TRADING UPDATE Q3 2021
Growing results along with record high backlog
- Growing operational profitability: a-EBITDA for Q3 2021 was EUR 34.4 million, EUR 5 million higher than the previous quarter due entirely to the steel pipes segment. The corresponding amount for the first 9M of 2021 rises to EUR 82 million, 14% higher y-o-y (9M 2020: EUR 72 million) confirming the group’s growth prospects.
- Record high order backlog at more than EUR 800 million as of September 30, 2021 (31 December 2020: EUR 500 million).
- Strong sales at EUR 766 million, 21% higher than prior year’s corresponding period (9M 2020: EUR 635 million).
- Consolidated profit before tax of EUR 35.2 million vs. EUR 24.2 million in 9M 2020. Commenting on the Group’s performance, Alexis Alexiou, Cenergy Holdings’ Chief Executive Officer, said:
The strong performance in Q3 2021 confirms our ability to provide effective solutions to our customers in all our business lines. We continue to benefit from stronger markets from the green energy transformation. Cenergy successfully implements initiatives to improve efficiency and streamline internal procedures. The cables segment still drives the Group’s profitability, though Corinth Pipeworks returned to a full production programme and to operational profits during the third quarter. At the same time, we secured significant energy projects and grew our backlog to record high levels. The recent awards of Santorini-Naxos electrical interconnection in Greece, an HFW pipeline in Norwegian North Sea on behalf of Aker BP and the first ever subsea project with Vattenfall in Denmark are some examples of the successful tendering activity during the latest quarter, demonstrating our commitment to high value-added products.
Finally, the recent agreement between the EU and USA on Section 232 tariffs implies our products will once again be competitive in the US market, judged solely by their high quality and the attention to service we traditionally offered our US customers.
Strong operational profitability and bottom line results
Revenue grew by 21% for the nine-month period to EUR 766 million, with Q3 2021 rising by 9% compared to the previous quarter, as all plants in the Group achieved full production capacity. The cables segment pushed forward several projects already at execution stage, such as the production of inter-array cables for Doggerbank A and Seagreen in the UK and that of export cables for the Kafireas II Wind Farm in Greece. The strong demand for cables products continued, particularly in our main markets in Central Europe, the Balkans and the Middle East. More importantly though, it is the steel pipes segment that returned to full speed, as it started production of pipes for the Israel Natural Gas Lines (INGL) and Snam projects awarded earlier in the year.
This full production schedule led adjusted EBITDA for Q3 2021 to reach EUR 34.4 million (+16% quarter on quarter), with the EUR 5 million over and above the previous quarter coming from steel pipes. The 9-month a-EBITDA amounted to EUR 82 million, i.e. + EUR 10 million or 14% compared to prior year’s comparable period.
During Q3 2021, the negative metal result in cables segment observed during Q2 was partially reversed, driving EBITDA up by EUR 17 million. Profitability margins remained at satisfactory double- digit levels, for both the quarter and year to date, despite price inflation in raw materials and other key resources.
On the other hand, net finance costs increased by EUR 0.9 million (14%) in Q3 vs. Q2 2021 due to higher working capital needs, though they remain significantly lower on a cumulative basis vs. 2020 (9M 2021: EUR 21.7 vs 9M 2020: EUR 24.1 million), as both the debt level and interest rates are lower.
The stronger EBITDA and lower finance costs generate profit before income tax of EUR 35.2 million for the period ended on 30 September 2021, a significant increase over the EUR 24.2 million in 9M 2020. Profit after tax for the period stood at EUR 30.6 million, compared to EUR 18.5 million in last year’s corresponding period, representing 4.0% of revenue (against 2.9% in 9M 2020).
We continue to win tenders steering backlog to record high levels
The successful tendering activity continued without disruptions for both segments with total order backlog reaching EUR 808 million as of September 30, 2021, the highest level ever achieved by the Group. The commercial team of Corinth Pipeworks secured some important orders from June to September 2021, adding a note of optimism to the production picking up in the same quarter, though total order book remains skewed in favour of the cables segment.
The cables segment continues to execute its secured orders for projects, keeping a strong momentum and taking advantage of its ability to expand into new markets. At the same time, we explore possible co-operations aiming at utilizing our know-how in the submarine cable industry and possible new business opportunities around the globe to benefit from the proven potential of the offshore wind sector. High capacity utilisation in all plants is driving the entire segment’s profitability, as demand recovery for cable products was confirmed and gained further pace during 2021.
The steel pipes segment, on the other hand turned profitable during Q3 2021 and is expected to benefit even further from growing orders during the last months of the year. Corinth Pipeworks is following developments in the US market concerning the lifting of tariffs and duties on the imports of
steel products from the EU, getting ready to take advantage of the revived market as well as new opportunities. As energy demand is rebounding, its focus stays on new innovative products, together with the expansion to new geographies.
Overall, Cenergy Holdings is looking ahead to a positive year, with steady revenue streams supporting satisfactory operational margins, as its companies’ advanced technology products and their robust operational structure, form the basis for sound sustainable growth and development.
|AMOUNTS IN EUR THOUSAND||9M 2021||9M 2020||Change (%)||Q3 2021||Q2 2021||Change (%)|
|GROSS PROFIT MARGIN (%)||10.8%||11.9%||-115 bps||13.7%||8.9%||+483 bps|
|a-EBITDA margin (%)||10.7%||11.3%||-63 bps||12.3%||11.5%||+79 bps|
|EBITDA margin (%)||9.9%||10.4%||-49 bps||13.2%||7.9%||+537 bps|
|a-EBIT margin (%)||8.2%||8.5%||-32 bps||10.0%||9.1%||+91 bps|
|EBIT margin (%)||7.4%||7.6%||-18 bps||10.9%||5.4%||+550 bps|
|Net finance costs||(21,673)||(24,088)||-10%||(7,638)||(6,724)||14%|
|Profit before income tax||35,154||24,165||45,5%||22,993||7,275||216,1%|
|Profit after tax for the year||30,558||18,479||65%||18,980||6,956||173%|
|Net profit margin (%)||4.0%||2.9%||+108 bps||6.8%||2.7%||+407 bps|
|Profit attributable to owners||30,526||18,480||65%||18,969||6,942||173%|
|AMOUNTS IN EUR||9M 2021||9M 2020||Change (%)||Q3 2021||Q2 2021||Change (%)|
|Earnings per share||0.16070||0.09717||65%||0.09981||0.03658||173%|