The Azkoyen Group, a Spanish multinational based in Navarre, obtained a net profit of 1.35 million euros at the end of the first half of 2020, 79.4% less than the same period in 2019.
The performance of this first semester has been affected by the COVID-19 pandemic.
This pandemic is having an unprecedented impact and has prompted governments around the world to take very exceptional action in an environment of high uncertainty. These measures have led to a reduction in consumption, commercial activities and industrial production which has severely affected the economy, resulting in a reduction in demand for the products and services offered by the Azkoyen Group.
In this context of the international pandemic caused by COVID-19, a 23.7% decrease in net sales was recorded in the first half of the year compared to the same period in the previous year. It should be mentioned that, overall and compared to the same periods in the previous year, after moderate growth in the first two months of this year, with an increase of 2.4%, the Group experienced a reduction in sales in the following four months of 34.9%, due to the negative impact of COVID-19. Specifically, the monthly sales reductions were as follows: -15.5% in March (the pandemic was declared on 11 March), -52.5% in April, -44.3% in May and -29% in June. Subsequently, the progressive recovery in monthly sales continued in July and August. In turn, the COVID-19 pandemic has affected the Group’s activities with varying degrees of intensity in each division.
The Time & Security division (Security technologies and systems) obtained 26.2 million euros, an 8.8% decrease compared to the same period of the previous year. This division has experienced less impact on its sales given the characteristics of its business model and by operating in territories such as Germany and Benelux where the pandemic is being somewhat less harmful to the economy and the population.
In the Coffee & Vending Systems division, sales fell by 28% to 15.2 million euros, compared to 21.2 million in the same period last year. It is worth noting that, after excellent growth in the first two months of the year (+25%), in the following four months there has been a reduction in sales (-49.8%), although the group is seeing a gradual recovery in monthly sales.
The Payment Technologies division registered a 38.9% drop in sales compared to the same period in 2019, after a reduction in the last four months of the period (-53.8%), with a turnover of 13.6 million euros. Demand was impacted in the different geographic markets in which it operates, but the progressive recovery of monthly sales is also notable.
Despite the lower sales volumes, the gross margin as a percentage of turnover remained stable at 43.3%, compared to 43.7% in the previous year.
Fixed costs amounted to 21 million euros, 6.8% lower than in the same period last year, following the implementation of cost mitigation measures and, conversely, despite certain increases in commercial fixed costs, in accordance with the organic growth plans in force, which are now being reviewed and prioritised.
EBITDA amounts to 6.2 million euros, down 48.2% compared to the 12 million euros recorded in the same six-month period in 2019. The Group’s EBITDA/sales percentage stood at 11.3%.
Meanwhile, EBIT amounts to 3 million euros, a decrease of 5.9 million euros, or 65.9%, compared to the same period of the previous year.
At 30 June 2020 net financial debt amounts to 12.2 million euros, slightly more than 0.6 times the EBITDA of the last 12 months. On the other hand, net financial expenses are higher than those recorded in the prior year, rising from 120 thousand euros to 277 thousand euros, mainly due to the greater negative exchange rate differences recorded. Cash and cash equivalents at the end of the first half of the year amounted to 14.6 million euros. In addition, various short-term credit lines, recently renewed and/or formalised for another year, with a total limit of EUR 12 million, are maintained, of which no balance has been drawn down as at 30 June.
All of the above keeps the Azkoyen Group in a solid financial position.
In view of the international pandemic caused by the coronavirus, the Azkoyen Group has adopted action protocols, following the recommendations issued by the competent authorities in each market in which it operates, to protect the health and safety of its employees and customers.
The Group is also adapting to the current situation of the pandemic with various mitigation measures, while essentially maintaining ongoing strategic initiatives. For all businesses, the current year’s expenditure and investment plans have been revised, adapting them to the new circumstances. As a result, certain new staff recruitment has been suspended and outsourced and other services have been reduced. Non-essential investments have been delayed or cancelled.
In addition, Azkoyen Group companies are resorting, in certain countries, to labour flexibility measures provided by the various governments (currently with reduced application).
Furthermore, the different companies of the Azkoyen Group launched a solidarity initiative, together with their employees, to raise funds to alleviate the effects of the COVID-19 pandemic. The final amount collected was tripled by the Group, reaching a total of 32,460 euros, which was allocated to help certain national Red Cross organisations.
Cancellation of dividend distribution
In the current context caused by the COVID-19 pandemic, on 11 May the Board of Directors of the Azkoyen Group agreed, based on a criterion of prudence and liquidity conservation, in view of the situation of uncertainty generated by the international COVID-19 pandemic, to modify the proposal for the application of the profit of the annual accounts closed on 31 December 2019, according to which it was proposed to distribute a dividend of 4.8 million euros, and instead allocate this amount to voluntary reserves.
Subsequently, on 26 June 2020, the Ordinary General Shareholders’ Meeting approved the proposal made by the Board of Directors.
The Board also agreed a 15% reduction in the gross fixed remuneration and attendance fees for meetings of the Board or its committees for non-executive directors, and a 20% reduction in the gross fixed remuneration of the CEO.. These reductions have been accompanied by others applied to management and will be applicable until the end of 2020 or, if earlier, until sales recover to levels close to those obtained in the previous year.
New initiatives and technological developments
As part of the initiatives to adapt to the new scenario caused by the coronavirus pandemic, at the beginning of May 2020, the Azkoyen Group presented its Distance Selection technology for its automatic machines, which allows the user to obtain products without the need for contact with the surface of the machine, providing absolute safety and hygiene in the purchasing process. It is possible to select the product from a distance of up to 2 centimetres from the surface of the selection panel. The new Distance Selection technology is being presented in the different markets, with an excellent response. Its marketing began immediately. The patent registration was filed with the European Patent Office on 23 April 2020.
At the same time, the Group is offering its Payment Technologies, which allow remote payment with mobile devices.
In the retail segment the Cashlogy automated cash control solution helps to manage business more efficiently and enhances hygiene in the business premises. In this same context and related to the COVID-19 situation, Coges has presented a solution based on its IoT platform, Nebular, which enables the monitoring of mask distribution through vending machines in workplaces. This means that the user company can rely on its vending operator for the management and distribution of PPE to its employees.
It should also be mentioned that, since June, Coges has started marketing Dynamos, a new compact-sized cashless payment system, particularly suitable for new customer segments. This technology, together with the so-called Pay4Vend, is produced by Coges and installed in the vending machines.
Also, within the context of the international pandemic caused by COVID-09, it is important to highlight that the primion Subgroup’s access and time and presence control solutions (such as prime Mobile / prime WebAccess & PSM 2200 / or prime Visit) have developed new features to meet the requirements of the “new normality” (tracking and counting of people in buildings, visitor management, automation of alarms in the event of non-compliance, thermal cameras, employee presence control via a smartphone to facilitate teleworking and flexible working hours, etc.) for both existing clients and new clients/segments.
The Group’s strong financial position and geographic and business diversification, as well as the measures taken and the ability to innovate and adapt its offer to the “new normality” are helping to reduce the impact of the pandemic.
According to current estimates, it is expected that the crisis caused by the COVID-19 pandemic will still negatively affect the consolidated profit and loss for the second half of the 2020 financial year, with a reduction in sales compared to the overall levels obtained in the previous financial year, but, on the other hand, that the progressive recovery of sales will continue or be maintained. Given the complexity of the situation and its rapid evolution, a more precise quantified estimate cannot be reliably made at this stage.