President & CEO
Exel Composites Plc’s January – March Business Review 2017
The year 2017 has started off well: we have made clear improvement on the quarterly key figures as well as solid progress with respect to the implementation of our growth strategy. During the first quarter order intake was strong and order backlog at the end of March improved further from the relatively good level at the end of 2016. With increased order intake also revenue increased during the first quarter. Key performance indicators i.e. order intake, revenue and operating profit all improved. The significant improvement in operating profit reflected increased revenues, a lower cost base and an increased production yield.
The Industrial Applications segment contributed the most to revenue growth due to the increased efforts and focus on new customer acquisition, which have clearly gained momentum. Also the general market environment recovery is contributing to the order intake and consequently revenue growth. The recent increases in oil and metal prices are expected to gradually improve overall market demand for composites. Revenue and order intake in the Asia-Pacific (APAC) region, China in particular, has also clearly picked up during the first quarter.
Operating profit has continued to improve since the third quarter of 2016, driven by top line growth, increased production efficiency and reduced cost level. We continue to see the impact of the cost savings measures from 2016 also going forward. The main part of savings are related to personnel costs and to the downsizing of our business unit in Australia.
The acquisition of the Chinese composites production company Nanjing Jianhui (JHFRP), which was originally announced with a separate stock exchange release at the end of October 2016, has been completed at the end of April. I am very happy to have finalized this important step in the implementation of our growth strategy in China. This acquisition strengthens our position in China, and improves our export capacity to other growth markets in Asia. We now aim to ensure a smooth integration of the business to the Exel Group. Exel’s existing Chinese factory as well as that of the acquired business are both located in Nanjing, which gives us the opportunity to realize operational synergies in terms of production capacity and cost structure.