Quarterly Report • Nov 17, 2023
Quarterly Report
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INTERIM MANAGEMENT REPORT AT 30 SEPTEMBER 2023
THIS REPORT IS A TRANSLATION. THE ITALIAN VERSION PREVAILS
On 29 April 2022, the Shareholders' Meeting of the parent company Landi Renzo S.p.A. elected the Board of Directors and the Board of Statutory Auditors for the period 2022-2024. They will therefore remain in office until the Shareholders' Meeting called to approve the financial statements for the year ending 31 December 2024. On the same date, the Board of Directors confirmed Stefano Landi as Executive Chairman and appointed Sergio Iasi as Vice Chairman.
On 11 July 2023, following the resignation of Cristiano Musi, the Board of Directors co-opted Annalisa Stupenengo as Chief Executive Officer, also assigning her to the role of General Manager. On 23 October 2023, the Ordinary Shareholders' Meeting unanimously confirmed, without the application of the voting by list procedure, the appointment of Annalisa Stupenengo as the new member of the Board of Directors, whose term of office will come to an end when the financial statements as at 31 December 2024 are approved. The Board of Directors of Landi Renzo S.p.A., which met on that date, and subsequently the Shareholders' Meeting, confirmed Annalisa Stupenengo in her role as Chief Executive Officer and General Manager, conferring the same powers upon her as those conferred when she was coopted.
On the date this Interim Management Report was drafted, the company officers were as follows:
| Executive Chairman | Stefano Landi |
|---|---|
| Vice Chairman | Sergio Iasi |
| Chief Executive Officer | Annalisa Stupenengo |
| Director | Silvia Landi |
| Director | Massimo Lucchini |
| Director | Andrea Landi |
| Independent Director | Pamela Morassi |
| Independent Director | Sara Fornasiero (*) |
| Independent Director | Anna Maria Artoni |
| Board of Statutory Auditors | |
| Chairman of the Board of Statutory Auditors | Fabio Zucchetti |
| Statutory Auditor | Luca Aurelio Guarna |
| Statutory Auditor | Diana Rizzo |
| Alternate Auditor | Luca Zoani |
| Alternate Auditor | Gian Marco Amico di Meane |
| Control, Risks and Sustainability Committee | |
| Chairperson | Sara Fornasiero |
| Committee Member | Sergio Iasi |
| Committee Member | Anna Maria Artoni |
| Appointment and Remuneration Committee | |
| Chairperson | Pamela Morassi |
| Committee Member | Massimo Lucchini |
| Committee Member | Anna Maria Artoni |
| Committee for Transactions with Related Parties | |
| Committee Member | Sara Fornasiero |
| Committee Member | Pamela Morassi |
| Committee Member | Anna Maria Artoni |
(*) The Director also holds the office of Lead Independent Director
Landi Renzo S.p.A. Via Nobel 2/4 42025 Corte Tegge – Cavriago (RE) – Italy Tel. +39 0522 9433 Fax +39 0522 944044 Share capital: Euro 22,500,000 Tax ID and VAT Reg. No. IT00523300358
This report is available online at: www.landirenzogroup.com
| Description | Registered Office | % stake at 30 September 2023 Direct investment |
Indirect investment |
Notes |
|---|---|---|---|---|
| Parent Company | ||||
| Landi Renzo S.p.A. | Cavriago (Italy) | Parent Company | ||
| Companies consolidated using the line-by line method |
||||
| Landi International B.V. | Utrecht (The Netherlands) | 100.00% | ||
| Landi Renzo Polska Sp.Zo.O. | Warsaw (Poland) | 100.00% (1) | ||
| LR Indústria e Comércio Ltda | Rio de Janeiro (Brazil) | 99.99% | ||
| Beijing Landi Renzo Autogas System Co. Ltd | Beijing (China) | 100.00% | ||
| L.R. Pak (Pvt) Limited | Karachi (Pakistan) | 70.00% | ||
| Landi Renzo Pars Private Joint Stock Company | Tehran (Iran) | 99.99% | ||
| Landi Renzo RO S.r.l. | Bucharest (Romania) | 100.00% | ||
| Landi Renzo USA Corporation | Wilmington - DE (USA) | 100.00% | ||
| AEB America S.r.l. | Buenos Aires (Argentina) | 96.00% | ||
| Officine Lovato Private Limited | Mumbai (India) | 74.00% | ||
| OOO Landi Renzo RUS | Moscow (Russia) | 51.00% | ||
| SAFE&CEC S.r.l. | San Giovanni Persiceto (Italy) | 51.00% | ||
| SAFE S.p.A. | San Giovanni Persiceto (Italy) | 100.00% (2) | ||
| Idro Meccanica S.r.l. | Modena (Italy) | 100.00% (3) | ||
| IMW Industries LTD | Chilliwak (Canada) | 100.00% (2) | ||
| IMW Industries del Perù S.A.C. | Lima (Peru) | 100.00% (4) | ||
| IMW Industries LTDA | Cartagena (Colombia) | 100.00% (4) | ||
| IMW Energy Tech LTD | Suzhou (China) | 100.00% (4) | ||
| IMW Industries LTD Shanghai | Shanghai (China) | 100.00% (4) | ||
| Metatron S.p.A. | Castel Maggiore (Italy) | 100.00% | ||
| Metatron Control System (Shanghai) | Shanghai (China) | 84.00% (5) | ||
| (*) Associates and subsidiaries consolidated using the equity method |
||||
| Krishna Landi Renzo India Private Ltd Held | Gurugram - Haryana (India) | 51.00% | (6) | |
| Other minor companies | ||||
| Landi Renzo VE.CA. | Caracas (Venezuela) | 100.00% | (7) | |
| Lovato do Brasil Ind Com de Equipamentos para Gas Ltda |
Curitiba (Brazil) | 100.00% | (7) | |
| EFI Avtosanoat-Landi Renzo LLC | Navoiy Region (Uzbekistan) | 50.00% | (6) (7) | |
| Metatron Technologies India Plc | Mumbai (India) | 100.00% (5) (7) |
(1) Held indirectly through Landi International B.V.
