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Topsoe Annual Report 2015: Results influenced by challenging market conditions, but market shares maintained

31.03.2016
Making optimal performance possible
  • Revenue grew by 2%; however, adjusted for currency fluctuations, revenue dropped by 4%
  • Operating profit (EBIT) was reduced by 11%
  • Results did not meet growth ambitions, but market shares were maintained, as the entire industry was affected by challenging market conditions 
  • Initiatives implemented in 2015 have reduced cost base

Topsoe’s revenue reached DKK 5,785 million in 2015, which was 2% more than in 2014 and the highest ever. However, revenue was positively influenced by currency fluctuations. Adjusted for this effect, revenue in 2015 was 4% lower than the year before. EBIT in 2015 was DKK 502 million compared to DKK 563 million in 2014, a reduction of 11%. EBIT margin was 8.7% in 2015 compared to 9.9% in 2014. 

“The results do not meet our growth ambitions. Market conditions have been challenging in 2015, mainly due to geopolitical and macroeconomic turmoil, which has affected our entire industry. In addition, profitability was adversely impacted by increasing staff expenses as well as start-up costs related to new production sites. However, I’m pleased that we have been able to maintain our market shares, and I’m sure that it can be attributed to the combination of Topsoe’s world-leading products and services and the hard work of our employees across the globe. We reacted to the harsh market conditions by implementing several initiatives. Global staff was reduced by approximately 160 in August, and a comprehensive cost awareness program was implemented. As a result we saw significant cost reductions already in the second half of the year. A reduced cost base together with our investments in R&D, increased production capacity, and promising partnerships constitute a solid platform for our future growth,” says Bjerne S. Clausen, CEO of Topsoe. 

Agile response to customer needs

In 2015, Topsoe introduced new sales concepts and business models, which put the company in a good position to act fast when demand picks up again. To be able to respond even faster to new customer needs, the global organization was reorganized and the top management team was reduced to six members in the beginning of 2016.

In 2015, Topsoe successfully adapted its offerings to optimally support customers by introducing a number of new and improved products. Technology sales followed the market’s increased need for revamps and optimization of existing plants, which led to an encouraging pick-up in technology sales in the second half of 2015. 

In April 2015, Topsoe entered into a partnership with American company, Unifrax to produce and market the unique TopFrax™ filters for a broad range of industries. In May, a joint venture with the German company Ferrostaal was established under the name Ferrostaal Topsoe Projects GmbH. By combining the outstanding project development skills of Ferrostaal with Topsoe’s world-class technical expertise, we can offer customers unmatched integrated solutions. In August, Topsoe acquired the Furnace Manager Technology, that complements existing Topsoe offerings very well and has spurred significant customer interest. 

Topsoe maintained an industry-leading R&D spend of approximately 10% of revenue. 

The coming year

2016 can prove to be a challenging year as geopolitical and macroeconomic uncertainty presumably will continue to negatively affect many of our important markets. However, due to the strategic initiatives and actions taken in the past year Topsoe is well-prepared to meet the challenges. Topsoe expects 2016 revenue to be in line with or slightly above 2015 revenue and that 2016 profitability (EBIT margin) will increase compared to 2015.

The lifting of the sanctions on Iran in January 2016 is expected to have a positive impact on Topsoe’s results in 2016, as a number of halted projects can be restarted.

The half-yearly report will be published on August 12, 2016.  

Read the full annual report on www.topsoe.com/annual-report-2015

Contact

Svend Ravn, Media Relations Manager
Phone: +45 22 75 43 58

Five year summary

Profit

DKK million 2015 2014 2013 2012 2011
Revenue 5,785 5,685 5,348 5,244 4,421
Gross profit 2,483 2,542 2,408 2,142 1,924
EBITDA 795 929 876 793 668
Deprecation and amortization -293 -366 -175 -200 -201
EBIT 502 563 701 593 467
Financial income/expenses -40 14 -21 -28 63
Net profit 322 440 553 415 402

Balance sheet

DKK million 2015 2014 2013 2012 2011
Balance sheet total 7,194 6,455 6,132 5,503 5,158
Equity 2,003 1,831 1,644 1,422 1,307
Net working capital 451 540 462 280 177
Net indebtedness 1,152 1,016 994 228 386

Cash flow

DKK million 2015 2014 2013 2012 2011
Cash flows from operating activities 750 754 483 786 796
Cash flows from investing activities -638 -585 -721 -342 -238
Hereof investments in property, plant and equipment -589 -600 -664 -307 -209
Cash flows from financing activities -99 -222 163 -247 -389
Change in cash and cash equivalents for the year 32 -14 -75 197 169

Employees

Number 2015 2014 2013 2012 2011
Total number of employees (average) 2,688 2,694 2,430 2,195 2,091

Ratios

% 2015 2014 2013 2012 2011
Gross margin 42.9 44.7 45.0 40.8 43.5
EBITDA margin 13.7 16.3 16.4 15.1 15.1
EBIT margin 8.7 9.9 13.1 11.3 10.6
Return on invested capital (ROIC) 16.0 20.1 31.0 33.0 26.5
Equity ratio 27.8 28.4 26.8 25.8 25.3
Return on equity 16.8 25.3 36.1 30.4 33.1

The ratios have been prepared in accordance with the recommendations and guidelines issued by the Danish Society of Financial Analysts.

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