Blue Cap AG publishes key financial figures for the third quarter of 2023 and provides an outlook for further development
_Management Board gives an outlook on the further development of Blue Cap AG: Focus on Blue Cap's strengths through the implementation of transformation
-Continuation of the measures to increase value in the portfolio
-Number of transactions should increase noticeably: Examination of additional acquisition options in special situations; critical evaluation of the development potential of portfolio companies for possible exits
-Publication of new medium-term targets adjusted to this by the end of November 2023
_Nine-month revenue (continued)(1) at EUR 209.0 million (9M 2022: EUR 222.8 million)
_Adjusted(2) EBITDA (continued) at EUR 15.9 million (9M 2022: EUR 23.6 million), adjusted EBITDA margin (continued) at 7.6% (9M 2022: 10.3%)
_Full-year forecast for 2023 for continuing operations was adapted to consolidated revenue of EUR 265-285 million and an adjusted EBITDA margin of 7-8%
Munich, October 25, 2023 The Management Board of Blue Cap AG ("Blue Cap") is further developing the established “Buy, Transform, Sell” growth strategy. Dr Henning von Kottwitz, CEO of Blue Cap, explains: “We want to focus on Blue Cap’s strengths and on the topics where we can raise the greatest value levers with our skills.” The core of the work at Blue Cap remains the intensive work in the portfolio. The growth strategy also includes plans for a noticeable increase in portfolio transactions in German “Mittelstand”. On the one hand, this should be achieved by examining additional acquisition options in special situations: these promise great potential for increasing value due to Blue Cap's high level of transformation expertise. Such transactions can usually also be carried out at significantly more favourable conditions. In addition, Blue Cap will consistently separate from companies if they do not promise any substantial increases in value in the near future or require other competencies for their further development. Further details will be defined in the next few weeks and communicated by the end of November 2023 together with medium-term targets adapted to the current framework conditions.
Blue Cap AG operates active portfolio management in its investments, which was further strengthened with the introduction of the transformation radar at the beginning of 2023. In recent months, Blue Cap has proven that it can quickly identify and implement necessary measures. Henning Eschweiler, COO of Blue Cap, comments: “With these skills in the team, we are also ideally prepared for increasing value in special situations. We see interesting options here, especially in the current difficult economic environment.” Portfolio management also includes the consistent preparation of portfolio companies for a possible exit.
Nine-month figures marked by persistently difficult economic environment
Given the persistently difficult economic environment, the nine-month consolidated group revenue of EUR 209 million was below the comparable figure for the previous year of EUR 222.8 million. The operating result (adjusted EBITDA(2)) reached EUR 15.9 million (9M 2022: EUR 23.6 million). This corresponds to a margin of 7.6% (9M 2022: 10.3%) of total operating performance. Adjusted EBIT also declined significantly compared to the previous year, to EUR 4.3 million (9M 2022: EUR 14.7 million).
Revenue has declined in most portfolio companies due to decreased call-offs, postponed projects or general restraint from customers. This decline in revenue, among other things due to low utilization, directly leads to a disproportionately reduced contribution to earnings.
Whereas improvements were achieved in the Business Services segment, the decline in earnings compared to the previous year is based primarily on the weaker business at con-pearl following the record year of 2022, as expected, and at the two companies in the Adhesives & Coatings segment.
Group key figures for continued operations at a glance
| EUR m | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 |
|---|---|---|---|---|
| Revenue | 63.7 | 77.0 | 209.0 | 222.8 |
| Adjusted EBITDA | 4.4 | 7.8 | 15.9 | 23.6 |
| Adjusted EBITDA margin in % | 7.0% | 9.9% | 7.6% | 10.3% |
Continuingly solid balance sheet structure
Blue Cap continues to have a solid balance sheet and financing structure. Thus, as of September 30, 2023, the equity ratio remained stable at 36.5% compared to the end of 2022. The net debt ratio (including lease liabilities) of 3.0 years (31.12.2022: 2.6) is still well within the target range of less than 3.5 years. Furthermore, the net debt was substantially reduced year-on-year and compared to the end of 2022 to EUR 58.7 million.
