Highlights of FY21/22 Half-12 months Outcomes
- Group gross sales US$1,674 million – up 26% in comparison with first half of the prior 12 months. Excluding the results of international forex actions and an acquisition, gross sales elevated by 21%
- Gross revenue US$357 million or 21.3% of gross sales (in comparison with US$300 million or 22.5% of gross sales in first half of the prior 12 months)
- Adjusted EBITA US$138 million (in comparison with US$135 million in first half of the prior 12 months)
- Web revenue attributable to shareholders decreased by 8% to US$93 million or 10.36 US cents per share on a totally diluted foundation
- Underlying web revenue, excluding the online affect of restructuring prices and non-cash objects, decreased by 2% to US$96 million
- Decline in revenue margins because of numerous elements, together with international provide chain disruptions, commodity worth will increase and diminished COVID-19 associated subsidies
- Free money outflow from operations US$56 million (in comparison with a free money influx of US$68 million in first half of the prior 12 months)
- Acquisition of E. Zimmermann GmbH, a specialist automotive machining enterprise primarily based in Germany
- Whole debt to capital ratio of 18% and money reserves of US$487 million as of 30 September 2021
- Interim dividend 17 HK cents per share (2.18 US cents per share) with a scrip dividend different
HONG KONG SAR – Media OutReach – 11 November 2021 – Johnson Electrical Holdings Restricted (“Johnson Electrical”), a world chief in electrical motors and movement subsystems, as we speak introduced its outcomes for the six months ended 30 September 2021.
Whole Group gross sales for the primary half of FY21/22 totalled US$1,674 million, a rise of 26% over the primary half of the prior 12 months. Excluding the results of international forex actions and an acquisition, gross sales elevated by 21%. Web revenue attributable to shareholders decreased by 8% to US$93 million or 10.36 US cents per share on a totally diluted foundation. Underlying web revenue, after adjusting for the results of a lot of non-cash objects and restructuring prices, decreased by 2% to US$96 million.
Automotive Merchandise Group
The Automotive Merchandise Group (“APG”), which accounted for 76% of whole Group gross sales, reported a 21% enhance in gross sales on a relentless forex foundation and excluding an acquisition. A major a part of this enhance pertains to the truth that within the interval from late March to Might 2020, a lot of Johnson Electrical’s automotive element operations in Europe and the Americas have been successfully shut down because of the pandemic.
Though direct comparisons with the identical interval within the prior 12 months are subsequently considerably deceptive, APG achieved gross sales progress effectively above international auto business manufacturing progress of roughly 6% throughout the six months from April to September 2021. The drivers of this sustained outperformance are the division’s give attention to modern know-how options that allow electrification, scale back emissions, enhance gas economic system and heighten end-user consolation and security.
APG’s gross sales efficiency on a regional degree mirrored each variations within the development of the COVID-19 pandemic and the disruptive affect of a number of provide chain bottlenecks which have hit the worldwide automotive sector over the interval underneath assessment.
In Europe and the Americas, APG’s gross sales in fixed forex and excluding an acquisition elevated by 34% and 29%, respectively. As beforehand famous, the vast majority of this progress was achieved as OEM meeting vegetation in these areas have been now not closed for pandemic containment causes and end-market client demand for passenger automobiles was exceptionally robust. Nonetheless, all through the interval underneath assessment, the automotive business struggled to deal with a chronic scarcity of semiconductors and different elements. This has required all main auto OEMs to make frequent adjustments to manufacturing schedules, droop manufacturing of chosen car fashions and briefly shut some factories completely. In Europe, these disruptions to produce resulted within the lowest variety of new passenger car registrations within the month of September since 1995.
APG’s gross sales in Asia elevated by 8% in fixed forex phrases. Gentle car manufacturing volumes within the area have been flat in comparison with the identical interval within the prior 12 months, with China’s manufacturing volumes declining by 11%. China’s economic system recovered faster from the affect of the pandemic in 2020 and therefore the weak point of its automotive business in comparison with the prior 12 months’s April to September interval was largely a mirrored image of the worldwide microchip scarcity and a subdued home client economic system. Demand and manufacturing exercise in Southeast Asian markets have been additionally negatively impacted by a resurgence in COVID-19 in a number of nations.
Business Merchandise Group
The Business Merchandise Group (“IPG”), which accounted for twenty-four% of whole Group gross sales, reported a 19% enhance in gross sales on a relentless forex foundation in comparison with the primary half of the prior 12 months.
