- CONSOLIDATED REVENUE at a constant exchange rate +8.3%. Euro 272.9 million, +3.6% compared to 263.4 million for the first half of 2017
- EBITDA: Euro 44.9 million, +4.7% compared to 42.9 million for the first half of 2017
- PROFIT: Euro 37.7 million, +99%, compared to 19 million for the first half of 2017
Nerio Alessandri, Chairman and Chief Executive Officer, said: “We are proud to confirm that also in the last semester Technogym has grown faster than the sector both in terms of revenues and profitability, despite the significant impact of exchange rates. The result is particularly relevant if we consider the April implementation of the new IT system, that has led to the postponement of part of May and June revenues to July and August, revenues that today have been recovered as expected. The focus on innovation and the premium positioning of our brand at global level allowed us to record excellent growth rates in key geographies such as the US (+ 28.5%) and China (+ 22.3%). These performances more than offset the slowdown recorded in South America, caused by the economic downturn in Brazil.
Our digital Mywellness platform, widespread in the sectors of sports, fitness and health is a market unique solution; thanks to the combination of IoT and cloud it connects today 15,000 fitness clubs and 10 million users worldwide, allowing them to live a unique and personalized wellness experience. The platform will soon be enriched with media contents, live and on demand coaching services that will be central within our consumer strategy and to consolidate our Technogym 4.0 project. Thanks to the mix of all these elements and thanks to the strength or our team we will close 2018 with a sustainable and profitable growth, a prerequisite for the achievement of our medium-term objectives.”
CESENA, Italy—September 20, 2018—The Board of Directors of Technogym S.p.A. (MTA: TGYM), one of the world’s leading companies in smart equipment, service and digital services for the fitness, sport and health sectors, as part of the broader wellness sector, examined and approved the consolidated half-yearly financial report as of June 30, 2018, today, drawn up in accordance with IAS/IFRS international accounting standards.
Technogym increased revenue in the first half of 2018, achieving excellent growth rates in North America, a strategic region for medium-term company growth and consolidating its leadership in Europe, the main geographic area for the company. This performance was affected by a temporary extension in deliveries, related to the initial stage of the roll-out of the new IT system and consequently the processing of some important orders was deferred. However, this was offset in July and August.
The increase in EBITDA is more than proportional to the growth in revenue. This result was achieved through a number of different factors including continuous improvement of operational efficiency, management of the product mix, and focusing on commercial deals centred on smart equipment, services and digital.
The net financial position improved compared to the first half of 2016, and reflects the seasonal nature of the business with respect to December 31, 2016.
The strong increase in profit is mainly due to products premium positioning, cost management and to the benefits related to the “Patent Box” Italian tax relief.
With respect to innovation, the company launched numerous new products and solutions in the first half of 2018; SKILL RUN, the innovative treadmill dedicated to athletic training and SKILL BIKE, the stationary bike designed for cyclists and triathletes. Thanks to SKILL LINE, Technogym has defined a new product category intercepting the booming trend of athletic training, in strong growth both in clubs and in the consumer market.
In the area of digital innovation, Technogym consolidates the leadership of the Mywellness Cloud digital platform, the only open ecosystem in the industry able to offer end users a fully personalized experience both on Technogym equipment and outdoor, thank to dedicated apps. Today, Technogym counts on over 80,000 installed fitness and wellness clubs, out of which 15,000 are connected to its Mywellness Cloud digital platform and over 10 million people connected to this service; by leveraging this infrastructure Technogym will invest more and more in its Media division, dedicated at content and training programs development for different passion and different disciplines to be delivered both at home and in clubs.
With reference to marketing and communication activities, the company continues its commitment in positioning Technogym as a Premium brand in the BtoB sector and a Prestige brand within BtoC. Finally, Technogym consolidated its position as the leading sports training brand at the global level. Last February the company was Official Supplier to the Pyeongchang 2018 Winter Olympics in Korea.
Results of the First Half of 2018
Consolidated results have been prepared in compliance with the International Reporting Standards issued by the International Accounting Standards Board. First half 2017 figures have been adjusted, due to the IFRS 15 implementation starting from January 1st 2018.
Following the revenue growth recorded in 2017, revenues in the Technogym Group also continued to grow in the first half of 2018. This growth stood at +3.6% (+8.3% at a constant exchange rate), with significant results in crucial geographic areas such as North America
Technogym continues to grow in accordance with the business plans in all the main markets of greatest interest: Europe, North America and APAC. In accordance with trends in recent years, there has been a significant increase in North America (+14.6%) a strategic markets for the future growth of the company. Growth is also positive in Europe and Asia Pacific. After two years of strong growth, revenues slowdown in LATAM, mainly because of the instable macro-economic context in Brasil, which represents the major contributor in the region.
