DGAP-News: BAUER Aktiengesellschaft: BAUER AG achieves significant improvement in earnings for 2020 despite decrease in revenues

- At EUR 1,453.6 million, total Group revenues were down 8.8% due to the COVID-19 pandemic compared to the previous year's figure of EUR 1,594.7 million

- EBIT increased by around EUR 22 million to EUR 55.5 million despite lower total Group revenues

- Improved EBIT margin of 4.1% (previous year: 2.3%)

- Reduction of net debt pursued consistently in the course of working capital optimization

- Measures for sustainable profitability implemented in all segments

- Forecast for 2021: total Group revenues of between EUR 1,550 million and EUR 1,650 million and EBIT of between EUR 75 and EUR 85 million.

Schrobenhausen, Germany - In the context of the publication of the 2020 Annual Report today, BAUER AG provides information about developments in the past year as well as the expectations for 2021. According to this, the company recorded a decrease in total Group revenues in 2020 in a market environment characterized worldwide by the COVID-19 pandemic, yet was nevertheless able to increase the earnings before interest and tax (EBIT) with an improved EBIT margin as a result.

"In 2020, the COVID-19 pandemic caused the global economy to drop sharply to an extent not seen in many decades. Accordingly, our globally networked business also felt considerable impacts. In particular, we saw a reluctance to invest among our customers in the Equipment segment. The Construction segment was affected by curfews and travel restrictions in many countries, particularly in the Far East. However, it was largely possible to offset this in other regions. The Resources segment was relatively unaffected. Overall, we have made it through this difficult time in good shape. Above all, we succeeded in achieving positive EBIT in all three segments despite the challenges, thereby increasing EBIT as well as the EBIT margin for the Group," remarks Michael Stomberg, Chairman of the Management Board of BAUER AG.

The BAUER Group achieved total Group revenues amounting to EUR 1,453.6 million in the 2020 financial year, thus recording a decrease of 8.8% from the previous year's figure of EUR 1,594.7 million. EBIT rose considerably from EUR 33.7 million in the previous year to EUR 55.5 million. At EUR -8.2 million, earnings after taxes were slightly negative, yet significantly improved from the previous year's value of EUR -36.6 million.

At EUR 1,162.5 million, the Group's order backlog at the end of 2020 was up 13.1%, significantly more than the previous year's already high figure of EUR 1,027.6 million. Even though the markets were very volatile due to the COVID-19 pandemic and showed themselves to be far more difficult than in 2019, the Construction segment managed to win several large orders and significantly increase the order backlog. The order backlog in the Equipment segment was above the previous year. On the other hand, in the Resources segment, the backlog decreased compared with the previous year, also due to the termination of a major order. Order intake decreased by 1.3% to EUR 1,588.5 million, compared to EUR 1,608.7 million in the previous year.

At 23.7%, the equity ratio remained at the same level as the previous year (23.8%). An equity ratio of over 30% remains a target. In order to sustainably improve the equity ratio again, no dividends will be distributed. In the medium term, however, Bauer continues to maintain its dividend policy, which plans for a dividend ratio of approximately 25 to 30% of reported earnings after taxes.

Net debt was EUR 528.8 million in the year under review, representing a significant decrease from the previous year's figure of EUR 563.7 million. This was primarily due to the decrease in inventories and trade receivables, partly in the course of measures to optimize the working capital. Liabilities to banks were also further reduced. After reaching its highest level in 2013, the net debt has thus reduced by 21.5%.

Despite the positive developments, Bauer intends to continue working hard in the coming years to improve net debt relative to total assets and revenues. Accordingly, Bauer also intends to use the capital increase planned for 2021 to further reduce the liabilities to banks.

Business segments

With its three segments, Construction, Equipment and Resources, over 100 subsidiaries and a broadly diversified business model, the Group operates in around 70 countries all over the world.

The Construction segment achieved total Group revenues of EUR 669.0 million in the 2020 financial year, representing an increase of 6.4% from the previous year's EUR 628.8 million. EBIT returned to markedly positive figures at EUR 24.3 million (previous year: EUR -17.4 million). In the previous year, a significant valuation allowance of approximately EUR 40 million had a negative impact on the total Group revenues and the earnings for the Construction segment as well as for the Group.

Developments in the individual regions differed considerably in 2020 depending on the country-specific measures to combat the COVID-19 pandemic. Primarily the countries in the Far East were greatly impacted by the consequences of the COVID-19 pandemic. In countries such as Malaysia, the Philippines, Vietnam and partly also in Thailand, there were massive lockdowns and a correspondingly significant reduction in construction activities. On the other hand, the overall performance in Germany, Europe and North America was good.

In 2020, Bauer continued working steadily on the global rollout of the Bauer Construction Process. Initial successes have already been achieved in the systematic introduction of structured lean management methods transferred to the specialist foundation engineering process. For example, project management improved on many sites, with processes and risk reduction measures unified for the long term.

By the end of 2020, order backlog grew significantly by 23.7% from EUR 611.1 million in the previous year to EUR 755.8 million. This was primarily due to very large orders received in Europe. Accordingly, the order intake rose by 17.5% to EUR 813.7 million, compared to EUR 692.7 million in the previous year.

In 2020, the Equipment segment was the segment most significantly affected by the customers' reluctance to invest, resulting from uncertainty caused by the COVID-19 pandemic. Accordingly, total Group revenues fell by 14.4% from EUR 713.7 million in the previous financial year to EUR 610.7 million. EBIT decreased from EUR 58.7 million to EUR 30.1 million. Thanks to the numerous measures that were adopted, earnings after taxes were still in the positive range.

