Half-Year Report at 30th June 2017 approved by the Board of Directors. Record quarter and half-year: new organisational model continues to drive revenues and profitability

• Revenues in the quarter reached €157.8 million (+7.7% compared to the second quarter of 2016 and +11.5% compared to the first quarter of 2017). Revenues for the first half reached €299.3 million (+6.2% compared to the first half of 2016)

EBITDA at highest ever: €31 million in the second quarter, with EBITDA margin of 19.7%. Half-year EBITDA of €51.8 million, up 15.3% compared to first half 2016 (EBITDA margin of 17.3%, compared to 16.0% in the first half of 2016)

Net profit up by 11.9% to €29.3 million compared to €26.2 million in the first half of 2016

Net financial position positive in the amount of €5.5 million, compared to €3.5 million at 31 December 2016

Bologna, 4th August 2017 - Datalogic S.p.A. (Borsa Italiana S.p.A.: DAL), a company listed in the STAR Segment of the Italian Stock Exchange managed by Borsa Italiana S.p.A. (“Datalogic”) and global leader in the automatic data capture and process automation markets, approved today the Half-Year Report at 30th June 2017.

The first-half results show strong growth in all the main economic indicators, thus confirming the positive trend recorded in the first quarter. Thanks to a sustained increase in sales revenues and to improvements in operating costs, EBITDA increased by 15.3% to around €52 million, EBIT increased by 16.6%, to €41.2 million and net profit by 11.9%, to €29.3 million. Net financial position is positive in the amount of €5.5 million, an improvement compared to December 2016.

Datalogic Group Chief Executive Officer, Valentina Volta, commented: “The increasing demand of products and solutions for automation, quality and efficiency of processes finds a prompt reply in our new organisation model focused on clients. Second quarter preliminary revenues, the best ever in Datalogic’s history, recorded a double digit growth in Transportation & Logistics, Manufacturing and Healthcare sectors, and highlighted a recovery of the Retail sector. We are very satisfied of the growth recorded in China and of the consolidation of our leadership position in EMEA. The improvement recorded of EBITDA, the best ever both at quarterly and interim level, comes from the strong focus of the entire structure on production costs. This performance, supported by an increase in the booking and the ongoing streamlining of production and operating costs, makes us confident that positive results will also be achieved in the second part of the year.”

Half-yearly revenues amounted to €299.3 million, an increase of 6.2% compared to €281.8 million in the first half of 2016 (+4.8% at constant Euro/Dollar exchange rates). The booking reached €322.8 million, up by 12.0% compared to the same period of 2016.

The impact on turnover of new products in the first half was 15.1% (28.3% in the first half of 2016) and is attributable to the time delay between the removal from the indicator of “cross-industry” products with consolidated turnover, the replacement of which is scheduled starting from the second part of the year, and the simultaneous inclusion in the indicator of products more focused on customers from specific industries with a longer useful life but with a lower initial impact on turnover.

Gross operating margin, equal to €142.3 million, increased by 8.6% compared to the €130.9 million achieved in the same period of the previous year (+8.4% at constant Euro/Dollar exchange rates), while its impact on revenues improved by one percentage point, from 46.5% in the first half of 2016 to 47.5% in the first half of 2017 (48.1% at constant Euro/Dollar exchange rates), as a result of the shift of the sales mix to products where the customer’s willingness to pay is higher and the efficiencies of the main components of the cost of goods sold.

Operating costs, equal to €98.3 million, increased by 3.6% (+2.4% at constant Euro/Dollar exchange rates) compared to €94.9 million in the same period of 2016, with an improvement of approximately 1 percentage point compared to turnover, from 33.7% to 32.8%. This performance reflects an 8.2% increase in the costs for research and development activities to €26.3 million, with an impact on revenues of 8.8% compared to the 8.6% recorded in the first half of 2016.

The EBITDA grew significantly by 15.3% from €45 million to €51.8 million (+17% at constant Euro/Dollar exchange rates) while the impact on revenues (EBITDA margin) increased to 17.3% compared to 16.0% due both to production costs efficiencies and a different seasonality of operating costs, in particular R&D and distribution costs.