(2) Held indirectly through SAFE&CEC S.r.l.
(3) Held indirectly through SAFE S.p.A.
(4) Held indirectly through IMW Industries LTD
(5) Held indirectly through Metatron S.p.A.
(6) Company joint venture
(7) Not consolidated as a result of their irrelevance
| (Thousands of Euro) | ||||
|---|---|---|---|---|
| ECONOMIC INDICATORS FOR THE THIRD QUARTER | Q3 2023 | Q3 2022 | Change | % |
| Revenue | 69,333 | 71,905 | -2,572 | -3.6% |
| Adjusted gross operating profit (EBITDA) (1) | 653 | 2,163 | -1,510 -69.8% | |
| Gross operating profit (EBITDA) | -810 | 1,762 | -2,572 | |
| Net operating profit (EBIT) | -5,070 | -2,579 | -2,491 | |
| Earnings before taxes (EBT) | -7,378 | -2,812 | -4,566 | |
| Net profit (loss) for the Group and minority interests | -7,677 | -3,274 | -4,403 | |
| Adjusted gross operating profit (EBITDA) / Revenue | 0.9% | 3.0% | ||
| Gross operating profit (EBITDA) / Revenue | -1.2% | 2.5% | ||
| Net profit (loss) for the Group and minority interests / Revenue | -11.1% | -4.6% | ||
| (Thousands of Euro) | ||||
|---|---|---|---|---|
| ECONOMIC INDICATORS OF THE FIRST NINE MONTHS | 30/09/2023 | 30/09/2022 | Change | % |
| Revenue | 221,138 | 216,351 | 4,787 | 2.2% |
| Adjusted gross operating profit (EBITDA) (1) | 4,573 | 8,704 | -4,131 -47.5% | |
| Gross operating profit (EBITDA) | -1,122 | 7,070 | -8,192 | |
| Net operating profit (EBIT) | -13,893 | -5,995 | -7,898 | |
| Earnings before taxes (EBT) | -22,996 | -8,873 | -14,123 | |
| Net profit (loss) for the Group and minority interests | -28,611 | -9,892 | -18,719 | |
| Adjusted gross operating profit (EBITDA) / Revenue | 2.1% | 4.0% | ||
| Gross operating profit (EBITDA) / Revenue | -0.5% | 3.3% | ||
| Net profit (loss) for the Group and minority interests / Revenue | -12.9% | -4.6% | ||
| (Thousands of Euro) | |||
|---|---|---|---|
| STATEMENT OF FINANCIAL POSITION | 30/09/2023 | 31/12/2022 | 30/09/2022 |
| Net fixed assets and other non-current assets | 144,582 | 155,331 | 155,856 |
| Operating capital (2) | 61,467 | 54,683 | 65,311 |
| Non-current liabilities (3) | -13,021 | -11,807 | -10,186 |
| NET INVESTED CAPITAL | 193,028 | 198,207 | 210,981 |
| Net financial position (4) | 114,427 | 92,323 | 100,270 |
| Net Financial Position - adjusted (5) | 100,816 | 77,242 | 85,395 |
| Shareholders' equity | 78,601 | 105,884 | 110,711 |
| BORROWINGS | 193,028 | 198,207 | 210,981 |
| (Thousands of Euro) | |||
|---|---|---|---|
| KEY INDICATORS | 30/09/2023 | 31/12/2022 | 30/09/2022 |
| Operating capital / Turnover (rolling 12 months) | 19.8% | 17.9% | 22.0% |
| Adjusted net financial position (5) / Shareholders' equity | 1.3 | 0.7 | 0.8 |
| IARKE |
|---|
| CERTIFIED |
| Adjusted net financial position (5) / Adjusted EBITDA (rolling 12 months) |
9.06 | 5.06 | 5.52 |
|---|---|---|---|
| Personnel (peak) | 969 | 951 | 977 |
| (Thousands of Euro) | |||
|---|---|---|---|
| CASH FLOWS | 30/09/2023 | 31/12/2022 | 30/09/2022 |
| Gross operational cash flow | -13,049 | 5,831 | -6,309 |
| Cash flow for investment activities | -6,423 | -39,020 | -6,260 |
| Gross FREE CASH FLOW | -19,472 | -33,189 | -12,569 |
| Variation in the consolidation area | 0 | 0 | -30,683 |
| Non-recurring expenditure for voluntary resignation incentives | -916 | -439 | 0 |
| Net FREE CASH FLOW | -20,388 | -33,628 | -43,252 |
| Share capital increase | 0 | 58,554 | 58,598 |
| Repayment of leases (IFRS 16) | -2,857 | -3,872 | -2,782 |
| Overall cash flow | -23,245 | 21,054 | 12,564 |
(1) The data does not include the recognition of non-recurring costs. As EBITDA is not identified as an accounting measure under IAS/IFRS, it may be calculated in different manners. EBITDA is a measure used by the company's management to monitor and evaluate its operating performance. Management believes that EBITDA is an important parameter to measure the company's operating performance, as it is not influenced by the effects of the different criteria for determining the tax base, the amount and characteristics of invested capital and relative amortisation and depreciation policies. The company's way of calculating EBITDA may not be the same as the methods adopted by other companies/groups, and therefore its value may not be comparable with the EBITDA calculated by others.
