KUKA’s order intake rose once again as car manufactures, mainly in the US, accelerated their investments in the production of electric cars and also in the use of robots in the production of battery cells. As Q3 21 has high comparables, the group’s strong top-line performance was unable to be matched in profitability.
Figures came in ahead of expectations.
Companies: KUKA AG
KUKA reported the second highest order intake in its company history in Q2 and most of its divisions faced some uptake in H1, which is a continuation from Q1 21. The comparison to the previous year’s quarter looks very strong, but the basis was quite low.
The reported figures were slightly above our expectations.
KUKA suffered from the customers’ reluctance to spend money and then the virus gave the company a hard time. In 2021, the business looks definitely better compared to last year as it is making money and reported a strong rise in the order book.
The situation remains quite fragile as the pandemic is far from over. Management has high hopes in the new operational system for robotics. This could help to reduce the barriers for use by reducing the complexity in working with robots.
Finally, it appears that a robot business can suffer indirectly from the current pandemic situation. The good thing for KUKA’s robots were the human measures implemented to protect them. The (net) result could not be prevented from turning red.
Profitability did not meet our expectations. Q4 became more difficult as clients took a more cautious stance and the re-initiation of stay-at-home was another burden.
KUKA saw a strong recovery in order intake, but revenues reported a material decline, as did profitability. This higher order uptake was the silver lining of KUKA’s Q3 figures, which were not bad for a capex-driven business. We are aware such contracts could face cancellation however. Interestingly, the order book did not benefit that much from the higher demand for automation. The figures were broadly in-line with our expectations.
KUKA’s Q2 figures are far from being disastrous, but they gave a realistic view on a capex-driven industry. The figures fit into our broad picture and management’s guidance for a potential negative EBIT for the full year is already our expectation. However, we miss some strategic measures in addition to those to fight the impact of the current situation. What will KUKA’s positioning be in the post-COVID-19 period? How could this be reached? Many questions, no answers.
Despite the cash drain in Q1, the cash level stood at quite a high watermark. What is a bit more worrying is the lower order intake (should be better in Q2). As expected, automotive and electronics remained quite cautious in placing new orders. Contrary to the stumbling industries, Swisslog’s lower order income was unexpected.
The figures were barely better than expected. Management explained the reported declines by limited access to customers’ production sites. Some car manufactures have re-s
‘With a little help from my friends’ could have been another title as the Quandt-family-dominated car producer, BMW, has ordered robots for the manufacturing of car bodies.
FY 2019 had quite a nice ending, reporting higher than expected sales and earnings. And here ends the good news. Management failed to provide any outlook, but the CEO has been cited in a press release that the COVID-19 pandemic is impacting KUKA and is causing ‘great concern’. We understand that the company is preparing for shutdowns and other measures, but the order backlog has improved relative to the 9M figures.
Being highly likened to the automotive and electronics industries, KUKA could not decouple from the development in these industries. The Q3 set of figures showed some deeper skid marks in the main divisions, which had forced management to cancel FY guidance at the end of September and to announce the restructuring of part of a division. Now, we know the segment is in Robotics. Furthermore, it was not unexpected that Europe and China would become difficult markets.
The current economic environment and the uncertainties, especially in the automotive industry, negatively impacted KUKA’s Q2 report. Despite having a dominant shareholder, who made some direct investments in KUKA subsidiaries, the China division China has not really benefited from this kind of constellation although it has shown some improvement. Profitability was slightly above our expectations.
But on omission! KUKA’s management strives to meet guidance, expecting a pick-up of the business in H2. The company had always booked in recent quarters the costs for various initiatives, which burdened the EBIT line, but were expected to be beneficial for future growth. It seems that management has cancelled these in Q1 in order to meet a target.
Profitability exceeded our expectations.
Or, one cloud raises the question of whether the company is being run properly or whether the major shareholder is not fulfilling its promises. Independent of the answer, management’s typical reaction is to start a cost-cutting programme propelled by making people redundant. Additionally, we do not understand how management has come to the conclusion that the reduced guidance was met. Our earnings expectations have not been met.
Chinese-dominated KUKA has adjusted the already lowered FY 2018 guidance (sales: €3.3bn, adjusted EBIT margin: around 4.5%) once again. Management now expects sales of c.€3.2bn and an adjusted EBIT margin of 3.0%. The 2020 targets (sales: €4.0-4.5bn; adjusted EBIT: ~7.5%) do not look realistic according the new management.
Management reduced FY 2018 guidance primarily expecting lower profitability (EBIT margin of 4.5% after 5.5%). Reported Q3 figures did not meet our expectations.
Although we do not follow KUKA due to the shareholding structure (94.55% owned by Midea) and the low liquidity, we try to read across the trends in the robots industry. In the third quarter, we saw some trend reversal, although this doesn’t look sustainable.
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Companies: DX (Group) Plc
Friday's market sell off saw some violent downward moves in many stocks with little initial differentiation between sectors or the key drivers of businesses, creating significant share price drops in a number of higher quality or uncorrelated names. We take a look at some stocks we believe have either seen an unwarranted sell-off, have seen weakness go under the radar or where there is now a more attractive opportunity.
