ROBIT PLC INTERIM REPORT 1 JANUARY–31 MARCH 2024: PROFITABILITY IMPROVED SIGNIFICANTLY

ROBIT PLC          STOCK EXCHANGE RELEASE          23 APRIL 2024 AT 9.00 EEST

ROBIT PLC INTERIM REPORT 1 JANUARY–31 MARCH 2024: PROFITABILITY IMPROVED SIGNIFICANTLY

Q1 refers to the period from 1 January to 31 March 2024. Figures from the corresponding period in 2023 are given in parentheses. All the figures presented are in euros. Percentages are calculated from thousands of euros.

1 January–31 March 2024 in brief

• Net sales EUR 22.8 million (21.9); change 4.0%
• EBITDA and comparable EBITDA EUR 2.1 million (0.1); 9.0% of net sales (0.3)
• EBIT and comparable EBIT EUR 1.1 million (-1.4); 4.7% of net sales (-6.3)
• Review period net income EUR 0.5 million (-1.7)
• Net cash flow for operating activities EUR 0.9 million (-1.3)
• Equity ratio at the end of the review period 49.3% (46.6)

MARKET OUTLOOK FOR 2024

Robit expects the global mining industry demand to remain at the current good level. Demand in the construction industry is expected to remain at the current satisfactory level in the short term. Project activity in the construction industry has picked up after bottoming out in 2023. With the projects’ commencements progressing, demand is expected to develop positively in the second half of the year.

GUIDANCE FOR 2024

Robit expects net sales for 2024 and adjusted EBIT profitability in euros to improve from 2023.

Background to the guidance

The guidance is based on the assessment that demand in the mining industry will remain at a good level and that demand in the construction industry will develop positively in the second half of 2024. In addition, the guidance is based on the assumption that there will be no significant changes in the exchange rates from the level at the end of 2023.

In 2024, Robit will switch to using comparable EBIT profitability in its guidance instead of the previous comparable EBITDA profitability. In 2023, comparable EBIT was EUR -0.1 million.

CEO ARTO HALONEN:

In the early part of the year, market demand remained at the level of the end of 2023. Demand in the mining industry remained strong. Demand in the construction industry remained low. Especially in the Nordic well drilling market, the work situation of customers has been weak after several strong years. However, there are signs of moderately improved demand in the construction industry, especially as demand for infrastructure construction is picking up. Orders received during the review period totalled EUR 23.2 million, down by 0.6% growth from the corresponding period.

Robit’s net sales grew by 4.0% on the previous year and totalled EUR 22.8 million (21.9). In constant currencies, there was an increase of 6.7%. The net sales grew, driven by the Top Hammer business, which grew by 10.1%. Net sales in the Down the Hole business decreased by 4.8%, primarily driven by the well drilling segment, which is especially important to the business. Net sales in the Geotechnical business decreased by 4.0% due to the low demand in the construction industry in the Nordic countries. The company’s growth came from the Australasian region. Sales were boosted by new customers and good demand from existing customers in the region. In the EMEA & East region, sales remained at the level of the corresponding period. Net sales decreased in Asia and the Americas. The decline in sales in the Americas region came from South America, mainly due to the loss of an unprofitable customer in 2023.

In the first quarter, comparable EBIT grew clearly and was EUR 1.1 million (-1.4). As a percentage of net sales, the EBIT was 4.7 (-6.3). The measures already taken by the company to strengthen profitability and competitiveness were reflected in the result. We will continue the measures by focusing in particular on renewing the product offering and promoting cost-saving measures.

The Fit for Service programme focused on working capital management continued. The company’s inventory value decreased by EUR 1.8 million from the level at the end of 2023. In 2024, we will focus in particular on improving the inventory turnover rate. The decrease in inventory value and strengthened profitability supported the improvement of the cash flow from the company’s business operations to EUR 0.9 million (-1.3).

The company updated its long-term aims. We aim to increase our market share by growing faster than the average market growth. Our long-term profitability target is over 10% comparable EBIT.