Markets in Germany, the USA and China proved to be the most robust. In the countries in Europe, the sales figures declined. The same was true for the Middle East as well as the other Asian countries and Africa.

Bauer achieved a significant strategic milestone in the third quarter of 2020 by ending the joint venture launched together with Schlumberger in 2015 to develop and build deep drilling rigs for the oil and gas industry. On the other hand, the well drilling business in the USA was expanded in the year gone by. The water well drilling rig business established in the USA under the Gefco brand was taken over in order to ensure a successful market entry.

Order intake development was significantly weaker than in the previous year due to the COVID-19 pandemic. Overall, it fell by 7.6% from EUR 672.1 million in the previous year to EUR 621.3 million. At EUR 118.9 million, order backlog at the end of 2020 was above the previous year's level of EUR 108.3 million.

The Resources segment delivers innovative products and services in the areas of drilling services and water wells, environmental services, constructed wetlands, mining and remediation. Total Group revenues decreased by 14.6%, from EUR 314.8 million in the previous year to EUR 268.8 million. However, EBIT improved from EUR -5.1 million to EUR 1.9 million.

Overall, 2020 was once again shaped by the restructuring measures initiated in the previous years, which are now nearly completed. As a result, Bauer sees itself in a significantly better position for the future. For example, Bauer sold its brewery and beverage technology business and significantly reduced the financial burden on the subsidiary in Jordan, which has recorded losses for a number of years.

The environmental services business was healthy again and was able to handle a market environment with good demand in 2020. The business in drilling services and well drilling recorded stable performance, while the subsidiary in Jordan was negatively impacted due to a decline in orders and delays caused by lockdowns. Significant restructuring in the area of well materials over the past years has proven successful, and Bauer achieved positive earnings. Also, the financial year was once again successful in the area of constructed wetlands in Oman. In 2021, there is an opportunity for additional contracts for constructed wetlands in the Middle East. The area of mining also once again recorded positive revenues and earnings in 2020.

Order intake was EUR 248.5 million in 2020, below the previous year's value of EUR 306.6 million. At EUR 287.9 million, the order backlog at the end of the year was also down from the previous year's EUR 308.2 million. This decrease can also be attributed to the fact that the remaining works for the large Kesslergrube project are no longer included.

Outlook

The COVID-19 pandemic will have a significant impact on the general economic situation in 2021 as well. Given the background of the ongoing pandemic and the difficulty of predicting further effects in the current financial year, the Management Board anticipates total Group revenues of between EUR 1,550 million and EUR 1,650 million and EBIT of between EUR 75 and EUR 85 million for the Group in the 2021 financial year.

This forecast is based on the assumption that the high order backlog in the Construction segment can be processed and additional order opportunities can be exploited due to stimulus programs. In the Equipment segment, the Management Board expects a positive surge in demand worldwide in the second half of 2021. The earnings situation of the Resources segment should benefit from the completed restructuring phase.

"For the coming years, as market conditions normalize, we do not expect a continuation of this revenue increase due to the recovery effects from the pandemic," remarks Michael Stomberg. "In the next few years, we are setting a clear focus on increasing our profitability. To this end, we have identified numerous starting points which we would like to exploit. We will also continue to work on the improvement of our cost structures and the expansion of synergies within the Group. Improvement of our working capital and cost base is being supported with a long-term program of measures. In particular, this is true for the production of our equipment and the development of new products as well as for the more flexible adjustment of our capacities to fluctuations on the global markets. Over the remaining course of the year, we will work out the details in this context as well as the medium-term goals we are pursuing."

You can view the full annual report including a detailed analysis of the individual segments and submarkets online at http://www.bauer.de.

About Bauer

The BAUER Group is a leading provider of services, equipment and products related to ground and groundwater. With over 110 subsidiaries, Bauer operates a worldwide network on all continents.

The operations of the Group are divided into three future-oriented segments with a high potential for synergy: Construction, Equipment and Resources. The Construction segment offers new and innovative specialist foundation engineering services alongside the established ones, and carries out foundation and excavation work, cut-off walls and ground improvements worldwide. Bauer is a world market leader in the Equipment segment and provides a full range of equipment for specialist foundation engineering as well as for the exploration, mining and extraction of natural resources. The Resources segment delivers innovative products and services and acts as a service provider with several business divisions and subsidiaries in the areas of drilling services and water wells, environmental services, constructed wetlands, mining and remediation.

Bauer profits greatly from the collaboration between its three separate business divisions, enabling the Group to position itself as an innovative and highly specialized provider of products and services for demanding projects in specialist foundation engineering and related markets. Bauer therefore offers appropriate solutions for the world's major challenges, such as urbanization, growing infrastructure needs, the environment, and water, oil and gas.

The BAUER Group was founded in 1790 and is based in Schrobenhausen, Bavaria. In 2020, it employed some 11,000 people in around 70 countries and achieved total Group revenues of EUR 1.5 billion. BAUER Aktiengesellschaft is listed in the Prime Standard segment of the German stock market.

More information can be found at http://www.bauer.de.

GROUP KEY FIGURES 2020 (IFRS)

*Previous year's figure adjusted; see 2020 Annual Report p. 70 and p. 102.

Contact:

Christopher Wolf

Investor Relations

BAUER Aktiengesellschaft

BAUER-Strasse 1

86529 Schrobenhausen, Germany

Phone: +49 8252 97-1797

Fax: +49 8252 97-2900

[email protected]

www.bauer.de