3U HOLDING AG successfully stays the course and increases Group revenue and earnings

Consolidated revenue of 3U HOLDING AG rose by EUR 6.28 million in the first nine months of 2020 compared to the same period of the previous year, from EUR 38.21 million to EUR 44.49 million, which corresponds to growth of 16.4 %.

All three segments contributed to this development with the ITC (information and telecommunications technology) segment expanding its share of Group sales to over 30% with growth of 33.9%.

The ITC (Information and Telecommunications Technology) segment generated 33.1 % (9M/2019: 27.1 %) of consolidated revenues, the Renewable Energies segment 16.0 % (9M/2019: 14.4 %) and the SHAC (Sanitary, Heating and Air Conditioning Technology) segment 53.8 % (9M/2019: 58.9 %).

As neither 2019 nor 2020 saw any major mergers and acquisitions activities recognised in the balance sheet in the first nine months – with the exception of the acquisition of the Roge wind farm –, the changes in the income statement are largely attributable to the operating activities in the segments. Effects from the sale of the externally leased parts of the Adelebsen property, which was agreed at the end of the second quarter, may eventually be recognised in the fourth quarter of 2020 when ownership is transferred to the buyer.

The cost of materials increased at a disproportionately low rate of 11.1 % compared with the same period a year ago. The cost of materials ratio (cost of materials as a percentage of revenue) fell from 56.2 % in the first nine months of 2019 to 53.6 % in the first nine months of 2020. This development is mainly attributable to the growth of cloud computing and the telephony business in the ITC segment as well as the relatively lower share of the goods intensive SHAC segment.

Personnel expenses also rose disproportionately by 14.2 % to EUR 9.78 million (9M/2019: EUR 8.56 million). While as of 30 September 2020 a total of 233 persons were employed at 3U Group, seven more than a year ago (30 September 2019: 226 persons), the personnel expense ratio (personnel expenses as a percentage of revenue) declined slightly in the first nine months to 22.0 % (9M/2019: 22.4 %). In contrast, the personnel expenses ratio in the SHAC segment rose – mainly due to the temporary, extensive use of temporary staff at the distribution centre in Montabaur. In order to protect employees from possible infections, work was carried out there in two shifts, which could only be carried out with additional staff. This measure was reintroduced in the course of the fourth quarter.

In the first nine months of the 2020 financial year, the Group generated EBITDA of EUR 6.43 million (9M/2019: EUR 4.42 million). The improvement in earnings before interest, taxes, depreciation, and amortisation is due to the consistently lower cost ratios. The EBITDA margin (EBITDA as a percentage of revenues) rose from 11.6% in the same period of the previous year to 14.5% in the first nine months of 2020.

Loss carryforwards, which were used in the past, have now been partially exhausted. As expected, tax expense therefore rose from EUR 0.05 million to EUR 0.81 million in the first nine months of 2020. The consolidated net profit for the period (after minorities) was EUR 0.60 million, around four times as high as in the same period of the previous year (9M/2019: EUR 0.14 million).

ITC segment (Information and Telecommunications Technology)

The ITC segment increased revenues by 33.9% to EUR 13.86 million (9M/2020: EUR 10.35 million) and generated an EBITDA of EUR 3.66 million, 90.1% higher than in the same period of the previous year (9M/2019: EUR 1.92 million). The EBITDA margin rose from 18.6% in the first nine months of fiscal 2019 to 26.4% in the first nine months of 2020. As a result of the measures taken against the COVID 19 pandemic, demand for telecommunications services has risen significantly since the second half of the first quarter, as reported. Although this effect levelled off again in the third quarter, the Telecommunications business area was able to expand its business by 26.5% in the first nine months. Rising sales of value-added services also contributed significantly to this growth.

The activities of weclapp SE, i.e. the Cloud Computing business area, were also increased in the first nine months of 2020 with revenue growing by 52.7 % compared to the same period of the previous year. As an individual company, it generated an EBITDA margin of around 35%.

