Although sales at the press manufacturing operation fell by 21.7% to €203.5m (£169.7m) last year, orders on hand more than doubled – from €27.4m to €61.2m – after Langley gave the business permission to respond in kind to aggressive pricing from competitors.
In his review of operations in the group’s annual report and accounts for the year to 31 December 2019, Langley said: “Hitherto I was content for the business to principally serve its installed base. However, order intake was substantially impaired in the first half and in July, I gave licence for the business to respond in the market ‘gloves off’.”
He said that order intake had improved significantly in the H2 as a result, albeit at lower margins.
“Unfortunately it was not possible to translate sufficient of these orders into revenue in 2019 and subsequently the factory under-recovered for much of the year, working short time until November. However, the order book is now at a healthy level with production at its highest level since we acquired the business in 2012. At the current run-rate, the division is contributing positively again and I have instructed the business to continue with the ‘gloves off’ initiative,” Langley stated.
Manroland Sheetfed UK managing director Peter Redmond, who joined the business last spring, said he was hopeful of signing orders for new presses during 2020.
“We are turning interest into projects and expect to be announcing some deals this year,” Redmond said.
“Paul Guy [national sales manager] has come on board now and the feedback is good, and Drupa should be a good show for us,” he added.
Manroland Sheetfed will unveil “its latest offering to the market” at Drupa in June, with more details to be made available in due course.
Pressroom chemicals manufacturer Druck Chemie, acquired in 2014, is part of Langley’s ‘other businesses’ division, where sales slipped from €130m to €127.2m.
Langley said Druck Chemie had experienced “another challenging year with margins under pressure and a shrinking market” although its performance was broadly in line with expectations. Germany and France were its strongest markets.
“The very small Druck Chemie subsidiary in the UK posted a small loss, but contributed margin to the German production, whereas subsidiaries in Belgium, Italy, Switzerland, the Czech Republic and Poland all contributed positively, with only Brazil going into negative territory. Overall a satisfactory result,” he said.
The overall group had sales of €820.2m (2018: €848.4m) and filed profit-after-tax down from €73.8m to €41.7m.
“The slow down which began in 2018, after successive years of increasingly record profits, continued into 2019 for much of the group,” Langley said in his chairman’s remarks.
“However, profit before tax of 7% was achieved on the reduced volume overall and after cash outflows of some €150m on dividends and acquisition, net assets still stand at over €700m and the consolidated cash position at almost €240m. With no debt in the group, the financial position remains very healthy and the group is poised for its next phase of development.”
Last year the group acquired Italian firm Marelli Motori in a deal that included paying its €55m bank debt in full, its first buy since 2014.
“Historically, our major developments have taken place where targets have underperformed largely due to a failure of management to adapt to a downturn. Marelli fits this description and the acquisition, turn-around and rebuilding of the target whilst dealing with the issues in the existing group, is valuable experience for the next generation members of this family business,” Langley stated.
Looking ahead to 2020, he commented: “Macro-economic conditions do at least seem to be reasonably favourable although as I write, it is too early to say what impact the recent coronavirus outbreak may have but without doubt the longer it goes on, the greater that impact will be.”
Langley’s ARO welding technology facility in Wuhan, China has been closed due to the coronavirus situation. China represents less than 10% of ARO’s overall business.
