The Azkoyen Group, a Spanish multinational company with its headquarters in Navarra, has achieved a net profit of 2.5 million euros at the end of the first quarter of 2020, 18.5% less than the same period in 2019.
In the midst of the international pandemic caused by COVID-19, the Azkoyen Group’s net turnover fell by 4.5% when compared to the first quarter of last year. The Coffee & Vending Systems division (Vending machines) achieved a 3.8% increase in sales, reaching 10.8 million, compared with 10.4 million in the same period last year. The Time & Security division (Security technologies and systems) achieved 13.6 million euros, a fall of 6% compared to the same period last year. Meanwhile, the Payment Technologies division (Electronic means of payment) recorded a 10.7% drop compared to the same period in 2019, with a turnover of 9.3 million euros.
It should be noted that, overall, after moderate growth in the first two months of the year, with a 2.4% increase in January and February, the Group experienced a 15.5% drop in sales in March, due to the negative impact of COVID-19.
At an operational level, the COVID-19 pandemic began to affect the Group’s activities in a general way in March, from the beginning of the month in Italy and from the middle of the month in Spain and the rest of the countries, with a different degree of severity in each division.
The gross margin as a percentage of sales increased from 43.6% last year to 44.5% this year, with a general improvement in the various businesses.
Fixed costs amounted to 11.6 million euros, 4.7% higher than in the same period last year, after certain increases in fixed business costs, R&D and other costs, in accordance with the defined organic growth plans in force, which have now been reviewed and prioritised.
The EBITDA amounted to 5 million euros, which implies a drop of 14.3% compared to the 5.9 million euros in the first quarter of 2019 with the Group’s EBITDA/sales percentage standing at 14.9%.
Meanwhile, the EBIT fell by 0.8 million euros, 19.4% less with respect to the same period last year, dropping from 4.3 to 3.4 million euros.
As at 31 March 2020 net financial debt amounted to 11.2 million euros, less than 0.5 times the EBITDA of the last 12 months. At the same time, net financial costs were higher than those recorded last year, rising from 18 to 104 thousand euros. With regard to cash and cash equivalents, at the end of the first quarter, cash amounted to 13.3 million euros. Also, various short-term credit lines exist, recently renewed for another year, with a total limit of 10 million euros, of which no balance had been drawn down as at that date. All of the above places the Azkoyen Group in a solid financial position.
Faced with the international pandemic caused by the coronavirus, the Azkoyen Group has adopted intervention protocols, following the recommendations issued by the competent authorities, in each of the markets in which it operates, to protect the health and safety of its employees and customers.
Furthermore, the Group is adapting to the current situation of the pandemic with a number of mitigation measures, while essentially maintaining the ongoing strategic initiatives. The current year’s expenditure and investment plans have been revised for all the businesses, adapting them to the new circumstances. As a result, certain new staff recruitment has been halted and outsourced and other services have been reduced. Non-essential investments have been delayed or cancelled.
In addition, Azkoyen Group companies in certain countries are using labour flexibility measures introduced by the various governments.
In addition, the various companies of the Azkoyen Group have launched a charitable initiative, together with their employees, to raise funds to alleviate the effects of the COVID-19 pandemic. More specifically, the final amount already raised will be tripled by the Group, reaching a total of 32,460 euros, which will be used to assist certain national Red Cross organisations.
Cancellation of dividend distribution
In the midst of 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 revise the proposal for the application of the profit of the annual accounts for the year ended 31 December 2019, according to which it was proposed that a dividend of 4.8 million euros be distributed and that this amount be allocated to voluntary reserves instead.
The Board of Directors also agreed a 15% reduction in the gross fixed remuneration and allowances for attendance at Board meetings and its committees for non-executive directors, and a 20% reduction in the gross fixed remuneration of the managing director. 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 similar to those obtained last 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 launched its Distance Selection technology for its automatic machines, which allows the user to obtain the products without any contact with the surface of the machine, providing absolute safety and hygiene in the purchase 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 launched in various markets, with an excellent response. Marketing has started immediately. The patent registration was submitted to the European Patent Office on 23 April 2020. In addition, the Group is offering its Payment Technologies, that allow remote payment using mobile devices.
Furthermore, the Azkoyen Group, acting through Urkotronik, its distributor in the Basque Country, has been involved in installing its automatic vending machines to assist in the distribution of Personal Protection Equipment (PPE) to prevent the spread of the coronavirus. The distribution is carried out in a safe and controlled manner thanks to the most advanced technology offered by the Azkoyen Palma+ and Mistral+ automatic machines.
In the retail sector, the Cashlogy automated cash control solution helps manage businesses more efficiently and improves hygiene in the establishment. In this same vein, and in view of the COVID-19 situation, Coges has launched a solution based on its IOT platform, Nebular, which helps to monitor the distribution of masks via vending machines in the workplace. In this way, the user company can rely on its vending operator for the management and dispensing of PPE to its employees.
The COVID-19 pandemic is affecting the development of markets significantly in the second quarter, mainly in Coffee & Vending Systems and Payment Technologies, with the negative effects being more limited in Time & Security.
In this scenario, it is expected that the crisis caused by the COVID-19 pandemic will significantly affect the consolidated results for the first half of the year and for the whole of 2020. However, given the complexity of the situation and its rapid development, it is not possible at this time to make a reliable quantified estimate of its potential impact on the Group’s businesses.
The Group’s solid financial position and geographic and business diversification, as well as the measures taken and its capacity to innovate and adapt its range of products to the “new normality”, mean that it can expect to emerge even stronger than before.