NET SALES

Net sales by product area

The Group’s net sales for the review period totalled EUR 22.8 million (21.9), an increase of 4.0% from the corresponding period. In constant currencies, the growth was 6.7%.

The Top Hammer business grew by 10.1%, the net sales for the review period being EUR 14.0 million (12.7). Net sales in the Top Hammer business increased especially in the Australasia region, driven by new customers, and growth also came from the EMEA region.

The Down the Hole business decreased by 4.8%, the net sales for the review period being EUR 5.0 million (5.3). Net sales in the Down the Hole business declined in the Americas region and especially in the well drilling segment.

The Geotechnical business decreased by 4.0%, the net sales for the review period being EUR 3.8 million (3.9). The decrease in net sales was affected by the low activity of the construction industry during the early part of the year.

Net sales by market area

Robit is combining the East market with the EMEA market for reporting net sales for 2024 due to the relatively small size of the East area’s net sales as part of the group’s net sales.

PROFITABILITY

The review period comparable EBITDA was EUR 2.1 million (0.1) Comparable EBITDA’s share of net sales was 9.0% (0.3). The company’s comparable EBIT was EUR 1.1 million (-1.4). The comparable EBIT was 4.7% (-6.3) of the review period’s net sales.

Profitability in the review period improved significantly from the corresponding period. The effects of the company’s cost saving program were mainly reflected in the profitability of the review period.

Financial income and expenses totalled EUR -0.5 million (-0.4), of which EUR -0.5 million (-0.3) was interest expenses and EUR 0.0 million (0.0) was changes in foreign exchange rates. The company’s financing costs increased during the review period due to the new covenant agreement made in 2023. On March 31, 2024, the company achieved a covenant level of 2.49, as a result of which it reverts to the original covenant agreement.

CASH FLOW AND INVESTMENTS

Consolidated cash flow statement

The Group’s cash flow before changes in working capital during the review period was EUR 2.1 million (0.1). The net cash flow of operating activities decreased to EUR 0.9 million (-1.3). The changes in working capital had an impact of EUR -1.0 million (-0.8). The change in working capital was positively affected by a decrease in accounts payable of EUR 0.7 million and an increase in inventories of EUR 1.7 million. The increase in sales and other receivables had an impact on cash flow of EUR 3.4 million.

The net cash flow from investing activities was EUR 1.6 million (-0.5), which was mainly due to the redemption of other financial assets into cash and cash equivalents. Gross investments in production were low as planned at EUR 0.1 million (0.2). The share of investments in net sales was 0.6% (1.1).

The net cash flow for financing was EUR -0.3 million (-0.3). According to IFRS 16, the repayments of lease liabilities reported totalled EUR -0.3 million (-0.3).

Depreciation, amortisation and write-downs totalled EUR 1.0 million (1.4).

FINANCIAL POSITION

The Group had interest-bearing debt amounting to EUR 31.2 million (35.6), of which EUR 4.1 million (6.5) was interest-bearing debt under IFRS 16. The company has reassessed the valuation of certain leases on the balance sheet, and this has reduced liabilities under IFRS 16 by approximately EUR 0.9 million. The Group’s liquid assets totalled EUR 13.3 million (3.9). Interest-bearing net debt was EUR 17.9 million (30.1), and interest-bearing net bank debt without IFRS 16 debt impact was EUR 13.8 million (23.6).

The Group’s equity at the end of the review period was EUR 46.3 million (47.8). The Group’s equity ratio strengthened to 49.3 (46.6) and gearing stood at 38.7% (66.4).

PERSONNEL AND MANAGEMENT

The number of personnel decreased by 34 persons from the end of the comparison period, and at the end of the review period was 218 (252). At the end of the review period, 69% of the company’s personnel were located outside Finland. The company also had 51 leased labour personnel (50) working mainly in mining contract customers.