Companies: ANX IBPO CYAN SOM EQT AFM
Seeing Machines has announced that it has been selected as the DMS supplier for automotive programmes through Magna International worth cA$120m and a fundraise of at least US$40m at 11p.
The funds will be used to accelerate growth in the rapidly expanding DMS technology market, across all transport sectors globally. This includes the acceleration of the development of new core software and system features, acquisition of additional specialised technology, expansion of sales channels and produc
Companies: Seeing Machines Limited
Seeing Machines has announced results for its financial year ended June 2021 and, after the 3 August 2021 trading update, there were few surprises in the numbers with the company trading ahead of expectations in terms of margins and cash. This reflects the successful focus by the management on reducing costs and conserving cash. However, with the conclusion of the recent fund raise, we expect the company to change gear to investing in the business and managing for longer term shareholder value.
Whitelee windfarm hydrogen project funding
Companies: ITM Power PLC
The oversubscribed placing to raise £25m and £2m open offer leaves Velocys well placed to move forward on its reference projects and strengthens its ability to address further demand as airlines increasingly seek out sustainable fuelling solutions. We have updated our forecasts for the raise and after a review of project timings. These show that if the company can progress its projects, it is capable of being cashflow positive in FY 24 without recourse to further funding. Our DCF based central c
Companies: Velocys plc
While there remains considerable uncertainty over the planning and permitting of the Uskmouth power station conversion there have been a couple of recent pieces of good news for SIMEC Atlantis in our view. Inclusion of waste-to-energy in the carbon capture support model is potentially positive for Uskmouth and may increase its political attractiveness to the Welsh Government as they consider permitting. The ring fencing of CfD support for tidal steam in the next allocation round opens up the pos
Companies: SIMEC Atlantis Energy Ltd.
The Whitelee project to which ITM is supplying its PEM electrolyser technology has won £9.4m of government funding. We see this project as a key demonstration of the value of co-locating hydrogen production with renewables and indicates a wide market for this key energy storage solution.
Macfarlane Group, the leading protective packaging solutions specialist, servicing clients across the UK
and now emerging into Continental Europe, has issued a trading update this morning (25 November)
covering the period since end June and the year to date. Trading has continued to be robust in a difficult
supply chain environment and the Group now expects to exceed its previous expectations for the full
year. Sales growth for the year to date has accelerated through to October at rate of +2
Companies: Macfarlane Group PLC
The H1 results were a bit of a double check. First, how high hopes (battery materials) persist in a rapidly changing environment, something already communicated to the markets. The second, and a rather annoying one, was how to deal with the issues as management was not really transparent. This explains the strong miss in EBIT compared to the consensus. We were also wrong-footed as our impairment figure was far too low.
Companies: Johnson Matthey Plc
Like Taylor Maxwell before it, management's patience and persistence has landed another prized target, this one HBS NE Limited trading as HBS New Energies and UPOWA, giving Brickability a platform into the fast-growing renewables energy products market. It is Brickability's 13th acquisition in the past three years, will cost a maximum £5.5m and falls within the group's target 4-6x EV/EBITA purchase range thus enhancing earnings whilst broadening the product offering to its core housebuilder cust
Companies: Brickability Group PLC
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What’s cooking in the IPO kitchen?
Trinistar Liverpool S.a r.L announces its potential listing of a newly formed single asset company which will own the Capital Building in Liverpool on the IPSX. Upon admission the Company would become a real estate investment trust (REIT). The Capital Building occupies close to a 3.5 acre freehold site in the centre of Liverpool’s business district; the building comprises c425,000 square feet of predominantly of
Companies: ADBE ADBE SYM ARC AVCT CMCL CLIN DCTA FRAN OSI
Oil prices suffered one of the largest ever one-day plunges, crashing more than 11% on Black Friday as a new coronavirus strain sparked fears that renewed lockdowns will hurt global demand. The crash, the 7th largest ever for Brent crude, the global oil benchmark, may prompt the OPEC+ cartel to re-consider its policy when it meets next week, with the group increasingly leaning toward pausing its output hikes. The sell-off was amplified by low liquidity on a festive day in the US, the breach of s
Companies: FO 88E DEC EME GTC TRIN UOG WEN
The trading update confirms that TClarke is on track to meet FY21 expectations signalling a strong recovery from the pandemic-hit 2020 with revenues +47%, H2 margins back at 3%, underlying EPS +50% and net cash of c£5m in the year-end balance sheet. The highlight, in support of its target £500m turnover by 2023, is continued improvement in the order book, currently at £525m (end June £503m) including a record £320m (+25%) secured for a year out. This is not ‘being bought' but comes with a real s
Companies: TClarke plc
LTHM announced exceptional results for H1F22 ended 30 September 2021. H1F22 revenue reached £193.9m, +81.2% over H1F21 of £107m. This is notably a stellar first half driven by demand-supply imbalances in global markets that have resulted following the pandemic. Resulting PAT of £26.6m translates to EPS of £1.335 vs. £0.256 in H1F21.
Companies: James Latham Plc