(2) This is calculated as the difference between Trade Receivables, Inventories, Contract Work in Progress, Other Current Assets and Trade Payables, Tax liabilities, Other Current Liabilities (net of the payable for the purchase of equity investments).
(3) These are calculated by totalling Deferred Tax Liabilities, Defined Benefit Plans for employees and Provisions for Risks and Charges.
(4) The net financial position is calculated in accordance with the provisions of Consob Communication DEM/6064293 of 28 July 2006 as amended (as most recently amended on 5 May 2021, to adopt the new ESMA recommendations 32-232-1138 of 4 March 2021).
(5) Not including the effects of the adoption of IFRS 16 - Leases, the fair value of derivative financial instruments and the commitment to the acquisition of equity investments.
Girefin S.p.A., Gireimm S.r.l., Itaca Gas S.r.l., GbD Green by Definition S.p.A. and E.M.A. 2021 S.r.l. agreed to the consensual termination of the special shares agreement by signing a termination agreement;
some amendments were also made to the shareholders' agreement by signing a dedicated amendment in order to reflect the above-mentioned termination of the special shares investment agreement.
In the third quarter of 2023, the global economy continued to slow due to strong and repeated global tensions and the continuation of restrictive monetary policies, particularly by the US Federal Reserve (Fed) and the European Central Bank (ECB), which kept interest rates high with a view to combatting continuing inflation.
As recently published by the ECB research office, short-term growth outlooks have deteriorated for the Eurozone, while in the medium term, the economy is expected to gradually resume moderate expansion with a recovery in both internal and external demand.
These economic scenarios have strengthened the awareness on the part of world governments of the immediate need to accelerate all support and strengthening policies revolving around the green revolution, the energy transition and sustainable mobility, not only as focal points to mitigate climate change and global warming, but also as a source for the structural improvement of economic and social conditions, thanks to the creation of new jobs.
In this regard, the growing importance of hydrogen, biomethane and natural gas as energy sources for the future and possible solutions that guarantee greater environmental sustainability combine well, also due to recent strategic decisions, with the Landi Renzo Group's green mission and with its desire to play a leading role in the coming years in the energy transition value chain, as it is has all of the means and potential to meet market needs and be a top-tier player at global level.
The Landi Renzo Group's entire business is aimed at offering on one hand technological solutions for the infrastructure required to exploit natural gas, biomethane and hydrogen, and on the other technologies for transforming mobility towards more sustainable models or models generally aimed at the decarbonisation of passenger and cargo transport. Indeed, all of the various forms of gas, biomethane and hydrogen represent energy sources that reduce emissions compared to conventional sources, with different levels of penetration depending on geographical area and application type.
Overall, sales as at 30 September 2023, driven by rising volumes in the "Green Transportation" segment, increased by 2.2% compared with the same period of the prior year, reaching Euro 221,138 thousand. Nonetheless, there was a decline in profitability, due specifically to a particularly negative first quarter, as well as a slowdown in the production of the Clean Tech Solutions segment in the third quarter. Overall, the second and third quarters showed encouraging signs of a recovery in margins (net of non-recurring items), especially in the Green Transportation segment.
The turnover of the "Green Transportation" segment rose overall by 9.8%, or Euro 13,776 thousand, due to the increased demand of OEM customers for passenger cars as well as Mid&Heavy Duty vehicles, despite the drop in volumes in the After Market sales channel, which continues to be impacted by geopolitical tensions in Eastern European countries and economic and financial difficulties in several countries in the Latam region, particularly Argentina and Brazil.
The considerable rise in sales in the OEM channel (+33.2%), historically less remunerative than the After Market segment, was also accompanied by a sharp improvement in industrial margins recorded starting from the second quarter.
