Gurit reports net sales impacted by challenging wind turbine blade market

On Aug. 17 Gurit (Zurich, Switzerland) reported unaudited sales results for the first half of 2022. Net sales for this period were CHF 234.8 million ($246.8 million) which is a decline of -­7.0% at constant exchange rates or ­­-9.2% in reported CHF versus the prior year. For Continued Operations, the decline was -5.7% at constant exchange rates.

Net sales in the first half of the year continued to be impacted by a challenging market for wind turbine blades, the company notes. Specifically, its largest Western wind customers produced less blades year-over-year. In China, Gurit observed market growth, but at aggressive price levels. Alternately, the marine and other industrial markets saw growth well above pre-pandemic levels. As reported in April, Gurit acquired a majority stake in the wind industry supplier Fiberline Composites (Middelfart, Denmark) to strengthen its product offering for the wind energy market and divested its Aerospace business.

Materials achieved net sales of CHF 141.4 million ($148.9 million) for the first half of 2022, which includes CHF 27.4 million ($28.8 million) of the newly acquired Structural Profiles business (operating under the brand Fiberline). This represents an increase of 22% at constant exchange rates compared to the first half of 2021. The demand for wind core materials achieved lower levels compared to last year, while the sales for Marine and other industrial segments grew year-over-year.

Kitting recorded net sales of CHF 71.6 million ($75.3 million) for the first half of 2022. This is a decrease of -20.9% at constant exchange rates compared to the first half of the prior year. In response to the continued challenging environment, the kitting production for Europe will be consolidated at the Gurit sites in Spain and Turkey. These sites will be strengthened and accommodate the volumes from Ringkøbing, Denmark, which is being converted into an innovation hub for the wind industry and now hosts a wind innovation center.

Manufacturing Solutions (Tooling) saw a decrease in its first half of 2022 net sales by -43.7% at constant exchange rates compared to a very strong first half of 2021, down to CHF 32.4 million ($34.1 million). The market for wind blade molds remains challenging as Western wind turbine manufacturers are delaying investments into new production equipment and the Chinese market saw increased price pressure.

Gurit reports that it reached an Operating Profit of CHF 19.8 million ($20.8 million) with an operating profit margin of 8.4% of net sales. Excluding divestment effects, restructuring and impairment charges, the adjusted operating profit is at CHF 4.6 million ($4.8 million) with an adjusted operating profit margin of 2.0% of net sales. The lower profit is mainly due to reduced sales in Wind, particularly in Manufacturing Solutions and impacted by increased raw material, energy and freight costs. In the first half year 2022, the operating profit is temporarily impacted by CHF 5.6 million ($5.9 million) (H1 2021: CHF 4.7 million/$4.9 million)) ramp-up cost in its new and major production sites in Mexico and India. Earnings per share are CHF 3.61 in H1 2022 (H1 2021: CHF 2.56).

Gurit achieved a net cash flow from operating activities of CHF -13.1 million ($-13.8 million) compared to CHF 19.3 million ($20.3 million) in the first half of the previous year. The reduction is due to a lower operating profit in 2022 and higher working capital levels caused by the timing of received trade payments. Capital expenditures amounted to CHF 6.7 million ($7 million) during H1 2022 compared to CHF 13.8 million ($14.5 million) for the first half of the previous year. Major growth capacity investments were made at the now operating site in Chennai, India.

The company expects a stronger second half of 2022, driven by the initiated cost-out programs and new plants going operational. For the full year net sales are expected around CHF 500-530 million ($526-557 million) with an adjusted operating profit margin between 2.0% and 4.0%. Adjusted operating profit does not include further restructuring and impairment charges in the second half of this year, which might become necessary if market conditions worsen further. Gurit believes that the longer term market outlook for wind energy remains strong, driven by an increasing demand for renewable energy and recently announced international support policies.

Net sales (in MCHF) by markets:	First half year
	H1 2022	H1 2021	Change in reported CHF	Change at constant HY 2021 rates
Composite Materials*	141.4	118.2	19.7%	22%
Kitting	71.6	95.2	-24.7%	-20.9%
Manufacturing Solutions	32.4	55.4	-41.6%	-43.7
Eliminations	-20.2	-24.3
Total Continued Operations	9.6	14.2	-32.6%	-29.4%
Aerospace	9.6	14.2	-32.6%	-29.4%
Total Group	234.8	258.6	-9.2%	-7%
Operating Profit	19.8	18.6
Operating Profit Margin	8.4%	7.2%
Adjusted Operating Profit	4.6	26.0
Profit for the Period	16.6	10.3
Operating Cashflow	-13.1	19.3
Capital Expenditures	6.7	13.8
Equity in % of Total Assets	34%	47.4%

*Note: Composite Materials contains Structure profile sales of CHF 27.4 million ($28.8 million) for a period of two months since the acquisition end of April 2022.