KHD Humboldt Wedag nine-month performance

KHD Humboldt Wedag reported a 26.2 per cent decline in consolidated revenue for the first nine months of the year to EUR125.4m, primarily due to the low order backlog at the beginning of the financial year, the company said in its 3Q15 interim report released last week.

Significant contributions to revenue in this nine-month reporting period came primarily from projects in Russia and North America. Due to unexpected challenges and the related cost overruns in the execution of some large projects, the gross profit margin decreased considerably to the current figure of EUR-5.4m (previous year: EUR25m).

Due to the low order backlog at the beginning of the year, the Capex segment contributed just EUR87.2m to revenue in the first nine months of 2015 (previous year: EUR131.3m). The Parts & Services segment revenue totalled EUR38.2m (previous year: EUR41.9m).

Order intake target revised
In the first three quarters of 2015, order intake was EUR125.8m – considerably higher than the level reached in the same period in the previous year (EUR80.2m), but is “still not satisfactory,” according to KHD. In the Capex segment, several customer investment decisions have been postponed until the first quarter of 2016.

Due to the challenging business environment KHD expects order intake in the final months of the financial year to be below original targets. Due to the postponement of the award of contracts the order intake forecast for financial year 2015 will not be reached. In the first three quarters of 2015, orders with an overall volume of EUR91.8m were won in the Capex business unit, up 139.1 per cent compared with the same period in the previous year (EUR38.4m). Spare parts and services continued to make a solid contribution, with an order intake of EUR34m but did not reach the previous year’s figure of EUR41.8m. 

In September the company’s subsidiary ZAB Zementanlagenbau GmbH Dessau signed a contract worth over EUR100m for a 4500tpd cement plant in the Northern Caucasus region of Russia. The projects will be booked as order intake as soon as the pre-conditions for commencing project execution are fulfilled.

Outlook
Growth in KHD’s core markets will remain at a moderate level over the medium term.  The company confirmed its outlook regarding the market environment and economic development of the KHD Group and maintains its forecast published in the half-year financial report, except for the order intake that is estimated to be 60-70 per cent above the value of the 2014 financial year.