Turnover was down in the "Clean Tech Solutions" segment by Euro 8,989 thousand (-12%), linked to the slowdown
in production, particularly during the third quarter, and due to the postponement to the following year of several important projects originally planned for 2023. Margins also declined compared with the same period of the previous year (-24.1%) due to a drop in revenue, rising installation costs and the higher incidence of direct costs that could not be reduced.
Overall, Group profitability in terms of Adjusted EBITDA amounted to Euro 4,573 thousand compared with Euro 8,704 thousand in the same period of 2022. This trend can be attributed to:
reduced volumes in the Clean Tech Solutions segment;
higher fixed costs necessary to strengthen the operating structure, particularly with effects on personnel costs. These negative effects were partially offset by the benefits generated in the second part of the half-year by the commercial agreement entered into for the revision of sale prices with the main Group customer operating in the OEM channel, resulting in a significant increase in industrial margins, as well as the increase in recent months in the OEM - Mid & Heavy Duty channel.
In the third quarter, the improvement trend in Adjusted EBITDA continued (positive at Euro 653 thousand), especially when compared with the first quarter of the year, which closed with a negative Adjusted EBITDA of Euro 961 thousand. This result was possible thanks to rising turnover and the updating of sales price lists.
The Group's consolidated net loss as at 30 September 2023 amounted to Euro 27,728 thousand, after accounting for:
Overall, the Adjusted Net Financial Position as at 30 September 2023 was Euro 100,816 thousand, compared with Euro 89,706 thousand as at 30 June 2023, with cash absorption over the third quarter of Euro 11,110 thousand, due especially to investments in tangible assets, extraordinary costs and financial expenses. Compared with the same figure recorded as at 31 December 2022, the Adjusted Net Financial Position deteriorated overall by Euro 23,574 thousand (Euro -77,242 thousand as at 31 December 2022).
The following table sets out the main economic indicators of the Group for the first nine months of 2023 compared with the same period in 2022.
| (Thousands of Euro) | ||||||||
|---|---|---|---|---|---|---|---|---|
| 30/09/2023 | 30/09/2022 | |||||||
| Green Transportat ion |
Clean Tech. Solutio ns |
Adjustme nts |
Landi Renzo Consolida ted |
Green Transportat ion |
Clean Tech. Solutio ns |
Adjustme nts |
Landi Renzo Consolida ted |
|
| Net sales outside the Group |
155,011 | 66,127 | 221,138 | 141,235 | 75,116 | 216,351 | ||
| Intersegment sales | 555 | 0 | -555 | 0 | 261 | 0 | -261 | 0 |
| Total Revenues from net sales and services |
155,566 | 66,127 | -555 | 221,138 | 141,496 | 75,116 | -261 | 216,351 |
| Other revenues and income |
1,092 | 204 | 1,296 | 417 | 165 | 582 |
| Operating costs | -155,333 | -63,083 | 555 | -217,861 | -137,491 | -70,999 | 261 | -208,229 |
|---|---|---|---|---|---|---|---|---|
| Adjusted gross operating profit |
1,325 | 3,248 | 0 | 4,573 | 4,422 | 4,282 | 0 | 8,704 |
| Non-recurring costs | -4,575 | -1,120 | -5,695 | -1,410 | -224 | -1,634 | ||
| Gross operating profit | -3,250 | 2,128 | 0 | -1,122 | 3,012 | 4,058 | 0 | 7,070 |
| Amortisation, depreciation and impairment |
-10,598 | -2,173 | -12,771 | -10,949 | -2,116 | -13,065 | ||
| Net operating profit | -13,848 | -45 | 0 | -13,893 | -7,937 | 1,942 | 0 | -5,995 |
| Financial income | 891 | 988 | ||||||
| Financial expenses | -8,341 | -5,484 | ||||||
| Exchange gains (losses) | -1,614 | 1,128 | ||||||
| Income (expenses) from | ||||||||
| equity investments Income (expenses) from |
-173 | -288 | ||||||
| joint ventures measured using the equity method |
134 | 778 | ||||||
| Profit (loss) before tax | -22,996 | -8,873 | ||||||
| Taxes | -5,615 | -1,019 | ||||||
| Net profit (loss) for the | ||||||||
| Group and minority interests, including: |
-28,611 | -9,892 | ||||||
| Minority interests | -883 | 223 | ||||||
| Net profit (loss) for the | ||||||||
| Group | -27,728 | -10,115 |
Consolidated revenues for the first nine months of 2023 totalled Euro 221,138 thousand, increasing by Euro 4,787 thousand (+2.2%) compared with the same period of the previous year.
Costs of raw materials, consumables and goods and changes in inventories increased overall from Euro 132,925 thousand as at 30 September 2022 to Euro 138,294 thousand as at 30 September 2023, basically aligned with the overall increase in turnover, thanks to the results obtained in the negotiation of procurement agreements.
The costs of services and use of third-party assets amounted to Euro 41,579 thousand, compared with Euro 39,455 thousand in the first nine months of the previous year, and are inclusive of non-recurring expenses of Euro 1,904 thousand, primarily relating to strategic consultancy.