The EBIT increased by 16.6% to €41.2 million, compared to €35.3 million (+19.5% at constant Euro/Dollar exchange rates).

Financial charges increased with respect to the €1.9 million in the first half of 2016 to €2.5 million, mainly due to the effect of exchange losses (€1.4 million compared to losses of €0.3 million in the first half of 2016) related to the effect on the Group’s net balances of the depreciation of the dollar during the first half of 2017, of the release of related up front fees for early loan repayment and of the increase in gross debt as a result of the stipulation of a new financing agreement of higher amount.

Group net income amounted to €29.3 million, up by 11.9% compared to €26.2 million achieved in the first half of 2016.

Net financial debt as at 30 June 2017 was positive by €5.5 million, an improvement of approximately €2 million compared to 31 December 2016 (positive by €3.5 million).

Trade working capital at 30 June 2017 stood at €70.2 million compared to €53.2 million at 31 December 2016 and €56.1 million compared to the same period of the previous year. The increase of this item compared to 31 December 2016 is mainly attributable to the increase in net trade account receivables, due to a different distribution of sales during the period, and inventories.


THREE-MONTH PERFORMANCE

Total revenues in the second quarter of 2017 amounted to €157.8 million, up by 7.7% compared to the second quarter of 2016 (+6.4% at constant Euro/Dollar exchange rates) and by 11.5% compared to the first quarter of 2017. The booking during the quarter was equal to €162.8 million, up by 10.2% compared to the second quarter 2016.
Operating margins reported a strong growth both compared to the second quarter of 2016 and the first quarter of the current year.


Q2 2017 vs. Q2 2016

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Q2 2017 vs. Q1 2017

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PERFORMANCE BY DIVISION

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(*) The 2016 figures have been restated based on the new operating structure

The Datalogic Division recorded turnover of €279.2 million, up by 7.3% (+6% at constant Euro/Dollar exchange rates) compared to the first half of 2016. The EBITDA of the division grew by 11.3% to €51.3 million, with an EBITDA margin of 18.4%.

- The Retail sector showed a substantially stable performance compared to last year, with a reversal trend compared to the first quarter of 2017, which recorded a slightly negative performance. The EMEA region (in which over 50% of the sector’s revenues are concentrated) saw an increase of 11.5% compared to the same period of 2016, which offset the slowdown in the American continent.

- The strong growth in the Manufacturing sector was confirmed, with double-digit growth on last year in both quarters. The increase was driven by the American continent and by China where turnover grew by over 60% compared to last year.

- The Transportation & Logistics sector reversed the negative performance of the first quarter, recording double-digit growth in the second quarter of the year, driven mainly by North America.

- Finally, the Healthcare sector was the best performing of all Datalogic sectors in terms of percentage growth. Particularly exceptional results were achieved in North America where turnover continued to grow significantly, as in the second quarter, due to sales of readers for the hospital sector.

The Solution Net Systems Division recorded turnover of €10.6 million, an increase of 6.3% compared to the first half of 2016 (+3.6% at constant Euro/Dollar exchange rates).

The Informatics Division recorded turnover of €11.2 million, a decrease of 11.9% (-14.3% at constant Euro/Dollar exchange rates) compared to the first half of 2016, still showing an improvement in the second quarter of 2017 compared to the same period of the previous year.

 

PERFORMANCE BY GEOGRAPHIC AREA

In the first half of 2017, consolidation was seen in the EMEA region, with growth of 7.1% to €158.7 million, and significant growth was recorded in the APAC region, driven by China, which grew by almost 30%. North American revenues also grew, while a decrease was seen in Latin America partly due to the presence of large projects in the same period of the previous year.

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(*) EMEA: Europa, Middle East e Africa.


EVENTS IN THE SIX-MONTH PERIOD


On 13th April 2017, Datalogic S.p.A. signed an agreement for a new credit line of Euro 250 million expiring in 2023. A part of the loan was used to repay, prior to the original expiration date, the already existing credit line for Euro 126 million and in part used to support the Group’s ordinary business and development.

