP, the FP Group generated free cash flow of EUR 3.5 million as against EUR 6.7 million in the same period of the previous year. This development had already been announced with the forecast published in March for the 2018 fiscal year.
CEO Günther explained: “We will continue to increase our pace to make even better use of our potential and to open up new potential. For this reason, we are fundamentally converting FP. The planning for our new consolidated statement of changes with clearer structures and more efficient processes has been completed. Thus, we are now starting to fully and systematically implement the necessary transformation. In 2018, we will spend between EUR 6.0 and EUR 8.0 million on this. As a result, we will generate sustainable advantages of EUR 6.0 million per year as at 2020. Our mission statement is clear: By 2020, we want to generate revenues of EUR 250 million and an EBITDA margin of 17%. The ACT project JUMP is an important lever for this.”
Forecast for the 2018 fiscal year confirmed
The FP Group is confirming its forecast for the 2018 fiscal year. The company expects revenue to increase slightly year on year. Adjusted for the expenses of the JUMP project, the FP Group also expects a slight year-on-year increase in EBITDA. Owing to growing investment in ACT and new products, the company expects free cash flow for 2018 to be positive but well below the previous year when adjusted for M&A and investments in finance lease assets, and before payments in connection with the JUMP project.
The anticipated development of financial performance indicators for the 2018 fiscal year is based on the assumption of constant exchange rates.
Key figures at a glance:
|in € million||H1 2018||H1 2017||Change|
|Cost of materials||52.3||51.8||1.0%|
|Consolidated net income||3.1||2.1||48.0%|
Earnings per share (in €, basic/diluted)
|Free cash flow||0.0||4.0||n/a|
|Adjusted free cash flow||3.5||6.7||-47.8%|
For press enquiries please contact:
Dr Joachim Fleϊng, Head of Investor Relations
Tel.: +49 (0)30 220 660 410
Contacts in the company:
Karl R. Thiel, VP Corporate Communication
Tel.: +49 (0)30 220 660 123
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About Francotyp-Postalia (FP)
The FP Group, a listed international company headquartered in Berlin, is an expert in secure mail business and secure digital communication processes. As the market leader in Germany and Austria, the FP Group offers products and services for efficient mail processing, consolidation of business mail and digital solutions for businesses and authorities with its product segments "Franking and Inserting", "Mail Services" and "Software". The Group generated revenue of more than EUR 200 million in 2017. Francotyp-Postalia is represented in ten countries with its own subsidiaries and in a further 40 countries via its own network of dealers. Thanks to a history spanning more than 95 years, FP has a unique DNA in the fields of actuator and sensor technology, cryptography and connectivity. It has a share of over 11% in the global market for franking systems.
You can find out more at www.fp-francotyp.com.