Personnel costs rose from Euro 34,289 thousand as at 30 September 2022 to Euro 37,373 thousand as at 30 September 2023. This change was caused by the costs incurred to strengthen the Group's managerial structure, in addition to outlays for voluntary retirement incentives incurred during the first nine months of 2023 (totalling Euro 916 thousand).
The Group heavily invested in highly specialised resources to support the increasing research and development performed for new products and solutions, particularly for the Heavy Duty market and hydrogen and biomethane mobility, capitalised when they meet the requirements laid out in IAS 38.
The Group had a total of 969 employees, including 382 relating to the SAFE&CEC Group.
Allocations, write-downs and other operating expenses totalled Euro 6,310 thousand (Euro 3,194 thousand as at 30 September 2022), up due to:
the provision for bad debts recognised by the management after updating its assessments concerning the recoverability of the Group's receivables due from customers on the basis of information as at 30 September 2023 (Euro 880 thousand).
The adjusted Gross Operating Profit (EBITDA) was Euro 4,573 thousand as at 30 September 2023, compared with Euro 8,704 thousand in the same period of the previous year, while the Gross Operating Loss (EBITDA) was Euro 1,122 thousand (profit of Euro 7,070 thousand as at 30 September 2022), inclusive of non-recurring costs of Euro 5,695 thousand (Euro 1,634 thousand as at 30 September 2022).
| (Thousands of Euro) | |||
|---|---|---|---|
| NON-RECURRING COSTS | 30/09/2023 | 30/09/2022 | Change |
| Strategic consultancy | -1,576 | -722 | -854 |
| Cyber attack consultancy | -138 | 0 | -138 |
| Extraordinary accruals - Ukraine and Russia | 0 | -454 | 454 |
| Extraordinary accruals - warranties | -1,908 | 0 | -1,908 |
| Customer penalties for delivery delays | -130 | -323 | 193 |
| Non-recurring expenditure for voluntary resignation incentives | -916 | 0 | -916 |
| Other extraordinary costs for structural optimisation | -715 | 0 | -715 |
| Other extraordinary costs | -312 | -135 | -177 |
| Total | -5,695 | -1,634 | -4,061 |
During the third quarter, structural optimisation and improvement activities continued, also by making recourse to consultancy from external partners, the digitalisation of internal processes in a number of areas of the company and the integration of the newly acquired companies in order to reduce both fixed and variable costs.
The Net Operating Profit (EBIT) for the period was negative at Euro 13,893 thousand (negative and equal to Euro 5,995 thousand at 30 September 2022), after accounting for amortisation, depreciation and impairment of Euro 12,771 thousand (Euro 13,065 thousand at 30 September 2022), of which Euro 2,574 thousand due to the application of IFRS - 16 Leases (Euro 2,626 thousand at 30 September 2022).
Total financial expenses (interest income, interest charges and exchange rate differences) amounted to Euro 9,064 thousand (Euro 3,368 thousand as at 30 September 2022) and include negative exchange effects of Euro 1,614 thousand (positive and equal to Euro 1,128 thousand as at 30 September 2022).
Financial expenses alone, amounting to Euro 8,341 thousand, rose compared with the same period of the previous year (Euro 5,484 thousand), as a direct consequence of rising interest rates and conditions on bank lending.
Income from joint ventures refers to the valuation at equity of the Indian joint venture Krishna Landi Renzo India Private Ltd Held.
The first nine months of 2023 closed with negative earnings before taxes (EBT) of Euro 22,996 thousand (negative and equal to Euro 8,873 thousand at 30 September 2022).
The net result of the Group and minority interests as at 30 September 2023 showed a loss of Euro 28,611 thousand (inclusive of a write-down of deferred tax assets of Euro 5,860 thousand), compared with a Group and minority interest loss of Euro 9,892 thousand as at 30 September 2022.
The management has identified two operating segments ("Cash Generating Units" or "CGUs") in which the Landi Renzo Group operates, or:
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| Distribution of revenues by segment | Q3 2023 | % of revenues |
Q3 2022 | % of revenues |
Changes | % |
| Green Transportation | 50,751 | 73.2% | 47,387 | 65.9% | 3,364 | 7.1% |
| Clean Tech Solutions | 18,582 | 26.8% | 24,518 | 34.1% | -5,936 | -24.2% |
| Total revenues | 69,333 | 100.0% | 71,905 | 100.0% | -2,572 | -3.6% |
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| Distribution of revenues by segment | 30/09/2023 | % of revenues |
30/09/2022 | % of revenues |
Changes | % |
| Green Transportation | 155,011 | 70.1% | 141,235 | 65.3% | 13,776 | 9.8% |
| Clean Tech Solutions | 66,127 | 29.9% | 75,116 | 34.7% | -8,989 | -12.0% |
| Total revenues | 221,138 | 100.0% | 216,351 | 100.0% | 4,787 | 2.2% |
As at 30 September 2023, Green Transportation segment revenues amounted to Euro 155,011 thousand, while those of the Clean Tech Solutions segment totalled Euro 66,127 thousand.
