Russ Curry, Ministry of New Media
Today Barco (Euronext: BAR; Reuters: BARBt.BR; Bloomberg: BAR BB) announced results for the six-month period ended 30 June 2021.
Barco CEO, Jan De Witte was quoted as saying “I’m pleased to see the health of our end market demand and competitive positioning reaffirmed in a strong order intake and an exceptional orderbook level for the first half of the year. The combination of an uneven recovery in economic activity and supply chain constraints has caused sales to continue to lag orders. I am confident that Barco will continue to generate steady improvements as markets further recover and office reopenings accelerate although supply chain constraints may temper the growth acceleration,. The first half performance also confirms our say-do related to operational execution, sustained customer focus and continued progress in strengthening our competitive position by expanding and renewing our product offerings.”
First half and second quarter 2021 highlights.
- Orders 1H21 of 465.6 million euro, an increase of 17% vs 1H20 and 34% vs 2H20
- Orderbook at 391.4 million euro, 110 million euro higher compared to year-end 2020
- Sales 1H21 of 366.0 million euro, 10% below 1H20; excluding currency effects, sales were 6% below last year
- EBITDA 1H21 of 27.5 million euro, or 7.5% of sales vs 10% for 1H20 and 3.5% for 2H20
- Cash flow 1H21 of 35 million euro, up from -50.9 million last year
- Orders 2Q21 of 236.6 million euro up 63% vs 2Q20 and up 3% vs 1Q21
- Sales 2Q21 of 194.3 million euro up 13% vs both 2Q20 and 1Q21
Executive summary
Group topline – solid order intake but lagging conversion to sales
Barco’s first half order intake was significantly above 2H20 and 1H20 driven by strong demand growth for Healthcare and Entertainment and continued to demonstrate quarter-to-quarter improvements. However, the conversion of orders to sales was hindered by prolonged pandemic induced restrictions (Entertainment and Enterprise) and, to a lesser extent, component shortages (Entertainment and Healthcare).
For the second quarter, sales were up 13% versus the first quarter and improved month by month as the global economy began to re-open.
As of the end of 1H21 orderbook was at a record level of 391 million euro.
Division topline performance – uneven recovery
In the Entertainment division all segments posted quarter-over-quarter improvements in both orders and sales. This reflects continued momentum in China and the restarting of immersive experiences in the rest of the world. Orders for the first half were up with 32% year-over year while sales were still below the first half of last year which included a strong first quarter.
Enterprise saw the continuation of gradual improvements in orders in the second quarter compared to the first quarter in both the Corporate and Control Rooms segments. However, sales were flat as a result of delayed project execution and hindered demand due to slow office re-openings across Europe, APAC and the Americas.
Orders for Healthcare were 18% higher for the first half compared to last year reflecting the resumption of healthcare investments in the diagnostic imaging and surgical markets, while sales were flat excluding currency effects.
Protecting profitability and strong cash flow generation
EBITDA margin for the first half was 7.5% of sales, 2.5 percentage points below 1H20 and 4 percentage points higher than 2H20.
Barco further reduced indirect costs by 4.6% for the first half of 2021 versus last year (and 19% versus 1H19) by extending cost containment measures while sustaining investments in strategic projects.
Gross profit margin improved 2.7 points versus the second semester of last year but was 2.7 percentage points lower than the first semester of last year, reflecting mainly higher freight costs and product mix effects.
Free cash flow for 1H21 was 35 million euro compared to -51 million euro last year, on the strength of working capital improvements compared to 1H20.
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