The Azkoyen Group, a leading Spanish technology multinational, which offers automated products and services designed to provide unique experiences for people on a daily basis, has experienced a 21.3% drop in net sales in the first nine months of 2020 compared to the same period last year, a trend that has been gradually improving in recent months.
The accumulated earnings at the end of the third quarter were affected by the COVID-19 pandemic, which had an unprecedented impact and significantly influenced consumption, commercial activities and industrial production, leading to a reduction in demand for the products and services offered by the Azkoyen Group.
In spite of this and as a result of the Group’s solid financial position and geographical and business diversification, as well as the measures adopted and the ability to innovate and adapt its products to the “new normality”, the Group has recorded a considerable improvement in its figures since the beginning of the pandemic, which is helping to reduce the negative impact on the business.
The gross margin fell from 43.5% in the previous year to 42.6% in the current year, due to the reduction in the volume of sales.
The EBITDA stands at 10.5 million euros (40.6% lower than the 17.6 million euros at the end of the same period in 2019). The Group’s EBITDA/sales percentage stands at 12.5%. The containment of fixed costs (a reduction of 8.4%) and a low level of bad debt (notably lower than that of the previous year) have contributed to achieving these EBITDA levels.
Geographical and business diversification, the key to the recovery
At an operational level, the COVID-19 pandemic started to affect the Azkoyen Group’s activities in a general way in March and with a different degree of intensity in each division thereafter, depending on the mobility restrictions and quarantines applied by the different countries. However, since the beginning of the third quarter there has been a considerable improvement at all levels. By geographical area, 33.9% of sales in the first nine months were in Germany, 15.7% in Spain, 10.2% in Belgium, 8.8% in Italy, 16.4% in the rest of the European Union, 8.4% in the United Kingdom and 6.6% in other countries.
Time & Security
The Time & Security division (Security technologies and systems) recorded a 9.4% drop in sales in the first nine months of the 2020 financial year, which implies a lesser impact from COVID-19, given the characteristics of its business model and the fact that it is being conducted in regions where the pandemic is causing somewhat less harm to the economy and the population. Sales have decreased when compared to the optimal volume for the first nine months of 2019 (which recorded a growth of 11.1% compared to the same period in 2018), experiencing a smaller impact from COVID-19, due to the characteristics of its business model (6% in the first quarter, 11.7% in the second quarter, 10.5% in the third quarter). In addition, maintenance income represents 29.4% of turnover (11.4 million euros, similar to the 11.5 million euros of the previous year). As at 30 September 2020, the order book, including maintenance contracts and projects, stood at 35.1 million euros, 0.6% higher than the same period in the previous year.
Coffee & Vending Systems
With regard to the Coffee & Vending Systems division, the volume of sales revenue in the first nine months of 2020 was down by 27.8% compared to 2019.
It is worth mentioning that, after an excellent growth of 25% in the first two months of the financial year, there was a drop in sales in March due to the negative effects of COVID-19 which meant closing the first quarter with a growth of 3.8% as compared to the figure for the same period of the previous year. These negative effects continued in the second quarter with sales in that period experiencing a significant fall of 58.6%. Nonetheless, there was a gradual recovery in monthly sales, which continued up to the present time, with the third quarter sales volume being 27.4% lower compared to the figures for the same period last year.
Payment Technologies
The Payment Technologies division recorded a decline of 30.9% compared to the same period in the previous year.This business unit has also experienced a progressive recovery in sales since March.
Thus, the reductions in sales in the first, second and third quarters of 2020 compared to 2019 were 10.7%, 63.8% and 12.1%, respectively.
Innovation to cope with the new situation
The Azkoyen Group innovates to adapt to each situation and to the needs of customers and users and, as part of the initiatives, to adapt to the new scenario caused by the pandemic. At the beginning of May 2020, the Azkoyen Group unveiled 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, ensuring absolute safety and hygiene in the purchasing process. The new Distance Selection technology was launched on the different markets, with an excellent response. At the same time, the Group is offering its Payment Technologies, which allow remote payment with mobile devices.
In the same month, Coges introduced a solution based on its IoT platform, Nebular, which facilitates the distribution of masks in the workplace.This means that the user company can rely on its vending operator for the management and distribution of PPE to its employees.
Later, in June, the company launched the Cashlogy App, an application that allows business owners with Cashlogy machines to have full control of their business cash from their mobile phone. The application allows establishment owners to have real-time information of the cash and the status of the machines via their mobile device, saving time in their daily administration activities.
More recently, in September 2020, the Azkoyen Group launched a new contactless PMT Nebular Pay credit card reader in Germany, Italy and the UK. This product allows payments to be made without the need to press buttons or download new applications; all you have to do is bring any card or mobile phone close to the reader to make the payment.
Also, within the framework of the international pandemic caused by COVID-19, it is important to highlight that the access and time and attendance control solutions of the primion sub-group (such as prime Mobile / prime WebAccess & PSM 2200 / or prime Visit) are already equipped to meet the requirements of the “new normality” (tracking and counting of people, visitor management, automation of alarms, facilitation of teleworking and flexible timetables, etc.), both for existing customers and for new customers / segments.
Among other projects, the development of the Internet of Things (IoT) and digital payment solutions will be further promoted, which will add value to the Coges hardware, increase sales to new customers and also contribute to the generation of recurring revenues.
Key prospects
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, with a more limited effect on the Time&Security division. In October, the progressive recovery in monthly sales continued (10.3% reduction compared to the same month in 2019).
The solid financial position and the geographical and business diversification of the Group, as well as the measures adopted and the capacity to innovate and adapt its products to the “new normality”, lead us to expect that it will emerge even stronger in the future.