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| Geographical distribution of revenues | Q3 2023 | % of revenues |
Q3 2022 | % of revenues |
Changes | % |
| Italy | 8,633 | 12.5% | 8,347 | 11.6% | 286 | 3.4% |
| Europe (excluding Italy) | 38,827 | 56.0% | 31,864 | 44.3% | 6,963 | 21.9% |
| America | 9,870 | 14.2% | 14,821 | 20.6% | -4,951 | -33.4% |
| Asia and Rest of the World | 12,003 | 17.3% | 16,873 | 23.5% | -4,870 | -28.9% |
| Total | 69,333 | 100.0% | 71,905 | 100.0% | -2,572 | -3.6% |
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| Geographical distribution of revenues | At 30/09/2023 |
% of revenues |
At 30/09/2022 |
% of revenues |
Changes | % |
| Italy | 23,961 | 10.8% | 25,469 | 11.8% | -1,508 | -5.9% |
| Europe (excluding Italy) | 122,333 | 55.3% | 96,201 | 44.5% | 26,132 | 27.2% |
| America | 38,845 | 17.6% | 45,055 | 20.8% | -6,210 | -13.8% |
| Asia and Rest of the World | 35,999 | 16.3% | 49,626 | 22.9% | -13,627 | -27.5% |
| Total | 221,138 | 100.0% | 216,351 | 100.0% | 4,787 | 2.2% |
Regarding the geographical distribution of revenues, during the first nine months of 2023 the Group realised 89.2% (88.2% at 30 September 2022) of its consolidated revenues abroad (55.3% in Europe and 33.9% outside Europe).
| (Thousands of Euro) | ||||
|---|---|---|---|---|
| GREEN TRANSPORTATION | 30/09/2023 | 30/09/2022 | Changes | % |
| Net sales outside the Group | 155,011 | 141,235 | 13,776 | 9.8% |
| Intersegment sales | 555 | 261 | 294 | 112.6% |
| Total Revenues from net sales and services | 155,566 | 141,496 | 14,070 | 9.9% |
| Other revenues and income | 1,092 | 417 | 675 | 161.9% |
| Operating costs | -155,333 | -137,491 | -17,842 | 13.0% |
| Adjusted gross operating profit (EBITDA) | 1,325 | 4,422 | -3,097 | -70.0% |
| Non-recurring costs | -4,575 | -1,410 | -3,165 | 224.5% |
| -3,250 | 3,012 | -6,262 | |
|---|---|---|---|
| -10,598 | -10,949 | 351 | -3.2% |
| -13,848 | -7,937 | -5,911 | 74.5% |
| 0.9% | 3.1% | ||
| -2.1% | 2.1% | ||
Revenues from sales in the Green Transportation segment as at 30 September 2023 amounted to Euro 155,011 thousand, up by Euro 13,776 thousand (+9.8%) compared with 30 September 2022.
The significant OEM channel sales performance (+33.2% compared with 30 September 2022), especially with reference to a leading European customer, more than offset the downturn in sales in the After Market channel (- 16.1% compared with 30 September 2022), influenced by political and economic difficulties in the reference markets, especially in the Latam area and Eastern Europe.
However, as already highlighted, starting from the third quarter of 2023 there was a clear trend reversal in terms of profit margins. Indeed, compared with the first half of 2023, which closed with an Adjusted Gross Operating Profit (EBITDA) of Euro 159 thousand, the first nine months of 2023 closed with a sharp improvement, with an Adjusted Gross Operating Profit (EBITDA) of Euro 1,325 thousand, including Euro 1,166 thousand realised just in the third quarter of 2023.
Group sales in the OEM channel amounted to Euro 98.7 million, up by Euro 24.6 million compared with 30 September 2022. Aside from consistent orders from a top OEM customer which is basing the development of its "green" product line on LPG bifuel engines, the increase in sales of components in the OEM - Mid & Heavy Duty channel has been consolidated.
Sales in the After Market channel, amounting to Euro 56.3 million (compared with Euro 67.1 million as at 30 September 2022), primarily relate to orders from distributors and authorised installers, both domestic and foreign, and reflect the slowdown in sales in several Latam and Eastern European markets.
A breakdown of revenues from sales in the Green Transportation segment by geographical area is provided below.
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| GREEN TRANSPORTATION | At 30/09/2023 | % of revenues |
At 30/09/2022 | % of revenues |
Changes | % |
| Italy | 18,112 | 11.7% | 18,654 | 13.2% | -542 | -2.9% |
| Europe (excluding Italy) | 91,779 | 59.2% | 69,074 | 48.9% | 22,705 | 32.9% |
| America | 13,310 | 8.6% | 22,227 | 15.7% | -8,917 | -40.1% |
| Asia and Rest of the World | 31,810 | 20.5% | 31,280 | 22.1% | 530 | 1.7% |
| Total | 155,011 | 100.0% | 141,235 | 100.0% | 13,776 | 9.8% |
Group sales in the Italian market as at 30 September 2023 were substantially aligned with the same period of the previous year.