Business Services with strong contribution to group result
As of September 30, 2023, Blue Cap's continued portfolio contained seven majority holdings which are attributable to the segments Plastics, Adhesives & Coatings, Business Services and Others, and one minority holding.
In the Plastics segment, the expected decline in orders from a major client had a negative impact on con-pearl compared to the previous year. As anticipated, H+E was confronted with lower call-off volumes in the third quarter and, in addition, with a production stop at a major OEM as a result of the severe flooding in parts of Eastern Europe.
The Adhesives & Coatings segment also fell markedly short of the previous year's period in terms of revenue and earnings. However, there have been noticeable improvements at Neschen resulting from the fitness programme that has been in place since the beginning of 2023. Neschen also benefited from an increased order volume in the two business fields Industrial Applications and Documents. Planatol, on the other hand, has continued to be affected by a sharp decline in demand, which is felt in nearly all its business fields.
The Business Services segment significantly increased its revenue and earnings compared to the same period last year. Thanks to a strong first half-year, HY-LINE managed to more than compensate for the reduced order intake in the third quarter. At Transline, the successfully implemented cost efficiency measures and a continuing upward market momentum had positive effects on the development of the result. The segment, new since 2021, generates a substantial part of the Group's earnings. This confirms the strategy of portfolio diversification.
In the Others segment, Blue Cap’s smallest holding, nokra, failed to reach last year’s figures due to project delays. A comprehensive turnaround programme is being carried out at the minority holding Inheco, with a focus on a severe reduction of costs and an improvement of working capital.
Segment key figures (continued) at a glance
| EUR m | 9M 2023 | 9M 2022 | Changes in % or in basis points (bps) |
|---|---|---|---|
| Plastics | |||
| Revenue | 71.8 | 84.6 | -15.1% |
| Adjusted EBITDA | 7.9 | 13.8 | -43.0% |
| Adjusted EBITDA margin in % | 11.0% | 15.7% | >100 bps |
| Adhesives & Coatings | |||
| Revenue | 63.4 | 72.9 | -12.9% |
| Adjusted EBITDA | 2.9 | 4.9 | -40.3% |
| Adjusted EBITDA margin in % | 4.7% | 6.6% | >100 bps |
| Business Services | |||
| Revenue | 71.4 | 62.8 | 13.7% |
| Adjusted EBITDA | 6.2 | 5.5 | 12.8% |
| Adjusted EBITDA margin in % | 8.6% | 8.6% | 0 bps |
| Others (*) | |||
| Revenue | 5.7 | 6.3 | -10.1% |
| Adjusted EBITDA | -0.5 | 0.0 | >100% |
| Adjusted EBITDA margin in % | -8.5% | -0.3% | >100 bps |
Note: rounding differences are possible
(*) The Others segment includes nokra, the Group's holding and real estate management companies, and Gämmerler already sold in FY 2022
Forecast for the full year 2023 adjusted, communication of a new medium-term targets by the end of November
The persistently difficult economic conditions will probably continue to have an impact in the final quarter of the year. The Management Board of Blue Cap AG has adjusted its previous annual forecast accordingly on October 24, 2023. The consolidated revenue of the continuing operations in the 2023 financial year is now expected to be between EUR 265-285 million (previously: EUR 275-295 million) and an adjusted EBITDA margin of 7-8% (previously 8-9%).
The Management Board continues to plan for significant growth in the medium term: the prerequisites for this are present in the Blue Cap portfolio and team. Goals and measures for this will be defined in the next few weeks and communicated by the end of November 2023 together with new medium-term targets adapted to the current framework conditions.
Important:
To coincide with the publication of the figures, a virtual conference call with the Management Board of Blue Cap AG will take place at 1:30 p.m. today. You can join the call using this link (see below). The presentation will be available on our website at https://www.blue-cap.de/investor-relations/praesentationen/ after the conference call.
(1) Due to the sale of Uniplast on June 14, 2023, Uniplast's contributions in the current year as in the previous year are summarized under discontinued operations. The continued operations therefore include all portfolio companies except for Uniplast. The information in this press release, including information on the prior-year periods, always relates to continued operations unless otherwise noted.
(2) Adjustments: Adjusted for extraordinary, out-of-period and other effects from reorganisation measures and one-off effects as well as for effects arising from purchase price allocations