The adjustments to client behaviour and buying preferences that emerged throughout the pandemic remained a robust progress driver for lots of the product purposes served by IPG throughout the first half. Garden and backyard, white items, window automation, drinks, energy instruments and different “home-centric” segments skilled notably excessive gross sales progress because of a mixture of latest programme launches, new enterprise wins and elevated market demand. Gross sales within the medical section additionally elevated, as automated surgical instruments took market share from handbook medical gadgets.
The worldwide provide chain constraints which have weighed on the automotive sector additionally held again manufacturing in a number of of IPG’s finish markets. Along with semiconductor shortages, these included shortages in different supplies and elements, and disruptions to transport schedules. However these provide challenges, IPG’s order e book all through the interval remained at amongst its highest ranges lately.
Profitability and Financial Situation
Gross revenue elevated by 19% to US$357 million – which as a proportion of gross sales represented a decline from 22.5% to 21.3%. The decline within the gross margin mirrored a mixture of things. Rising labour prices, exacerbated by the inefficiencies attributable to elements shortages and disruptions to buyer manufacturing schedules, adversely affected the gross margin. Moreover, the numerous discount in pandemic-related subsidies and the ending of one-off cost-saving initiatives, in addition to the marked enhance in underlying uncooked supplies prices (partially offset by hedging contracts) additionally diminished the gross margin.
Group working income amounted to US$117 million in comparison with US$122 million within the first half of the prior 12 months. The discount in reported working revenue and in web revenue attributable to shareholders was primarily because of the substantial enhance in freight and logistics bills that was solely partly offset by a rise within the web contribution from Different Revenue.
The COVID-19 pandemic and its repercussions has created an unprecedented shock to the container transport sector. The whiplash impact of demand collapsing after which rebounding sharply has resulted in an imbalance within the availability of containers worldwide – with a big scarcity in Asia. Occasions such because the blockage of the Suez Canal and spikes in COVID-19 instances in a number of main container ports have additional disrupted the conventional operations of the worldwide logistics provide chain. In consequence, spot market costs for transport containers on some routes have soared by greater than 5 occasions their common worth over the earlier 5 years.
Excluding prices associated to the restructuring of the Group’s manufacturing footprint and non-cash objects principally associated to international forex actions, the underlying web revenue margin for the primary half decreased to five.8% in comparison with 7.4% within the first half 12 months of the prior 12 months.
Larger inventories in response to the rebound in end-market demand and elevated capital expenditure on automation and growth of the Group’s manufacturing footprint resulted in a free money outflow of US$56 million for the interval. Johnson Electrical’s monetary situation stays strong with a complete debt to capital ratio of 18% and money balances of US$487 million as of 30 September 2021.
Interim Dividend
The Board has as we speak declared an interim dividend of 17 HK cents per share, equal to 2.18 US cents per share (2020 interim: 17 HK cents per share). The interim dividend might be payable in money with a scrip different the place a 4% low cost on the subscription worth might be provided to shareholders who elect to subscribe for shares. Full particulars of the scrip dividend different might be set out in a round to shareholders.
The interim dividend might be payable on 12 January 2022 to shareholders registered on 2 December 2021.
Company Technique and Growth
Johnson Electrical is now into its seventh decade of offering movement options to prospects worldwide. Though we’re working in a world the place the tempo of technological change has by no means been sooner or extra unpredictable, the vary of alternatives open to our enterprise has by no means been higher.
A number of long-term tendencies driving client demand, together with elevated electrification, emissions discount, automation, mobility, healthcare and security, are depending on the sorts of product providing and applied sciences which are on the coronary heart of what we do as a enterprise. Our R&D efforts are subsequently targeted on anticipating and assembly these buyer wants by modern designs that ship optimum efficiency at a beautiful worth.
Sustaining success over the long run, nonetheless, requires a recognition that the context and aggressive setting during which we’re working is rarely steady. Examples embrace the reintroduction of commerce limitations due to rising geopolitical tensions, the shock of the COVID-19 pandemic and, most just lately, a close to “excellent storm” of disruptions to international manufacturing provide chains.
Our response to those challenges is, partly, to drive ahead with the investments now we have been making over a number of years to adapt the form and nature of our international operations. This implies constructing large-scale manufacturing and engineering capabilities in every of the three main financial areas of the world to cut back dependence on anyone area and to be nearer to our finish prospects. It additionally requires investing in superior, automated manufacturing platforms to enhance high quality and handle the growing shortage and rising price of direct labour.
