2G Energy (2G) released yesterday its preliminary FY18 figures, posting a 10.8% year-on-year increase in net sales to €209.8m. EBIT was up by 56.2% year-on-year at €11.5m, up, which translated into an EBIT margin of 5.5% vs. 3.9% in the previous year.
This impressive result was achieved by following a diversification strategy that reduces the group’s exposure to regulatory changes in the domestic market by driving exports and services revenues.
Revenues in 2G’s business related to services and the sale of spare parts reached €78.0m, compared with €64.5m in FY17, with c. €20.4m of the sales generated in foreign markets. In the combined heat and power (CHP) systems, revenues stood at €131.7m, 40% of which was generated abroad.
In parallel, management has focussed on improving margin through its “Lead-to-Lean” programme. This resulted in an increase of total output by 16% year-on-year during FY18 to €221.1m. It also led to a reduction of personnel cost ratio, expressed with personnel costs to total output, by 1.2 percentage points to 16%. However, the ratio of cost of materials to total output increased by 0.7 percentage points.
In Q119, new order intake decreased from €54.7m to €39.2m. However, order book at €156.3m was larger than in previous year when it stood at €130.5m. This supports management’s guidance for FY19 of net sales at €210-230m and EBIT margin of 5.5%-7.0%. According to 2G, this continued margin improvement should be supported by the Lead-to-Lean project and increasing margin contributions from the service business.
The company also released that it has signed an agreement with Viessmann Kraft-Wärme-Kopplung GmbH for the supply of gas engines starting from Q219.
2G will publish its final FY18 figures on 10 May 2018.
Author: Anne Margaret Crow