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August 19, 2020

First half year: 16% revenue growth driven by high demand for Topsoe’s market-leading technologies and catalysts; order intake reduced during COVID-19 pandemic

  • In the first half of 2020, revenue increased by 16% to DKK 3,202 million compared to the first half of 2019, while EBIT decreased by 5% to DKK 419 million. When adjusting for special items in 2019, EBIT increased by 12%, or DKK 44 million.
  • The order backlog at June 30, 2020, was DKK 5,101 million, an increase of 18% compared to June 30, 2019. However, technology order intake has decreased during the COVID-19 pandemic.
  • The global COVID-19 pandemic is expected to have a negative impact on Topsoe’s business due to fewer or postponed technology orders.
  • The full-year 2020 revenue outlook range remains unchanged at DKK 5,900-6,300 million. The adjusted EBIT margin outlook for the full year 2020 is also unchanged in the range of 12-14%. The outlook can be adversely impacted by geopolitical risks and the effects of the COVID-19 pandemic.

“We are very satisfied with the results we have achieved in the first half of 2020. Both revenue and adjusted EBIT have grown significantly, driven primarily by our solutions in clean and renewable fuels. I am proud that our company is rewarded by customers for taking an active role in the green transformation. Our solutions help chemical companies and refineries comply with environmental regulations in a sustainable and financially viable way. This is vital for our customers’ businesses and helps the climate and the environment here and now.”

“While we have reached very satisfactory results in the first half year, we face a more challenging second half year. We see a negative effect of the COVID-19 pandemic in our order intake, which reflects that many refineries and technology projects are impacted by low demand and decreased economic growth globally. Accordingly, our technology order backlog has decreased during the COVID-19 pandemic, which will negatively impact revenue related to technology and catalyst first-fills, mainly from 2021 onwards. We maintain our outlook for the full year 2020, as we expect that the great results achieved in the first six months of 2020 will offset the negative impact of COVID-19 in the second half of 2020. Our business model remains solid, and we have a very strong balance sheet with no net debt,” says Roeland Baan, CEO, Topsoe.

Roeland Baan joined Haldor Topsoe in June as CEORoeland Baan joined Haldor Topsoe as CEO in June. 

In the first half of 2020, three lost time incidents were recorded, one more than in the first half of 2019. However, the total recordable incident frequency improved in the first half of 2020. Topsoe is determined to deliver significant further improvements in its safety performance going forward, guided by the company’s ‘Zero Harm’ policy.

Both the Chemical and Refinery Business Units experienced revenue growth in the first half of 2020. Technology revenue increased by 17% compared to the first half of 2019, mainly due to increased demand for renewable fuel technology. Catalyst revenue increased by 15% compared to the first half of 2019 due to high demand for refinery catalysts used for clean fuels.

EBIT was DKK 419 million in the first half of 2020, which is a decrease of 5% over the same period last year. However, EBIT was positively impacted by special items of DKK 65 million in the first half of 2019, of which DKK 41 million relate to a gain from selling surplus land, while DKK 24 million relate to license revenue originating from a contract based on in-kind contribution of Topsoe license which was suspended. When adjusting for these special items, EBIT was up by 12% in the first half of 2020 compared to the same period in 2019.

Adjusted EBIT margin was 13.1% compared to 13.6% for the same period in 2019.

Net working capital decreased by DKK 506 million in the first six months of 2020. This was mainly due to large customer payments, partly offset by an increase in inventory.

New member of the Board
On August 18, 2020, the Annual General Meeting elected a new member to the Board of Directors of Haldor Topsoe A/S, Mr. Jan Kreibaum.

Jan Kreibaum is senior advisor focusing on China-specific strategies along the chemicals value chain and serving in roles with industry association boards in China, including the European Chemical Industry Council (Cefic) and the China Petroleum and Chemical Industry Federation (CPCIF). Mr. Kreibaum has 30 years of professional experience in Asia and has previously been regional president with Clariant Chemicals (China) and held executive positions with Knauf Asia-Pacific, BASF East Asia, and Ciba. He holds a M.Eng. (Chem.) from McGill University.

