Smart Safety Systems division
In the third quarter of 2017, Groupe Gorgé stressed that decision-making with respect to several major calls for tender within Smart Safety Systems division had been regularly postponed by the clients over the last few months. This trend continued over the last two months. As a result, the pace of orders received this quarter will not allow to reach the fourth quarter's ambitious revenue target and, consequently, the division's annual revenue target.
The division is now expecting 2017 revenue of about €105 to €110 million (excluding subsidiaries held for sale), compared with 2016 revenue of €103.4 million. Although current operating profitability in the second half is expected to exceed that of the first half, it is expected to show a significant decline over the full year.
As a result, it has been decided to intensify the measures aimed at improving its operational efficiency and reducing its costs, while maintaining its strategic direction. In particular, the Smart Safety Systems division aims to reduce its costs by €4 million per year. It also considers is considering the disposal of loss-making foreign subsidiaries that have become non-strategic and whose revenue is not material at division level.
Protection of High-Risks Installations division
In the Protection of High-Risk Installations division, the effect of delays in Nuclear and Oil & Gas, coupled with the launch of more closely contested projects with lower margins in Nuclear, will have a significant impact on revenue and the division's profitability, which will both be significantly down over the financial year.
The division has initiated the introduction of a new organisation, the development of a more integrated offering and improvements in the competitiveness of the product portfolio. In the Nuclear business, a change of management and an operational turnaround plan have been put in place to ensure that current projects are properly executed and that there is a steady improvement in profitability. Business related to Oil & Gas is expected to recover in 2018 as the market stabilises.
In Nuclear, the signature of an initial contract of nearly €20 million for the two EPRTM reactors at Hinkley Point in the United Kingdom (press release dated 15 May 2017) provides visibility for the nuclear business over the coming years. Major new contracts are expected in the next few months. These will help the business to bounce back in the medium term.
3D Printing division
The 3D Printing division's objective remains unchanged, with the integration of Interson Protac and AvenAo Industrie boosting the division's ability to achieve its target of balanced EBITDA in the fourth quarter of 2017.
Group guidance update
However, given market conditions and the performance of these two divisions, the Group now expects 2017 revenue to be between €260 and €270 million, excluding subsidiaries held for sale in the Smart Safety Systems division, compared with €272.0 million in 2016 at constant scope.
The performance of the Protection of High-Risk Installations and Smart Safety Systems divisions will impact strongly on the Group's profitability. Exceptional non-cash items related in particular to the expected disposals in the Smart Safety Systems division could also impact on net impact.
Overall, Groupe Gorgé remains confident of its medium-term business prospects. The Group is well positioned on several calls for tender, including at least one that is expected to firm up in the next few weeks. These calls for tender relate to products developed in recent years, notably in the robotics and nuclear sectors.
GROUPE GORGE press releases may contain forward-looking statements regarding GROUPE GORGE's targets. These forward-looking statements reflect GROUPE GORGE's current expectations. Such forward-looking statements and targets depend on known and unknown risks, uncertainties and other factors that could cause actual results, performance or events to differ materially from those anticipated herein. The risks and uncertainties that could affect the Group's future ability to achieve its targets include, in addition to those indicated in the press release: the strength of competition; the development of markets in which the Group operates and notably the 3D printing division; currency fluctuations; obtaining the export authorizations that may be required for certain activities; control of costs and expenses; changes in tax legislation, laws, regulations or their enforcement; our ability to successfully keep pace with technological advances; our ability to attract and retain qualified personnel and key staff; the evolution, interpretation and uniform application and enforcement of International Financial Reporting Standards (IFRS), according to which we prepare our financial statements; manufacturing and supply chain bottlenecks; the performance of our business partners (subcontractors, agents, suppliers, etc.). Some of these risk factors are set forth and detailed in our Document de Référence (Registration Document including the annual financial report filed with the French Autorité des Marchés Financiers), available on our website www.groupe-gorge.com. This list of risks, uncertainties and other factors is not limitative. Other unanticipated, unknown or unforeseeable factors, such as changes in the economic situation or financial markets, could also have a material adverse effect on our targets.
This press release and the information it contains do not constitute an offer to sell or to subscribe, or a solicitation to purchase or subscribe shares or securities in GROUPE GORGE or in its listed subsidiaries in any country whatsoever.
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About Groupe Gorgé
Groupe Gorgé is an independent group that specializes in high-tech industries. Today, the Group is active in the fields of security and protection in extreme environments, as well as in the 3D printing sector. It employs around 1,900 people, is located in eight countries and directly exports around 40% of its activity. In its more than twenty-five year history, Groupe Gorgé has always developed and driven the latest technological and industrial innovations.
Smart Safety Systems:
Developing complete, innovative technological solutions for complex missions in hostile and confined environments.
Protection of High-Risk Installations:
Protecting people and ensuring the active and passive protection of installations for energy markets and industrial and tertiary sectors in France. Ensuring the maintenance of these protection systems.
Enabling major industry players to find new routes to successful innovation and production processes by providing systems, 3D printers and new premium material.
In 2016, the Group reported revenue of €281.2 million. It is backed by 1,900 employees and operations in over ten countries.
More information available on www.groupe-gorge.com
Groupe Gorgé is listed on Euronext Paris Compartment B.
ISIN code: FR0000062671
Ticker code: GOE
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