Third-Quarter Interim Management Report 2023_________________________________________________________16
The rest of Europe represents 59.2% of total sales and is up 32.9% compared with the same period of 2022 (48.9%). The increase was driven essentially by sales to a leading OEM customer.
Sales in the first nine months of 2023 on the American continent (8.6% of total sales), amounting to Euro 13,310 thousand (Euro 22,227 thousand at 30 September 2022), marked a decrease of 40.1% thanks to the persistence of the delicate macroeconomic situation of South American countries, particularly Brazil and Argentina.
The Asian and Rest of the World markets, with sales of Euro 31,810, amounting to 20.5% of total revenue, were basically aligned with the previous period.
| (Thousands of Euro) | ||||||||
|---|---|---|---|---|---|---|---|---|
| GREEN TRANSPORTATION | Q3 2023 |
Q2 2023 |
Q1 | 2023 30/09/2023 | Q3 2022 |
Q2 2022 |
Q1 | 2022 30/09/2022 |
| Revenue | 50,751 56,206 | 48,054 | 155,011 47,387 47,552 46,296 | 141,235 | ||||
| Adjusted gross operating profit (EBITDA) | 1,166 | 2,680 | -2,521 | 1,325 | 1,107 | 1,988 | 1,327 | 4,422 |
| % of revenues | 2.3% | 4.8% | -5.2% | 0.9% | 2.3% | 4.2% | 2.9% | 3.1% |
| Gross operating profit (EBITDA) | 42 | 115 | -3,407 | -3,250 | 820 | 1,645 | 547 | 3,012 |
| % of revenues | 0.1% | 0.2% | -7.1% | -2.1% | 1.7% | 3.5% | 1.2% | 2.1% |
| Net operating profit (EBIT) | -3,485 | -3,458 | -6,905 | -13,848 | -2,809 | -2,076 | -3,052 | -7,937 |
| % of revenues | -6.9% | -6.2% -14.4% | -8.9% | -5.9% | -4.4% | -6.6% | -5.6% | |
| Change in Revenues compared with the previous year | 3,364 | 8,654 | 1,758 | 13,776 | ||||
| Change % | 7.1% | 18.2% | 3.8% | 9.8% | ||||
In the first nine months of 2023, the adjusted Gross Operating Profit (EBITDA) of the Green Transportation segment, net of non-recurring costs of Euro 4,575 thousand, was positive at Euro 1,325 thousand, equivalent to 0.9% of revenues, down compared with the same period of the previous year (Euro 4,422 thousand, equal to 3.1% of revenues and net of non-recurring costs of Euro 1,410 thousand).
Despite the turnover growth as at 30 September 2023 compared with the same period of the previous year, overall margins declined primarily as a result of the different sales mix. In particular, against significant growth in sales in the OEM channel, characterised by limited operating profitability, sales decreased in the more profitable After Market channel, which maintained the same margins as last year. Results as at 30 September 2023 were influenced by the growth in fixed costs required to strengthen the structure.
The Gross Operating Loss (EBITDA) of the Green Transportation segment, amounting to Euro 3,250 thousand, includes non-recurring costs of Euro 4,575 thousand.
| CLEAN TECH SOLUTIONS | 30/09/2023 | 30/09/2022 | Changes | % |
|---|---|---|---|---|
| Third-Quarter Interim Management Report 2023_________17 |
| Net sales outside the Group | 66,127 | 75,116 | -8,989 | -12.0% |
|---|---|---|---|---|
| Intersegment sales | 0 | 0 | 0 | 0.0% |
| Total Revenues from net sales and services | 66,127 | 75,116 | -8,989 | -12.0% |
| Other revenues and income | 204 | 165 | 39 | 23.6% |
| Operating costs | -63,083 | -70,999 | 7,916 | -11.1% |
| Adjusted gross operating profit (EBITDA) | 3,248 | 4,282 | -1,034 | -24.1% |
| Non-recurring costs | -1,120 | -224 | -896 | 400.0% |
| Gross operating profit (EBITDA) | 2,128 | 4,058 | -1,930 | -47.6% |
| Amortisation, depreciation and impairment | -2,173 | -2,116 | -57 | 2.7% |
| Net operating profit (EBIT) | -45 | 1,942 | -1,987 | -102.3% |
| Adjusted EBITDA margin | 4.9% | 5.7% | ||
| EBITDA margin | 3.2% | 5.4% |
The Clean Tech Solutions segment generated revenues of Euro 66,127 thousand compared with Euro 75,116 thousand in the same period of the prior year. This trend is linked to the slowdown in production, particularly during the third quarter, due to the postponement to the following year of several important projects originally planned for 2023.
