Today Barco (Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) announced results for the six- and twelve-month periods ended 31 December 2020. Sales for the year were 770 million euro, down 29%, reflecting the #covid19 pandemic impact on their end-markets across all regions.
Jan De Witte, Barco CEO said “2020 was an off-year with unprecedented challenges for Barco, though it has also proven to be a year where the agility and flexibility of our organization and our culture ensured business resilience. These enabled us to sustain customer focus while continuing investments in our strategic priorities. While the first half of 2021 still presents uncertainties with regards to the shape and pace of market recoveries, we are starting the year with a balance sheet and a reset cost structure which gives us optionality to navigate the risks and opportunities ahead. As a result, we are in a strong position to capture the growth in our markets when the recovery sets in, to get back on the path towards our long-term financial objectives.”
Financial highlights fiscal year 2020 and 4Q20…
- Orders FY20 of € 746.0 million, -32.3% versus FY19
- Sales FY20 at € 770.1 million, -28.9% versus FY19
- Year-end orderbook at € 281.5 million down 13% versus FY19
- FY20 EBITDA of € 53.6 million versus € 153 million in 2019
- FY20 EBITDA margin at 7.0% of sales versus 14.1% in 2019
- FY20 Adjusted EBIT of € 10.2 million, resulting in full year net loss of € -4.4 million, after € 14.5 million restructuring and impairment charges
- Orders 4Q20 versus 3Q20, increased by +20.3%
- Sales 4Q20 versus 3Q20 increased by +16.7%
Q4 improved over Q3 including a +20% quarter-over-quarter recovery in order intake and +17% uptake in sales. All divisions contributed to this progress:
- Entertainment booked a clear uptake in sales in Q4 fueled by projects pick-up for the ProAV and Cinema activities, led by China.
- Enterprise continued its gradual recovery with increases in both the Corporate activity, particularly in the EMEA region, and the Control Rooms activity notably in the EMEA and US-markets.
- Healthcare rebounded after order push outs in the third quarter with both the diagnostic and the surgical activities delivering gains.
Profitability & free cash flow
Gross profit margin for the year declined 3 percentage points to 37% mainly due to unfavorable product mix. As operating expenses for 2020 were managed down to 20% below 2019, while sustaining investments in priority projects, EBITDA amounted to 54 million euro for a 7% EBITDA margin.
Over the second half the company continued to execute on its plan to reset indirect costs for 2021 to levels below 2019, resulting in a full year restructuring and impairment charge of 15 million euro.
Free cash flow for 2020 was -36 million euro, reflecting lower EBITDA, cash-outlays associated with the restructuring actions and higher working capital compared to 2019. Working capital improved in second half versus first half, with a second half free cash flow of +15 million euro.
Staying the strategic course
Despite the covid impact, Barco continued to invest in strategic and commercial initiatives, including next generation technologies, channel expansion and building out its China presence. This positions the company to strengthen its leadership when markets recover.
Additionally, for 2020, Barco delivered on its sustainability targets: the operations carbon footprint as well as the product energy footprint were reduced by more than the stated goals of -20% and -25% versus the 2015 baseline, and multiple new products with the Barco Ecolabel rating were launched in each division.
Outlook 1H21
The following statements are forward looking, and actual results may differ materially.
Management expects business conditions to be defined by the pandemic for at least the first half of the year and therefore does not have visibility to offer quantitative guidance for 2021 at this time.
If we assume a recovery for Entertainment only to start in the second half, a steady dynamic in Healthcare and a stronger back-to-office activity leading to improved demand for ClickShare as of the second quarter, then topline for the first semester will move toward the first half of last year.
Under this assumption, and given the reset of Barco’s cost structure, management expects a mid-plus single digit EBITDA margin for the first half of 2021.
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