With respect to revenue performance by sales channel: Field Sales continue to be the main channel, registering a growth of +9.3%. The Wholesales channel performance was impacted by postpone deliveries due to the IT system change; the companies forecast a full recovery in the second half. The inside sales channel (Ecommerce & teleselling) recorded a negative performance only due to some geographical areas in Europe. The Retail channel has a marginal impact on the company business model, with its main purpose to act as show room support for the other main direct sales channels, from an omni-channel perspective.
2) EBITDA, Net operating income and Profit for the period
Adjusted EBITDA amounted to Euro 44,865 thousand, up by Euro 1,833 thousand (+4.7%)
compared to Euro 42,860 thousand in the first half of 2017. Consistently with the change in revenue, this increase is mainly due: (i) to the increase in profit margins in relation to the rise in sales volumes; (ii) the streamlining of industrial activities which had a positive impact on direct production costs; (iii) stable operating costs even though there was an increase in sales volumes.
In the half ending June 30, 2018, there were no significant non-recurring expenses compared to the Euro 172 thousands registered at June 30, 2017.
On the whole, the percentage of EBITDA to Revenue (EBITDA Margin) equals 16.4% as of June 30, in line with the first semester of 2017 (+16.3%).
Net operating income amounted to Euro 33.578 thousand, up by Euro 3.665 thousand (+12.3%) compared to Euro 30.086 thousand in the first half of 2017. This increase is mainly due: (i) to the increase in profit margins in relation to the rise in sales volumes; (ii) the streamlining of industrial activities which had a positive impact on direct production costs.
ROS for the half year ended June 30, 2018 was affected by the typical seasonal nature of the fitness equipment market. In this regard, it should be noted that the increase in revenues in the different quarters of the year is linked primarily to customers’ tendency to make their purchases in the second half, following the most important industry trade fairs that are traditionally held in the first half.
Net profit came to Euro 37,692 thousand, up by Euro 18,733 thousand (+98.8%) compared to Euro 18,959 thousand in the first half of 2017. This increase mainly relates: (i) to the increase in the aforementioned Net operating income; (ii) to the effects of the patent box agreement.
3) Net Indebtedness
Net indebtedness amounted to Euro 61,542 thousand, up 20,223 thousands compared to 41,319 thousand for the year ended as of December 31, 2017; this increase is mainly due to the seasonal nature of the business. Net indebtedness at 30 June 2017 stood at Euro 109,600 thousand.
Founded in 1983, Technogym S.p.A. is a world-leading international supplier of products, services and solutions in the fields of fitness and wellness. With over 2,000 employees and 14 branches in Europe, the United States, Asia, Middle East, Australia and South America, the company exports 90% of its production to over 100 countries. Technogym S.p.A. was the official supplier for the last six Olympic Games: Sydney 2000, Athens 2004, Turin 2006, Beijing 2008, London 2012, Rio 2016.
Certain statements in this press release could constitute forward-looking statements, including references that do not exclusively relate to historical data or current events, and as such, uncertain. These statements are based on a number of assumptions, expectations and other factors that could lead to actual results which differ, even substantially, from that forecast. There are numerous factors that could generate results and trends that are notably different from the forward-looking information in this press release. These elements include but are not limited to the ability to manage the effects of the current uncertain international economic scenario, ability to acquire new assets and integrate them effectively, ability to forecast future economic conditions and changes in consumer preferences, ability to successfully introduce and market new products, ability to maintain an efficient distribution system, ability to achieve and manage growth, ability to negotiate and maintain favorable license agreements, currency fluctuations, changes in local conditions, ability to protect intellectual property, problems with information systems, risks associated with inventory, credit and insurance risks, changes in tax regulations, and likewise other political, economic, legal and technological factors and other risks and uncertainties. These forward-looking statements were issued as of today’s date and we shall not be under any obligation to provide any updates and they are not a reliable indication of future performance.
Alternative Performance Indicators
This press release provides a number of alternative performance indicators used by management to allow an improved assessment of the business performance and the financial performance and position of the Group. These indicators are not recognized as accounting measures in the context of IFRS and should therefore not be considered as an alternative way to assess the financial performance of the Group and its financial position. Since the calculation of these measures is not governed by the applicable accounting standards, the calculation methods applied by the Company may not be the same as those used by others and therefore these indicators may not be comparable. Therefore, investors should not place undue reliance on this data or information. This press release also contains certain financial, operating and other indicators that have been adjusted to reflect non-recurring extraordinary events and transactions, known as special items. This “adjusted” information was included to allow better comparison of the financial information for all periods; however, this information is not recognized as economic or financial data within the scope of the IFRS and/or does not constitute an indication of the historical performance of the Company or Group. Therefore, investors should not place undue reliance on this data or information.
Technogym Press Office: Enrico Manaresi, email, 39-3403-949108
Tancredi Group: Giovanni Sanfelice di Monteforte, email, 44-7775-858152
Investor Relations: Carlo Capelli, email, 39-0547-650111
*Full press release available here.