Regulatory News

Finally, a number of other offshore projects in the North Sea and the USA were successfully executed along with large-scale onshore projects in mature markets across Europe and the USA.

Gross profit decreased slightly to EUR 15.9 million in H1 2019, compared to H1 2018 (EUR 16.7 million), mainly driven by the decrease in revenue that was partially offset by the improved gross profit margin (8.1% in H1 2019 vs. 7.5% in H1 2018). The decrease in gross profit converted into a slight decrease in adjusted EBITDA to EUR 14.0 million (EUR 14.9 million in H1 2018). In H1 2019 profit before tax was EUR 2.4 million, mainly attributable to the factors stated above, as well as to the increase in net finance costs of EUR 1.7 million.

The higher needs in working capital that usually appear in the middle of the financial year due to the production cycle, coupled by reduced cash and cash equivalents by EUR 18 million led to an increase in net debt by EUR 12.8 million to EUR 196 million as of June 30 2019. No major capital expenditures were undertaken during the same period, with investments relating mainly to operational improvements of machinery in Thisvi CPW plant.

Cables

The financial performance in H1 2019 was driven, as expected, by the high capacity utilization levels of all production units. This fact led the cables segment to double its operational profitability compared to H1 2018 in terms of adjusted EBITDA.

Revenue for the cables segment increased by 32% year-on-year to EUR 300 million in H1 2019, driven mainly by the execution of high and extra-high voltage onshore & offshore projects.

As for the project business, during H1 2019:

• the expansion of the 400 kV cable system in the Peloponnese is in accordance with the timetable, as the production of the extra-high voltage submarine cables was executed and during August the installation of the first 400 kV submarine extra-high voltage cable in Greece, in Rio-Antirio was completed.
•  the production for the Seamade-Mermaid project in Belgium, Hollandze Kust Alpha project in the Netherlands and the interconnection of Crete – Peloponnese was initiated, while the production for the second phase of Cyclades islands interconnection project continued.
•  the successful installation of the submarine cables for the Modular Offshore Grid (‘MOG’) project in the North Sea, Belgium and the submarine cable interconnection of Kafireas wind park in Evia, Greece, with the national power network.During H1 2019, a limited number of high-voltage projects were awarded in the market, while Hellenic Cables and Fulgor participated in several tenders across geographical areas and markets. The current backlog of the cables segment stands at EUR 320 million.The cables product business achieved 6% higher sales volumes compared to H1 2018 along with an improved sales mix. The main drivers were the solid demand from Balkans, Middle East and the Nordic countries, which counterbalanced the slight lag in the markets of Germany and Central Europe.The remarkable increase in the project-based business along with the steady growth in the product business translated into an EUR 14.6 million increase in adjusted EBITDA, reaching EUR 28.5 million in H1 2019, up from EUR 14 million in H1 2018.

Net finance costs for H1 2019 amounted to EUR 11.3 million, decreased by 6% compared to H1 2018, as a result of improved interest rates, while depreciation & amortization for H1 2019 amounted to EUR 8.2 million. The metal price lag has negatively affected segment’s profitability by EUR -2.7 million.

Profit before income tax in H1 2019 was EUR 6.6 million, compared to a loss before income tax of EUR 7.1 million recorded in H1 2018. Finally, net profit after tax amounted to EUR 4.3 million versus losses after tax of EUR 4.8 million in H1 2018.

Investments in the cables segment in H1 2019 reached EUR 21.6 million, largely attributable to:

•  the expansion and upgrade of the high voltage submarine cables business unit in Fulgor’s plant in order to meet expected future demand levels, which started during 2018 and is expected to be concluded by the end of 2019, and
• selected investments for productivity improvements at other companies’ plants.
  Net debt remained stable at EUR 292.3 million compared to EUR 291.2 million as at 31 December 2018, as capital expenditure was financed mainly through segment’s inflows from operating activities.

Subsequent events

Please refer to the Notes of the Condensed Consolidated Financial Statements for the 6-month period ended 30 June 2019.

Outlook

In the steel pipes segment, the global economic environment in which Corinth Pipeworks operates remains volatile, as a result of the imposition of tariffs and antidumping duties by the USA. Despite these headwinds, Corinth Pipeworks remains focused on maintaining its leading position, through new investments and the penetration of new geographical and product markets. CPW maintains its positive outlook for the second half of 2019 with major project awards expected in the North and Baltic Sea as well as in the USA.

In the cables segment, given the strong forecast of new projects and the potential of expanding to new markets, the considerable backlog of orders and the growth potential of the offshore cables sector, the overall outlook remains positive, despite the volatility noticed in the global economic environment. Fulgor’s return to high utilization capacity during 2019 will drive the segment’s profitability until the end of the year. The Thiva plant is also expected to operate at high utilization levels throughout 2019. Furthermore, in the cables’ products, there are signs of recovery in the low and medium voltage cables markets in Western Europe, which were constrained by competitive challenges during the last years. Closing, the main focus for the remaining year is on the successful execution of existing projects and the improvement of internal processes in order to take advantage of any arising market opportunity.

Despite the current market volatility, Cenergy Holdings expects to maintain the positive momentum noticed in H1 2019. Looking ahead, the Company will benefit from the solid order backlog generated and remains well placed to take advantage of improving market conditions in the energy sector and further its companies’ ambitions of remaining significant world players in energy transfer and data transmission solutions.

Statement of the Auditor

The condensed consolidated interim financial statements for the six-month period ended 30 June 2019 have been subject to a review by the statutory auditor.