Renewable Energies Segment

In the Renewable Energies segment, segment revenue increased by 29.1 % from EUR 5.52 million in the first nine months of 2019 to EUR 7.12 million in the reporting period. The Roge wind farm acquired at the beginning of the year contributed EUR 1.51 million to segment revenue. Earnings from wind and photovoltaic systems are barely at a satisfactory level as wind yield was slack in the third quarter. Segment EBITDA improved from EUR 4.35 million in the same period of the previous year to EUR 5.61 million in the first nine months of 2020. The EBITDA margin in the Renewable Energies segment was 78.7 % as in the same period of the previous year.

SHAC segment (Sanitary, Heating and Air-Conditioning Technology)

In the first nine months of 2020, revenue in the SHAC segment rose by 6.5 % from EUR 22.49 million (9M/2019) to EUR 23.95 million (9M/2020). The e-commerce business area grew significantly by 10.7 %. The cost of materials ratio in the SHAC segment remained constant at 77.4% in a nine-month comparison. The twelve-point plan for improving earnings in the SHAC segment, which was launched at the beginning of the second quarter of 2020 by the Management Board in conjunction with the management teams in the e-commerce business area, provides for the increased use of private labels in the product range as well as measures in purchasing, product mix and marketing.

Segment EBITDA fell from EUR -0.14 million in the same period of the previous year to EUR -0.38 million in the first nine months of 2020. While the e-commerce business in the Group company Selfio again recorded a slightly positive EBITDA, the expenses for the expansion and optimisation of the supply chain as well as measures to protect the employees at the Montabaur site against infection impacted the segment EBITDA. While the SHAC segment almost broke even in the third quarter of the 2020 financial year, the first nine months of 2020 again produced a negative segment result (9M/2019: EUR -0.47 million; 9M/2020: EUR -0.84 million).

Financial position

Compared to 31 December 2019, financial funds as of 30 September 2020 have hardly changed and amounted to EUR 17.52 million at the end of the third quarter of 2020. Including restricted cash deposits, liquid funds as of 30 September 2020 amount to EUR 20.06 million.

The start of construction of the distribution centre also affects the changes in key balance sheet items. The increase in property, plant and equipment already reflects the progress of construction work and corresponds to the increase in financial liabilities on the liabilities side. Nevertheless, the 3U Group reports a net cash position (cash and cash equivalents minus current and non-current financial liabilities) of EUR 0.94 million and positive working capital of EUR 26.15 million. In contrast, the gearing ratio was increased to 76.0 % as of 30 September 2020 (31 December 2019: 73.0 %).

3U HOLDING AG continues to have a solid equity ratio of 56.8 % (31 December 2019: 57.8 %).

Outlook

After the good performance during the 2020 financial year to date, the Management Board reaffirms its forecast and expects a strong increase in revenue. In 2020, revenues of between EUR 58.0 million and EUR 63.0 million are expected. Including income from the sale of assets, EBITDA is expected to be between EUR 10.0 million and EUR 12.0 million. Due to higher depreciation and amortisation and higher tax expenses, consolidated net income is expected to be between EUR 2.0 million and EUR 3.0 million according to the annual planning. The Management Board assumes that the economic restrictions in the course of the measures to combat the COVID-19 pandemic in the 2020 financial year will   have no significant negative impact on business performance. However, the extent to which targets will be achieved depends on the successful transfer of assets sold to the buyers in the course of the fourth quarter.

"The whole course of business to date shows: We are on a good course for 2020 and have also shown that we are well positioned to meet the challenges posed by the COVID 19 pandemic. The key figures in our strategic focus areas of online trading and cloud computing are developing as planned and better," says a pleased Michael Schmidt, Speaker of the Management Board of 3U HOLDING AG. "It is already becoming apparent that we will enter the coming financial year with great momentum and that we can continue our success in megatrends.”

Quarterly Announcement

The complete quarterly Announcement for the first nine months of the 2020 financial year will be published today, 11 November 2020. It can be downloaded from the company’s website (www.3U.net) under "Investor Relations/Reports".