AD-HOC 3W Power: Next Restructuring Milestone of German Subsidiary Achieved

,  Luxembourg / Zwanenburg, The Netherlands
  • Order intake, revenue conversion and profits still reflect the disruption to business operations and associated impacts from the protective shield proceedings in the group’s largest entity, AEG PS GmbH in Germany
  • Situation improved in September which accounted for 44% of Q3 orders and 40% of Q3 revenue
  • Industry wide shortage of some key components impacted the business; the company has implemented mitigating actions
  • Company secured €5 million short term working capital financing
  • Third party expert restructuring opinion nearing completion; negotiation of  final financial restructuring measures with key stake holders underway

Luxembourg / Zwanenburg, The Netherlands – November 16, 2017. 3W Power S.A. (ISIN LU1072910919,WKN A114Z9), the holding company of AEG Power Solutions Group, a global provider of UPS systems and power electronic solutions for industrial, commercial, renewable and distributed energy markets, today announced its results for the first 9 months (9M) and Q3 2017. The figures include full consolidation of AEG PS GmbH for 2017.

        Group results*    

(in Euro million)

9M 2017

9M 2016

Δ in %

Q3 2017

Q3 2016

Δ in %

Order backlog

96.0

94.1

2.0%

96.0

94.1

2.0%

Orders

117.9

134.3

-12.2%

33.5

39.6

-15.6%

Revenue

100.3

119.0

-15.7%

33.3

39.3

-15.4%

Book to Bill

1.18

1.13

4.2%

1.01

1.01

-0.3%

EBITDA

8.0

(0.5)

 

(10.8)**

(1.6)

 

EBITDA margin

8.0%

-0.4%

 

-32.4%

-4.0%

 

Normalized EBITDA

(8.8)

(4.3)

 

(2.2)

(0.6)

-

Normalized EBITDA margin

-8.8%

-3.6%

 

-6.7%

-1.5%

 

 

*Q3 and 9M figures include full consolidation of AEG PS GmbH

**Q3 EBITDA includes a correction to insolvency gains as part of the reconsolidation of the German entity (€ 7.6m); YTD EBITDA confirmed as € 8.0m positive

 

AEG Power Solutions finished 9M 2017 with €117.9 million in orders (down 12.2% yoy) and €100.3 million in revenue (down 15.7% yoy). For 9M 2017, Products accounted for €74.9 in orders and €63.6 million in revenues.  Services accounted for  €43 million in orders and €36.7 million for revenues. Order intake, sales and profit improved towards quarter end, with September accounting for 44% of Q3 orders and 40% of Q3 revenue. Q4 revenue projections show an improvement on Q3.

Business was impacted by an industry wide shortage of certain key electronic components is impacting the supply chain. The company implemented mitigating measures including stocking policies and changes in design to reduce dependencies. 

Management’s focus was still on overcoming the disruption to business operations and associated impacts from the protective shield proceedings in the group’s largest entity, AEG PS GmbH in Germany, which supplies to markets and customers worldwide. 

Normalized EBITDA for Q3 2017 was €-2.2 million compared to €-6.6 million in the first half of 2017. Despite the shortfall in revenue, the result shows improvement in margin and costs.

              Industrial Products and Services (IPS)   

(in Euro million)

9M 2017

9M 2016

Δ in %

Q3 2017  2017

Q3 2016

Δ in %

Order backlog

96.0         

94.1

2.0%

96.0    

94.1

2.0%

Orders

117.9

134.3

-12.2%

33.5       

39.6

-15.6%

Revenue

100.3

119.0

-15.7%

33.3       

39.3       

-15.4%

Book to Bill

1.18

1.13

4.2%

1.01       

1.01

-0.3%

EBITDA

12.1

2.6

 

(8.8)**

(0.4)

 

EBITDA margin

12.1%

2.2%

 

-26.5%

-0.9%

 

Normalized EBITDA

(5.3)

(1.3)

-

(1.0)

0.4

 

Normalized EBITDA margin

-5.3%

-1.1%

 

-3.0%

1.0%

 

  

*Q3 and 9M figures include full consolidation of AEG PS GmbH

**Q3 EBITDA includes a correction to insolvency gains as part of the reconsolidation of the German entity (€ 7.6m); YTD EBITDA confirmed as € 8.0m positive

 

Q3 2017 Normalized EBITDA for IPS was €-1.0 million, compared to €-4.3 million for the first half 2017.

