BAUER AG continues to be strongly influenced by the effects of the COVID-19 pandemic in the third quarter

Total Group revenues increased by 4.7% compared to the previous year, to EUR 1149.6 million, but EBIT at EUR 24.1 million was below the previous year (EUR 29.8 million)
The order backlog grew by 5.9% compared to the previous year to EUR 1,270.9 million
Resources segment records strong earnings performance
Syndicated loan extended in advance
2021 forecast adjusted due to the consequences of the COVID-19 pandemic

Schrobenhausen, Germany – In the third quarter, the BAUER Group was affected much more significantly than anticipated by the consequences of the COVID-19 pandemic. At the end of the third quarter of 2021, the total Group revenues increased by 4.7%, from EUR 1,098.2 million to EUR 1,149.6 million, compared to the same period of the previous year; however, at EUR 24.1 million, EBIT was below the previous year’s value of EUR 29.8 million. On the other hand, the restructuring of the Resources segment is increasingly paying off and the syndicated loan was also extended in advance.

“In the Construction and Equipment segments, we have been affected more significantly than anticipated by the consequences of the COVID-19 pandemic, above all in the Far East. We expected an overall recovery in all regions in the second half of the year, but this did not occur. Therefore, we had to adjust our forecast at the start of November,” explains Michael Stomberg, CEO of BAUER AG.

At EUR -5.9 million, the Group's earnings after taxes were significantly above the previous year’s value of EUR -13.2 million, as the financial result improved considerably compared to the previous year.

The order backlog in the Group increased significantly by 5.9% to EUR 1,270.9 million compared with the reference period in the previous year, to which all three segments contributed.

The company also significantly increased equity from EUR 352.4 million to EUR 454.8 million. This is primarily attributable to the capital increase from authorized capital (EUR +16.0 million) carried out in December 2020 as well as the larger capital increase with subscription rights (EUR +76.1 million). Thus the Group’s equity ratio was 27.3% at the end of the third quarter of 2021 (previous year: 21.4%).

The income from the capital increase was used for the repayment of bank loans, which means that the current and non-current liabilities to banks reduced by a total of EUR 79.4 million compared to the same period of the previous year. The syndicated loan agreement was also extended in advance with a new volume in the amount of EUR 390 million. The term is three years with an option of extension.

Business segments

With its three segments – Construction, Equipment and Resources – and a broadly diversified business model, Bauer address major global trends such as rapidly progressing urbanization, infrastructure expansion, water extraction and treatment as well as climate change and increasing environmental awareness.

At EUR 517.6 million, total Group revenues in the Construction segment were up significantly by 10.5% compared to the previous year at EUR 468.3 million. However, EBIT decreased significantly compared to the same period in the previous year, from EUR 7.4 million to EUR -1.8 million.

The Construction segment continued to be influenced by the effects of the COVID-19 pandemic. Although work was able to proceed well overall in the markets in Europe, the USA and the Middle East, exit and travel restrictions negatively impacted business in the Far East, particularly in Southeast Asia, much more significantly than anticipated.

In addition, there were delays at individual major projects in Europe, including a project for the foundation of an offshore wind park on the French coast.

Order backlog in the Construction segment grew by 5.0% from EUR 761.3 million in the previous year to EUR 799.2 million. This includes major projects in Europe, Jordan, India and Egypt. Order intake decreased by 3.7% to EUR 595.5 million, compared to EUR 618.5 million in the previous year.

At the end of the third quarter, total Group revenues in the Equipment segment increased by 6.4%, from EUR 456.1 million to EUR 485.2 million, when compared to the same period of the previous year. EBIT also increased compared to the previous year, from EUR 14.3 million to EUR 17.8 million.

However, the increase in revenue and earnings only demonstrates a slight improvement compared to the previous year. Overall, the Equipment segment continues to be affected by customers’ reluctance to invest, resulting from uncertainties caused by the COVID-19 pandemic. Particularly in the countries of the Far East, sales figures so far have remained significantly below expectations. Restrictions continue to apply in many countries that have major impacts on the construction markets.

Order backlog increased significantly by 17.6%, from EUR 118.6 million in the previous year to EUR 139.4 million. At EUR 505.7 million, the order intake rose by 8.5% compared to the previous year’s EUR 466.3 million.

At EUR 208.2 million, total Group revenues in the Resources segment were down significantly by 7.2% after the third quarter, compared to the previous year’s EUR 224.4 million. This was largely because the previous year’s figures include the major Kesslergrube project, which was handed over to the client in July 2020. On the other hand, EBIT rose considerably from EUR 3.2 million to EUR 8.1 million.

The segment continues to not be significantly influenced by the COVID-19 pandemic. The restructuring carried out in recent years is now being increasingly reflected in the key figures. In particular the areas of water well construction, environmental services, constructed wetlands and mining performed well.

At the end of the third quarter, the order backlog increased by 3.9%, from EUR 319.8 million to EUR 332.3 million. In contrast, the order intake fell by 7.6%, from EUR 236.0 million to EUR 218.1 million.

Outlook

The effects of the COVID-19 pandemic can still be felt worldwide. Particularly in the countries of the Far East, initial hopes concerning the easing of strict regulations were once again dashed by renewed spread of the virus, in particular the Delta variant. Strict exit restrictions were implemented again in many regions, leading to significant project delays or standstills on sites. As a consequence, equipment sales in the Far East were also inappropriately low and significantly below planned levels.

Only the Resources segment continues to be unaffected by the COVID-19 pandemic, with a positive demand and order situation in nearly all areas even for the rest of the year.

Due to the ongoing consequences of the COVID-19 pandemic on business in the Construction and Equipment segments, as well as significant delays in some areas with individual major projects in Europe, BAUER AG had to adjust the forecast in an ad-hoc announcement on November 2, 2021. Since then, the company expects to achieve total Group revenues of between EUR 1,530 million and EUR 1,570 million as well as EBIT of between EUR 35 million and EUR 45 million for the 2021 financial year.

In addition to the forecast, the Executive Board anticipates that Group earnings after tax for the end of 2021 will remain at about the previous year's level due to the significant improvement in the financial result when compared to the previous year.

“Even though we are now coping with a setback, our restructuring measures over the past years have proved successful. The Resources segment has recorded strong earnings performance. We will continue to consistently pursue the course we have adopted, even if the environment in the Far East continues to be far from easy,” says Michael Stomberg.