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Avio 2019 results: net income and cash growth continue
- Net Revenues: Euro 368.7 million (-5% on 2018)
- Reported EBITDA: Euro 42.6 million (unchanged on 2018)
- Reported EBIT: Euro 26.5 million (-7% on 2018)
- Net Profit: Euro 27 million (+5% on 2018)
- Backlog: Euro 669 million (-24% on December 31, 2018)
- Net Financial Position: cash position of Euro 57.9 million (+18% on December 31, 2018)
- Extraordinary measures in relation to the Covid-19 emergency:
- Prefectural authorisation granted to continue industrial operations as per Article 1, letter h) of Presidential Decree of March 22, 2020
- Proposal for full allocation of 2019 net profit to retained earnings
- Guidance 2020 to be assessed upon the approval of the 2020 half-year report (September)
Rome, March 25, 2020 – The Board of Directors of Avio S.p.A. today reviewed and approved the statutory and consolidated financial statements of Avio S.p.A. at December 31, 2019.
Avio, a leading aerospace enterprise listed on the STAR segment of the Italian Stock Exchange, reports net revenues for 2019 of Euro 368.7 million, decreasing 5% on the previous year and slightly under the 2019 Guidance of Euro 380-405 million. The reduction in revenues is mainly due to slowdown in production and development activities following the Vega failure in July 2019.
Reported EBITDA of Euro 42.6 million, stable on the previous year, as envisaged by 2019 Guidance of Euro 42-44 million, due to the reduction in tax contributions for Research and Development activities, partly offset by positive contributions related to price revisions on commercial contracts and by the reduction in non-recurring costs.
Growing net profit of Euro 27 million (+5% on Euro 25.8 million in 2018), thanks to the significant reduction in financial charges (contribution of income to net profit of Euro 0.5 million, compared to charges of Euro 0.7 million in 2018), thanks also to the contribution of financial income from tax refunds.
The Net Order Backlog of Euro 669 million as of December 31, 2019 was slightly under Guidance indications (Euro 700-775 million), due to the shift of part of the order for the first production batch of 14 P120s to 2020. The backlog does not include yet the development contracts agreed at the ESA Seville Ministerial Council of November 2019 of approx. Euro 490 million, with contracts’ signings expected from 2020 to 2021.
Net Financial Position improving to Euro 57.9 million (+18% on Euro 49.1 million at December 31, 2018), thanks to the contribution of cash from the operating performance and from the VAT refunds despite the increase in Capex (Euro 28.6 million, compared to Euro 22.9 million in 2018), the dividends paid in May 2019 of Euro 0.44 per share (approx. Euro 11.6 million overall), and the treasury shares buy-back of approx. Euro 2.7 million as of December 31, 2019.
Concerning the Covid-19 outbreak emergency, which lead the Italian Government to set several limits on industrial activities and operations, Avio informs that on March 24, 2020, has obtained prefectural authorisation to continue industrial operations as per Article 1, letter h) of the Italian Presidential Decree of March 22, 2020. In the meantime, the activities in the launch base at the C.S.G. (Centre Spatial Guyanais) in Kourou, French Guyana, remain suspended until further notice by the French Government.
The Board of Directors of Avio S.p.A., in view of the heightening of the health emergency and the socio-economic effects linked to the spread of Covid-19, has deemed it appropriate, as a precautionary measure and in order to further strengthen the financial structure of the Company, to approve a new proposal for the allocation of the 2019 net profit, proposing at the next Shareholders' Meeting on May 6 to allocate the net profit for the year entirely to retained earnings. The Board reserves the right to assess the situation, including the possibility of future dividend payments, upon closing the half-year report.
In terms of the outlook, the Company considers that it is not yet possible to estimate the impact that this epidemic will have during the year. However, it is not possible to rule out a short-term negative effect, or at least a partial slowdown in economic activities also due to the restrictions and containment provisions adopted or in the process to be approved by Governments in Europe and globally (in particular concerning the stop in the activities in the launch base in Kourou). Avio confirms that It is already taking action to reduce the financial and operative impact of such a scenario in both the short and medium terms.
For these reasons, the Board of Directors considers it appropriate not to provide 2020 quantitative guidance, at least not until the approval of the H1 2020 results.
In addition, top management - also due to the Covid-19 emergency - has communicated to the Board that it has voluntarily decided to defer to 2021 the payment of its long-term incentive bonus. In parallel, the Board of Directors has approved a new management long-term incentive plan in which for the first time ESG KPIs have been introduced, with the objective to have the management of the Company focused on sustainability. Moreover, the Board of Directors has decided to donate a total amount of Euro 500 thousands to the Kourou Hospital in French Guyana and to the Civil Protection Department in Colleferro to help to fight the Covid-19 outbreak.
"2019 has further consolidated the profit and cash growth seen over recent years despite the difficulties resulting from the failure of a Vega flight last July - stated Avio's CEO, Giulio Ranzo. In parallel, Avio has continued to invest heavily in technology and new programmes.
“The Covid 19 outbreak represents a global emergency whose length and effects on the global economy are not fully foreseeable as of now. For this reason, we have decided, together with the Board of Directors, to precautionarily allocate to reserves all of the 2019 profits and not to pay long-term performance incentives to Management, in order to protect the financial structure of the Company. The specific situation and the perspectives, also related future dividend distributions, will be re-assessed at the half-year accounts’ closing, once the global impacts of the emergency will be clearer. In the meantime we are focused on working on the long-term sustainability of the Company, by protecting its financial structure to keep investing and getting ready to the future with new technologies and products”.