On 4th May 2017, the Extraordinary Shareholders’ Meeting approved – among the others - the amendments to Articles 6 and 9 of the Company’s Articles of Association aimed primarily at introducing the “increased vote” right for long-term shareholders of the Company pursuant to article 127 quinquies of Legislative Decree 58/1998 (Consolidated Finance Act, “TUF”) introduced by article 20, paragraph 1 bis, of Legislative Decree No. 91/2014 converted by Law No. 116/2014 (the so-called “Competitiveness Decree”).

A binding agreement was signed on 6th June 2017, and subsequently concluded on 6th July, for the acquisition of 100% of the share capital of the German company Soredi Touch Systems GmbH, leader in technology for terminals and in particular forklifts terminals. The transaction provides for a Datalogic maximum comprehensive financial commitment amounting to 10 mln/€, of which 8 million Euros in cash and 2 million Euros through Datalogic own shares.


EVENTS AFTER THE END OF THE SIX-MONTH PERIOD

There are no significant events to report, except for the conclusion of the above-mentioned acquisition of Soredi Touch Systems GmbH, on 6th July 2017.


BUSINESS OUTLOOK FOR THE CURRENT YEAR


The results of the first half confirm the Group’s positive trend in all the main geographical areas and in particular in China. The double-digit growth in the booking and the positive feedback received from customers demonstrate the validity of the Group strategy, and the effectiveness of the new customer-oriented business model and the new organisation.

In view of the largely stable macroeconomic scenario, the top line growth trend seen in the first half of the year is expected to be confirmed for the remainder of 2017 and the optimisation of production processes is set to continue as a result of the expected growth of investments in research and development and commercial facilities.


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Please note that the half-year report at 30th June 2017 will be available to anyone who requests it at the company headquarters, at the offices of Borsa Italiana S.p.A. (www.borsaitaliana.it), on the “eMarket STORAGE” instrument, managed by Spafid Connect S.p.A. and may also available on the company’s website www.datalogic.com (Investor Relations section).

The manager responsible for preparing the company’s financial reports – Alessandro D’Aniello – declares, pursuant to paragraph 2 of Art. 154-bis of the “Testo Unico della Finanza”, that the accounting information contained in this press release corresponds to the document results, books and accounting records.

 

Reclassified income statement at 30th June 2017 – Euro/1.000

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Please note that certain costs starting from 2017 have been reclassified into different P&L line items, therefore comparative data as at 30th June 2016 have been restated accordingly.


[1] EBITDA - Earnings before interest, taxes, depreciation and amortization. EBITDA as defined is an alternative performance indicator that Management used to monitor and assess its economic performance and it is not defined under IFRS, consequently it is not subject to Auditors review.

 

Reclassified Balance Sheet at 30th June 2017 ( ) – Euro/1.000

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[2]The reclassified Balance Sheet shows measures used by the Management to monitor and assess the financial performances of the Group. Given that the composition of these measures is not regulated by the reference accounting standards, even if they are directly reconcilable to the IFRS statements, they are not subject to any audit procedure by the Independent Auditors.

Net Financial Position at 30th June 2017 – Euro/1.000

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Il Presidente e Amministratore Delegato del Gruppo Datalogic, Romano Volta, ha così commentato: “I risultati positivi del semestre rafforzano la validità delle scelte strategiche avviate sia a livello gestionale che di prodotto che hanno permesso una crescita a doppia cifra in Europa e nei Paesi Asiatici. Il retail si conferma essere il motore della crescita ma nel semestre si è assistito anche ad una ripresa nel segmento industriale grazie all’introduzione sul mercato di nuovi prodotti basati su tecnologia imaging per la logistica ed il mondo del factory automation in crescita in Europa. Il contratto acquisito con Royal Mail costituisce inoltre un’interessante premessa per il rilancio della business unit Systems in coerenza con le altre attività del Gruppo.”