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burckhardt-reveals-exceptional-half-year-results-announces-mid-range-plan
burckhardt-reveals-exceptional-half-year-results-announces-mid-range-plan

Burckhardt reveals ‘exceptional’ half-year results; announces mid-range plan

Switzerland-based equipment specialist Burckhardt Compression (Burckhardt) has reported an ‘exceptional increase’ in order intake, strong sales and EBIT growth in its half-year 2022 financial report.

Driven by strong global market momentum, the company saw its consolidated order intake increase to CHF 706.7m ($710m), up 56.8% versus the prior-year period, representing the highest half-year value in the history of the company.

Order intake in the Systems Division increased from CHF 303m ($304) in the first half of fiscal year 2021 to CHF 531.5m ($533.7m) in the reporting period, due to a strong post-Covid market recovery and several large projects from liquefied natural gas (LNG)-marine, solar-panel- and hydrogen-mobility-related applications.

The Services Division continued to see strong growth and an increase in profitability. According to the report, its order intake amounted to CHF 175.2m ($175.9m), 18.6% higher than the previous year period, with growth coming from all areas including spare parts, field services, engineering/revamp/repair, and monitoring and diagnostics.

Although all regions contributed to the growth, ‘very strong’ momentum was seen in China, despite repeated Covid-related lockdowns.

Sales rose by 21% year-on-year to CHF 155.3m ($155.9m) and gross profit increased by 22.8% to CHF 67.3m ($67.6m), resulting in a slightly higher gross margin of 43.3% versus the first half of fiscal year 2021. The report states that cost increases in the supply chain have been mitigated largely by passing on higher costs to the market and by several saving measures.

The operational leverage resulting from higher sales saw the EBIT in the first half of fiscal year 2022 increase by 33.9% to CHF 32.1m ($32.2m) compared to the prior-year period, yielding an EBIT margin of 20.6%.

Outlook

Although the company expects supply chain challenges to continue, Burckhardt has confirmed its full-year guidance for Group sales of CHF 720-760m ($722.3 – $762m) and an EBIT margin similar to the fiscal year 2021 level.

Mid-Range Plan

The company also outlined its new Mid-Range Plan, in which its executive team highlighted its new ambitions and strategy with a focus on the transition towards a new energy economy, in addition to the company’s commitment to reaching higher financial and ESG targets for 2027.

Having strengthened its market position over the past few years, Burckhardt’s CEO Fabrice Billard revealed that the company remains on course to successfully deliver on its Mid-Range Plan 2022 targets. “We have enhanced our positioning in traditional markets through an unwavering focus on operational excellence and innovation, supported by targeted acquisitions,” he said.

“Amid the global drive towards energy security and sustainability, we have established strong positions in new markets. Our new Mid-Range Plan 2023-2027 builds on these solid foundations, and we enter this new strategic period with resilience and strong growth momentum.”

According to the plan, Group sales are expected to grow at 9% CAGR until 2027 to approximately CHF 1.1bn, of which around 40% will result from applications that support the world’s energy transition. The EBIT margin is also planned to grow to a range of 12% to 15%, representing at the mid-point value more than a double of absolute EBIT versus fiscal year 2021.

The Systems Division aims to grow sales at 9% CAGR to approximately CHF 620m ($622m) in fiscal year 2027. Burckhardt will also target a higher divisional EBIT margin range of 5% to 8%.

The Services Division aims to grow sales at 9.5% CAGR to around CHF 480m ($481.6m) in fiscal year 2027, with a higher divisional EBIT margin range of 22% to 25%.

To continue its ‘strong commitment to value creation’, Burckhardt aims for its RONOA to grow above 25% due to an operational focus on net working capital and a ‘disciplined approach’ to capital allocation.

The plan also reveals that the company intends to expand its marine offering and increase its presence in the USA, APAC and other selected markets. As part of its growth strategy in the US, Burckhardt will combine Arkos Field Service and the local Systems organisation into one company.

As part of its sustainability agenda, the company has committed to reducing its greenhouse gas (GHG) emission intensity by 50% by 2027, aspiring to become Net Zero by 2035 (Scope 1 and 2).


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