In addition to CEO Arto Halonen, the company’s Management Team at the end of the reporting period included Perttu Aho (VP Down the Hole), Ville Iljanko (VP Distributor Sales), Jorge Leal (VP Top Hammer), Ville Peltonen (CFO), Ville Pohja (VP Geotechnical) and Jaana Rinne (HR Director).

LONG-TERM FINANCIAL TARGETS

Robit’s long-term target is to grow faster than average market growth and achieve EBIT profitability of more than 10%.

RESOLUTIONS OF THE ANNUAL GENERAL MEETING 2024

Robit Plc’s Annual General Meeting was held in Tampere on 3 April 2024. The decisions and other materials related to the meeting are available on the company’s website at https://www.robitgroup.com/investor/corporate-governance/general-meeting/.

SHARES AND SHARE TURNOVER

On 31 March 2024, the company had 21,179,900 shares and 5,464 shareholders. Trading volume in January–March was 1,138,276 shares (4,670 247).

The company holds 47,190 treasury shares (0.2% of total shares). On 31 March 2024, the market value of the company’s shares was EUR 34.5 million. The closing price of the share was EUR 1.63. The highest price in the review period was EUR 2.05 and the lowest price EUR 1.31.

RISKS AND BUSINESS UNCERTAINTIES

Robit’s risks and uncertainties are related to possible changes in the company’s operating environment and global economic and political developments. The company’s ability to manage and prevent these risks varies.

Other uncertainties include the availability and cost of financing, exchange rate development, functioning of information systems, risks related to the security of supply and logistics as well as IPR risks. Passing on the increase in raw material costs fully to customer prices may pose a financial risk. Changes in export countries’ tax and customs legislation may adversely impact the company’s export trade or its profitability. Risks related to information security and cyber threats may also have a detrimental effect on Robit’s business. Potential changes in the business environment may adversely impact the payment behaviour of the Group’s customers and increase the risk of litigation, legal claims and disputes related to Robit’s products and other operations.

CHANGES IN GROUP STRUCTURE

There were no changes in the Group structure during the review period.

OTHER EVENTS DURING THE REVIEW PERIOD

On 19 January 2024, the company communicated the proposals of Robit Plc’s Shareholders’ Nomination Committee to the Annual General Meeting. The Nomination Committee’s proposals were included in the notice to the Annual General Meeting. Timo Sallinen (Senior Vice-President, Investments, Varma Mutual Pension Insurance Company) chaired the Shareholders’ Nomination Committee, with Harri Sjöholm (Chair of the Board of Five Alliance Oy), Jukka Vähäpesola (Head of Equities of Elo Mutual Pension Insurance Company) and Markus Lindqvist (Sustainability Director of Aktia Pankki Oyj) as the other members.

On 21 February 2024, Robit Plc published its financial statements release for 1 January–31 December 2023.

On 21 February 2024, the company sent Robit Plc’s shareholders a notice to the Annual General Meeting of 3 April 2024.

On 13 March 2024, Robit Plc announced that the company had published its Annual Report, Corporate Governance Statement, Remuneration Report for 2023 and an updated Remuneration Policy on its website.

Later on 13 March 2024, the company published certain adjusted interim and half-yearly financial information for the financial year 2023.   

EVENTS AFTER THE REVIEW PERIOD 

Robit Plc’s Annual General Meeting was held on 3 April 2024. The company announced the decisions of the Annual General Meeting in a separate stock exchange release on 3 April 2024.

On 3 April 2024, the company published the decisions of the constituent meeting of the company’s Board of Directors. At its constituent meeting, the Board of Directors elected by Robit Plc’s Annual General Meeting on 3 April 2024 elected from among its members Markku Teräsvasara as Chair of the Board and Harri Sjöholm as Vice Chair as well as members to serve on Robit Plc’s Remuneration Committee, Working Committee and Audit Committee.