Major events in 2020
In May, Topsoe and Air Products announced a global alliance agreement. The two companies will collaborate, using their extensive market network outreach for developing potential projects and the combination of their expertise for developing and building large-scale ammonia, methanol and/or dimethyl ether plants globally. In July, it was announced that Haldor Topsoe ammonia technology will be used in the world’s largest green hydrogen project, the NEOM project, equally owned by the partners Air Products, ACWA Power, and NEOM.

In May, Topsoe joined the United Nations Global Compact, the world’s largest sustainability initiative. By becoming part of this initiative, Topsoe commits to aligning policies and action with the Ten Principles of the UN Global Compact.

June 1 was Roeland Baan’s first workday at Topsoe as newly appointed President and CEO. Roeland Baan joined Topsoe from a position as CEO of the global stainless steel company Outokumpu, which is listed on the Finnish stock exchange. Throughout his career, Mr. Baan has held a wide range of global CEO and Executive Vice President (EVP) positions at Aleris International, Arcelor Mittal, SHV NV and Shell.

Financial highlights

  • Revenue amounted to DKK 3,202 million, an increase of 16% compared to the same period in 2019. Catalyst revenue increased by 15%, while technology revenue was up by 17%.
  • Gross margin was 46%.
  • EBITDA was DKK 580 million, equal to an EBITDA margin of 18%.
  • EBIT was DKK 419 million, equal to an EBIT margin of 13%.
  • Cash flow from operations before change in working capital was DKK 589 million.
  • The equity ratio was 31.8% at June 30, 2020 (compared to 25.6% at June 30, 2019).
  • Leverage ratio was 0.0, and net interest cover ratio was 26.3 at June 30, 2020.
  • The full-year 2020 revenue outlook range remains unchanged at DKK 5,900-6,300 million. The adjusted EBIT margin outlook for the full year 2020 is also unchanged in the range of 12-14%. The outlook can be adversely impacted by geopolitical risks, the effects of the COVID-19 pandemic, as well as continued low demand for refined oil products.

Financial highlights (DKK million)

 

H1 2020

H1 2019

Change

     

 

Revenue

3,202

2,757

16 %

Gross profit

1,473

1,404

5 %

EBITDA

580

  598

-3 %

EBIT

419

        440

-5 %

Adjusted EBIT

419

375

12%

Net profit

334

328

2 %

 

 

 

 

Return on equity1

31.7%

45.6%

 

Equity ratio1

31.8%

25.6%

 

Net interest cover ratio1

26.3

23.2

 

Leverage ratio1

0.0

0.9

 

R&D spend (of revenue) 1

7.7%

8.4%

 

 

 

 

June 30, 2020

Dec 31, 2019

Non-current assets

2,880

2,898

Current assets

4,347

4,028

Assets

7,228

6,926

 

 

 

Equity attributed to the owners of the parent company

2,301

1,912

Non-controlling interest

9

9

Liabilities

4,918

5,005

Equity and liabilities

7,228

6,926

 

 

 

H1 2020

H1 2019

Cash and cash equivalents, beginning of period

787

       761

 

 

 

Cash flows from operations before change in working capital

589

      426

Change in working capital

506

      -284

Cash flows from operating activities

1,095

        142

Cash flows from investing activities

-135

           71

Cash flows from financing activities

-207

      -311

 

 

 

Cash and cash equivalents, end of period

1,534

      666

 

 

H1 2020

H1 2019

Equity, beginning of period

1,921

  1,296

Comprehensive income

318

       306

Transactions with owners

70

         -

Equity, end of period

2,310

   1,602

 


 

H1 2020

H1 2019

Lost time incidents

3

       2

The half-year figures have not been reviewed by the company’s auditors. The audited Annual Report 2020 will be published by Haldor Topsoe A/S on March 3, 2021.

Notes

  1. Financial ratios have been calculated as follows:
    1. Return on equity: Net profit for the first half year annualized x 100 / Average equity attributed to the owners of the parent company
    2. Equity ratio: Equity attributed to the owners of the parent company x 100 / Total assets
    3. Net interest cover ratio: EBITDA (12-month rolling) / Net interest (12-month rolling)
    4. Leverage ratio: Net interest-bearing debt / EBITDA (12-month rolling)
    5. R&D spend (of revenue): Research & Development costs in percentage of revenue

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