Along with these vital investments, we’re working onerous to mix the most recent advances in digital know-how and our personal deep pool of enterprise and product information to allow dramatically sooner response occasions to prospects.
The final word aim of our technique is to make sure that our enterprise is aligned with essentially the most promising alternatives for worthwhile progress and geared up with an working mannequin that’s sufficiently agile and resilient to achieve quickly altering circumstances.
Supplementing the natural transformation of Johnson Electrical’s enterprise mannequin, we’re persevering with to pursue exterior alternatives to leverage our present capabilities and create new progress choices.
In Might 2021, we accomplished the acquisition of E. Zimmermann GmbH, a specialist machining enterprise primarily based in Germany. The mix of Zimmermann’s know-how in machining automotive differential housings with Stackpole’s powder steel experience is about to open a brand new alternative for the Group to develop its presence in energy transmission techniques in new power automobiles.
In October 2021, IPG shaped a brand new three way partnership firm with Cortica Ltd., an Israel-based chief within the discipline of autonomous synthetic intelligence. Leveraging Johnson Electrical’s expertise throughout a variety of producing processes with Cortica’s distinctive self-learning know-how, this new enterprise enterprise will give attention to growing and advertising AI-driven high quality assurance software program for industrial automation processes.
Chairman’s Feedback on the Half-12 months Outcomes and Outlook
Commenting on the outcomes, Dr. Patrick Wang, Chairman and Chief Government, stated, “Johnson Electrical skilled a robust restoration in demand within the six-month interval ended 30 September 2021, as most main economies rebounded from the COVID-19 international pandemic. That rebound has been accompanied by a lot of extensively reported provide chain headwinds which have had a adverse affect on the Group’s margins and are persevering with to current a problem to international manufacturing enterprises.”
“The quite combined image of the primary half of the 2021/22 monetary 12 months seems to be set to proceed within the second half. On the one hand, end-market demand stays buoyant and the Group continues to win new enterprise programmes and market share in lots of the quickest rising product purposes for each our automotive and business merchandise divisions. However, there isn’t a clear signal that the worldwide provide chain disruptions and inflationary forces that hampered operations and depressed revenue margins within the first half are behind us.”
“The extended scarcity of semiconductors continues to weigh closely on the automotive sector and appears more likely to persist by all of 2022. Excessive uncooked materials and logistics prices, mixed with rising labour charges, will even stay a burden on the enterprise within the close to time period given the sensible challenges and lag impact of passing further prices on by pricing adjustments.”
Dr. Patrick Wang additional commented, “Trying past the subsequent six to 12 months, the prospects for improved profitability and money movement technology are extra encouraging given the robust buyer pull for Johnson Electrical’s know-how options and the progress we’re making in reworking our international manufacturing footprint and enterprise processes.”
About Johnson Electrical Group
The Johnson Electrical Group is a world chief in electrical motors, actuators, movement subsystems and associated electro-mechanical elements. It serves a broad vary of industries together with Automotive, Good Metering, Medical Units, Enterprise Tools, House Automation, Air flow, White Items, Energy Instruments, and Garden & Backyard Tools. The Group is headquartered in Hong Kong and employs over 35,000 people in 22 nations worldwide. Johnson Electrical Holdings Restricted is listed on The Inventory Alternate of Hong Kong Restricted (Inventory Code: 179). For additional data, please go to: www.johnsonelectric.com.
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Ahead Trying Statements
This information launch accommodates sure ahead wanting statements with respect to the monetary situation, outcomes of operations and enterprise of Johnson Electrical and sure plans and aims of the administration of Johnson Electrical.
Phrases reminiscent of “outlook”, “expects”, “anticipates”, “intends”, “plans”, “imagine”, “estimates”, “initiatives”, variations of such phrases and comparable expressions are supposed to determine such ahead wanting statements. Such ahead wanting statements contain recognized and unknown danger, uncertainties and different elements which can trigger the precise outcomes or efficiency of Johnson Electrical to be materially completely different from any future outcomes or efficiency expressed or implied by such ahead wanting statements. Such ahead wanting statements are primarily based on quite a few assumptions concerning Johnson Electrical’s current and future enterprise methods and the political and financial setting during which Johnson Electrical will function sooner or later.