 

               Orders by geographical area (Quarterly comparison)*                               

(in Euro million)

9M 2017

9M 2016

Δ in %

Q3 2017

Q3 2016

Δ in %

Orders

Europe excl. Germany

 

 

52.0

 

61.0

 

-14.8%

 

12.9

 

15.1

 

-14.6%

Germany

28.0

29.0

-3.4%

7.7

10.0

-23.0%

Asia

19.2

25.2

-23.8%

6.7

8.1

-17.3%

Africa/Middle East

15.0

15.8

-5.0%

5.5

4.9

   12.2%

Rest of the world

3.7

3.4

8.8%

0.7

1.5

-53.3%

Order total

117.9

134.3

-12.2%

33.5

39.6

-15.4%

Of which Products

74.8

91.8

-18.5%

21.3

26.7

-20.2%

Of which Services

43.1

42.6

1.1%

12.2

13.0

-6.2%

 

*Q3 and 9M figures include full consolidation of AEG PS GmbH

 

              Revenue by geographical area (Quarterly comparison)*                     

(in Euro million)

9M 2017

9M 2016

Δ in %

Q3 2017

Q3 2016

Δ in %

Revenue
Europe excl. Germany

46.0

46.9

-1.9%

15.3

15.7

-2.5%

Germany

21.9

26.2

-16.4%

7.5

9.0

-16.6%

Asia

17.1

25.7

-33.5%

6.7

8.2

-18.3%

Africa/Middle East

12.5

17.2

-27.3%

3.0

6.0

-50.0%

Rest of the world

2.8

3.0

-6.7%

0.8

0.4

100.0%

Revenue total

100.3

119.0

-15.7%

33.3

39.3

-15.3%

Of which Products

63.7

83.7

-23.9%

19.7

27.3

-27.8%

Of which Services

36.6

35.5

3.1%

13.6

12.0

13.3%

             

*Q3 and 9M figures include full consolidation of AEG PS GmbH

The business in Europe generally performs except for the direct German business into Eastern Europe and Asia. A continued weakness of the Oil and Gas industry impacted the business in Asia, Africa and the Middle East. Service grew by 13.3% Q3 2017 on Q3 2016.

On September 5, 2017 the company issued an ad hoc with the intention to take a final step in its financial restructuring by obtaining a third party restructuring opinion.  The opinion is nearing completion and will outline measures to restructure the balance sheet leading to reduced debt and to improve the ability to grow profitably. To achieve this, 3W Power S.A. and key stakeholders entered into a non-binding memorandum of understanding outlining key elements and next steps as well as pre-requisites to provide additional capital. On October 11, 2017 the company secured a  5 million bridge facility to finance short term working capital needs. 

The restructuring opinion is expected to be completed by the end of November 2017 and shall serve as a base for negotiating balance sheet restructuring agreements. The Board of 3W Power S.A. assumes that the required measures can be implemented, and will closely monitor and assess the balance sheet restructuring process going forward. 

The company launched the next generation UPS systems Protect Plus M400 and M600 which are modular and provide one of the lowest total cost of ownership factors in its class. To strengthen its position in the light industrial marketplace, the company introduced its new Protect Flex solution that will provide access to new market opportunities. 

Outlook

With new UPS products and services, a lower fixed cost base and better execution, the Company  expects to see improved business. Demand for AEG PS products and services continues and there is an ever growing need for the power conversion products and solutions within the areas of critical infrastructure and energy storage that the company serves.

 

This communication does not constitute an offer or the solicitation of an offer to buy, sell or exchange sany securities of 3W Power. This communication contains forward-looking statements which include, inter alia, statements expressing our expectations, intentions, projections, estimates, and assumptions. These forward-looking statements are based on the reasonable evaluation and opinion of the management but are subject to risks and uncertainties which are beyond the control of 3W Power and, as a general rule, difficult to predict. The management and the company cannot and do not, under any circumstances, guarantee future results or performance of 3W Power and the actual results of 3W Power may materially differ from the information expressed or implied in the forward-looking statements. As a result, investors are cautioned against relying on the forward-looking statements contained herein as a basis for their investment decisions regarding 3W Power. 3W Power undertakes no obligation to update or revise any forward-looking statement contained herein.

This communication does not constitute an offer or the solicitation of an offer to buy, sell or exchange sany securities of 3W Power. This communication contains forward-looking statements which include, inter alia, statements expressing our expectations, intentions, projections, estimates, and assumptions. These forward-looking statements are based on the reasonable evaluation and opinion of the management but are subject to risks and uncertainties which are beyond the control of 3W Power and, as a general rule, difficult to predict. The management and the company cannot and do not, under any circumstances, guarantee future results or performance of 3W Power and the actual results of 3W Power may materially differ from the information expressed or implied in the forward-looking statements. As a result, investors are cautioned against relying on the forward-looking statements contained herein as a basis for their investment decisions regarding 3W Power. 3W Power undertakes no obligation to update or revise any forward-looking statement contained herein.

YOUR CONTACT 
Christian Hillermann

Hillermann Consulting - Investor Relations

AEG Power Solutions

Phone: +49 (0)40 32 02 79 10
Email: office@aeghillermann-consulting.de

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