Robit Plc
Board of Directors

Further information: 
Robit Plc 
Arto Halonen, Group CEO
+358 400 280 717 
arto.halonen@robitgroup.com  

Ville Peltonen, Group CFO
+358 40 7599 142
ville.peltonen@robitgroup.com

Distribution: 
Nasdaq Helsinki Ltd 
Key media 
www.robitgroup.com  

Robit is a global expert focused on high-quality drilling consumables for mining and construction markets to help you drill further and faster. Robit strives to be world number one company in drilling consumables. Through our high and proven quality Top Hammer, Down the Hole and Geotechnical products, and our expert services, we deliver saving in drilling costs to our customers. Robit has its own sales and service points in seven countries and an active distributor network through which it sells to more than 100 countries. Robit’s manufacturing units are located in Finland, South Korea and the UK. Robit’s share is listed on Nasdaq Helsinki Ltd. Further information at www.robitgroup.com.

The information presented above includes statements about future prospects. These relate to events or the company’s economic development in the future. In some cases, such statements can be recognised by their use of conditional words (such as “may,” “expected,” “estimated,” “believed,” “predicted” and so on) or other similar expressions. Statements such as these are based on assumptions and factors that Robit’s management have at their disposal and on current decisions and plans. There is always risk and uncertainty attached to any statements regarding future events because they pertain to events and depend on factors that are not possible to predict with certainty. For this reason, future results may differ – even significantly – from the figures expressed or assumed in statements about future prospects.

CONDENSED FINANCIAL STATEMENTS

*In the condensed income statement, changes in inventories are presented in Materials and services, and manufacture for own use in Other operating expenses.

**Founded in 2015 by Robit SA, Black Employees Empowerment Trust owns 26% of the shares of Robit SA.

*** The Group has internal loans that are treated as net investments in foreign entities in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates.

* Founded in 2015 by Robit SA, Black Employees Empowerment Trust owns 26% of the shares of Robit SA

NOTES

Contents

1.     Scope and principles of the interim report

2.     Key figures and calculation

3.     Breakdown of net sales

4.     Financing arrangements

5.     Changes to property, plant and equipment

6.     Given guarantees

7.     Business acquisitions

8.     Derivatives

1. SCOPE AND PRINCIPLES OF THE INTERIM REPORT

This interim report has been prepared in accordance with the IAS 34 standard for interim financial reporting and using the same principles as for the annual financial statements. The interim report has not been audited.

Robit combines the 2024 net sales reporting of the East area with the EMEA area due to the relatively small size of the East area's net sales as part of the company’s revenue.

All figures in the condensed financial statements and in the notes are rounded, which is why the sum of individual figures may deviate from the sum presented.

2.1 KEY FIGURES

2.2 CALCULATION OF KEY FIGURES

3. BREAKDOWN OF NET SALES

The IFRS 15 recognition of entries as revenue is identical within each business unit and market area.

4. FINANCING ARRANGEMENTS

The company’s cash and cash equivalents totalled EUR 13.3 million on 31 March 2024. In addition, the company has an EUR 4.0 million credit facility. The company’s sufficient liquidity is secured by way of cash and cash equivalents and an undrawn credit facility.

The covenants of the parent company’s loans are based on the company’s net liabilities/EBITDA ratio and the company’s equity ratio. The covenants are tested on a quarterly basis and the company met all the conditions on 31 March 2024.

*Adjustments resulting from corrections to IFRS 16 calculations

7. ACQUISITIONS

There were no changes in the Group structure during the review period.

8. DERIVATIVES

The company hedges the most significant net currency positions that can be forecast for time, volume and interest rate risk.

There were no open currency derivatives at the end of the review period.

On 8 June 2021, the company concluded a EUR 30 million financing agreement and, in connection with this, a EUR 10 million interest rate swap with an interest rate cap in order to hedge part of its exposure to variable interest rates. The interest rate swap will took effect on 30 June 2023 and it will end on 30 June 2026. The company applies hedge accounting in accordance with IFRS 9. This effectively leads to the recording of interest expenses on a hedged floating rate loan at a fixed rate.

The company’s main interest rate risk arises from long-term loans with floating interest rates that expose the Group’s cash flow to interest rate risk. The Group’s policy is to use, if necessary, a floating to fixed interest rate swap.