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Half-year results in line with outlook despite impact from planned US sanctions and declining technology markets

08.08.2018
  • Revenue increased by 3% to DKK 2,630 million, while EBIT decreased to DKK 294 million in the first half of 2018
  • The financial results were impacted by the planned reinstatement of US sanctions on Iran and slow-moving technology markets. The results are in line with the outlook for 2018
  • Topsoe plans to reduce the staff by around 200 as a consequence of the planned US sanctions on Iran and to secure efficiency gains related to the divestment of its automotive and stationary DeNOx business areas

Topsoe delivered revenue of DKK 2,630 million in the first half of 2018, while EBIT amounted to DKK 294 million, resulting in an EBIT margin of 11%. The gross margin in the first half of 2018 was 45%.

“Topsoe’s revenue and EBIT margin in the first half of 2018 are in line with our outlook. Revenue growth was driven by the catalyst business that has shown strong and resilient growth on the back of Topsoe’s continued market leading position. A lower EBIT was expected after a strong first half year in 2017, but the planned reinstatement of US sanctions on Iran as well as the slow-moving global technology market had a further adverse impact on our business,” says Bjerne S. Clausen, CEO, Topsoe.

The reinstatement of US sanctions on Iran has made it extremely difficult for Topsoe’s customers in Iran to finance new projects. This has resulted in slower progress of Iranian projects than anticipated at the beginning of the year. As a consequence thereof, Topsoe has decided to cease activities in Iran by November 2018.

Adjusting the organization
As a consequence of the planned US sanctions on Iran and to secure efficiency gains related to the divestment of its automotive and stationary DeNOx business areas last year, Topsoe plans to reduce the staff by around 200.

“We want to ensure that Topsoe remains a competitive business with significant potential for growth. Therefore, due to the current situation, we must unfortunately say goodbye to a number of good colleagues,” says Bjerne S. Clausen, CEO, Haldor Topsoe.

Negotiations with employee representatives will determine terms and the specific number of layoffs.

Looking ahead 

The market for technology for refineries and chemical plants has been declining globally for the past years. However, the downward trend seems to have been reversed, and an increase in new technology orders is expected during the coming years. Catalyst revenue grew by 16% despite price pressure in some markets. The full-year 2018 revenue outlook is expected to be in line with or slightly above comparable 2017 revenue, and EBIT margin is expected to be in the range of 10-12% in 2018, assuming the shutdown of the Iran activities proceeds according to plan and subject to redundancy cost.

On June 12, 2018, it was announced that the Topsøe family and Haldor Topsoe A/S had initiated a search process to find a potential minority investor in order to further develop the business. The intention is to further develop solutions that can help tackle some of the most pressing global challenges in the world today by securing sustainable energy supply, energy efficiency, and sufficient food supplies. Building on its core competencies, Topsoe has the potential to develop a leading position within new and sustainable technologies – also outside of its current business segments. This provides Topsoe with a broad range of opportunities and a strong platform for future growth.

Financial highlights

  • Revenue amounted to DKK 2,630 million, an increase of 3% compared to the same period in 2017. Catalyst revenue was up by 16% and technology revenue was down by 27% compared to the same period in 2017.
  • Gross margin was 45%.
  • EBITDA was DKK 424 million, equal to an EBITDA margin of 16%.
  • EBIT was DKK 294 million, equal to an EBIT margin of 11%.
  • Cash flow from operations before change in working capital was DKK 411 million.
  • The equity ratio increased to 28.7% compared to 25.6% for the first half of 2017.
  • The full-year 2018 revenue outlook is expected to be in line with or slightly above comparable 2017 revenue, and EBIT margin is expected to be in the range of 10-12% in 2018, assuming the shutdown of the Iran activities proceeds according to plan and subject to redundancy cost. If the commercial effects of the planned US sanctions towards Iran materialize earlier than November, it could have a negative impact on full year revenue and margins.

Financial highlights (DKK million)

  H1 2018 H1 2017 Change
Revenue 2,630 2,549 3%
EBITDA   424   570 -26%
EBIT   294   452 -35%
Net profit from continuing operations   221   278 -20%
       
Net profit from discontinuing operations -   -444  
       
Net profit 221   -166  
       
Return on equity 26.5% -16.8%  
Equity ratio 28.7% 25.6%  

 

 

 

June 30, 2018 Dec 31, 2017
Non-current assets   2,469   2,495
Current assets   3,369   3,694
Assets   5,838   6,189
     
Equity attributed to the owners of the parent company 1,677 1,664
Non-controlling interest   8   - 
Liabilities 4,153   4,525
Equity and liabilities   5,838   6,189

 

 

  H1 2018 H1 2017
Cash and cash equivalents, beginning of period    991   790
     
Cash flows from operations before change in working capital   411   483
Change in working capital   -274   -534
Cash flows from operating activities   137   -51
Cash flows from investing activities   -116   -153
Cash flows from financing activities   -472   -256
     
Cash flows from discontinuing operations   -    -55
     
Cash and cash equivalents, end of period   542   250

 

 

  H1 2018 H1 2017
Equity, beginning of period   1,664   2,289
Change in equity   -    -125
Comprehensive income   238   -248
Transactions with owners -217   -209
Equity, end of period   1,685   1,707

 Income and cash flow statements for H1 2017 and H1 2018 consist of continuing operations with discontinuing operations in a separate line.

The half-year figures have not been reviewed by the company’s auditors. The audited Annual Report 2018 will be published by Haldor Topsoe A/S on March 26, 2019.

More information

Kristine Ahrensbach, Group Vice President, Haldor Topsøe A/S

Phone: +45 25 52 95 47
Mail: kahr@topsoe.com  

About Haldor Topsoe A/S 

Haldor Topsoe A/S is the world leader in high-performance catalysts and proprietary technologies for the chemical and refining industries. Based on cutting-edge research and development, we help our customers achieve optimal performance in all phases from design to daily operations – in the most responsible way. Topsoe is headquartered in Denmark and serves customers across the globe. In 2017, our revenue was approximately 760 million US dollars, and we employ some 2,300 employees. www.topsoe.com

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