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| CLEAN TECH SOLUTIONS | At 30/09/2023 | % of revenues |
At 30/09/2022 | % of revenues |
Changes | % |
| Italy | 5,849 | 8.9% | 6,815 | 9.1% | -966 | -14.2% |
| Europe (excluding Italy) | 30,554 | 46.2% | 27,127 | 36.1% | 3,427 | 12.6% |
| America | 25,535 | 38.6% | 22,828 | 30.4% | 2,707 | 11.9% |
| Asia and Rest of the World | 4,189 | 6.3% | 18,346 | 24.4% | -14,157 | -77.2% |
| Total | 66,127 | 100.0% | 75,116 | 100.0% | -8,989 | -12.0% |
Given its extreme variability depending on the projects completed during the period, revenue by geographical area is not a significant indicator for the Clean Tech Solutions segment. Nonetheless, significant results were achieved in the America and Europe areas, primarily due to important biogas and hydrogen solutions projects.
| (Thousands of Euro) | ||||||||
|---|---|---|---|---|---|---|---|---|
| CLEAN TECH SOLUTIONS | Q3 2023 |
Q2 2023 |
Q1 | 2023 30/09/2023 | Q3 2022 |
Q2 2022 |
Q1 | 2022 30/09/2022 |
| Revenue | 18,582 | 24,431 23,114 | 66,127 24,518 29,976 20,622 | 75,116 | ||||
| Adjusted gross operating profit (EBITDA) | -513 | 2,201 | 1,560 | 3,248 | 1,056 | 1,885 | 1,341 | 4,282 |
| % of revenues | -2.8% | 9.0% | 6.7% | 4.9% | 4.3% | 6.3% | 6.5% | 5.7% |
| Gross operating profit (EBITDA) | -852 | 1,664 | 1,316 | 2,128 | 942 | 1,834 | 1,282 | 4,058 |
| % of revenues | -4.6% | 6.8% | 5.7% | 3.2% | 3.8% | 6.1% | 6.2% | 5.4% |
| Net operating profit (EBIT) | -1,585 | 919 | 621 | -45 | 230 | 1,112 | 600 | 1,942 |
|---|---|---|---|---|---|---|---|---|
| % of revenues | -8.5% | 3.8% | 2.7% | -0.1% | 0.9% | 3.7% | 2.9% | 2.6% |
| Change in Revenues compared with the previous year | -5,936 | -5,545 | 2,492 | -8,989 | ||||
| Change % | -24.2% -18.5% | 12.1% | -12.0% | |||||
Adjusted EBITDA came to Euro 3,248 thousand in the Clean Tech Solutions segment, compared with Euro 4,282 thousand in the same period of the prior year. This trend was caused by the drop in revenue, rising installation costs and the higher incidence of direct costs that could not be reduced.
With a view to improving the operations management of the Clean Tech Solutions segment, already during the first half of the year a "management" consultancy agreement was signed to support and optimise the management of operations, relating to production as well as purchasing. The costs incurred during the period, amounting to Euro 990 thousand and included in EBITDA, have been classified as "non-recurring" costs.
| (Thousands of Euro) | |||
|---|---|---|---|
| Statement of Financial Position | 30/09/2023 | 31/12/2022 | 30/09/2022 |
| Trade receivables | 69,219 | 73,559 | 61,552 |
| Inventories and contract work in progress | 95,034 | 97,109 | 110,469 |
| Trade payables | -94,201 | -98,033 | -90,045 |
| Other net current assets (liabilities) (*) | -8,585 | -17,952 | -16,665 |
| Net operating capital | 61,467 | 54,683 | 65,311 |
| Tangible fixed assets | 13,396 | 14,015 | 13,763 |
| Intangible assets | 105,238 | 108,536 | 109,711 |
| Right-of-use assets | 12,472 | 13,618 | 14,756 |
| Other non-current assets | 13,476 | 19,162 | 17,626 |
| Fixed capital | 144,582 | 155,331 | 155,856 |
| TFR (employee severance pay), other provisions and others | -13,021 | -11,807 | -10,186 |
| Net invested capital | 193,028 | 198,207 | 210,981 |
| Financed by: | |||
| Net Financial Position | 114,427 | 92,323 | 100,270 |
| Group shareholders' equity | 72,781 | 99,917 | 104,187 |
| Minority interests | 5,820 | 5,967 | 6,524 |
| Borrowings | 193,028 | 198,207 | 210,981 |
| Ratios | 30/09/2023 | 31/12/2022 | 30/09/2022 |
| Net operating capital | 61,467 | 54,683 | 65,311 |
| Net operating capital/Turnover (rolling) | 19.8% | 17.9% | 22.0% |
| Net invested capital | 193,028 | 198,207 | 210,981 |
| ARI |
|---|
| CERTIFIED |
| Net capital employed/Turnover (rolling) | 62.1% | 64.7% | 71.0% |
|---|---|---|---|
Net operating capital at the end of the period stood at Euro 61,467 thousand. This is an increase compared with the same figure at 31 December 2022 but a decrease compared with 30 September 2022.
In terms of percentages on turnover, there was an increase in this figure, from 17.9% as at 31 December 2022 to the current 19.8% (22.0% as at 30 September 2022). With reference to 31 December 2022, this growth was primarily due to the reduction in current liabilities, linked to the decline in advance payments on projects in the Clean Tech Solutions segment.
Trade receivables stood at Euro 69,219 thousand (of which Euro 18,237 thousand relating to the Clean Tech Solutions segment), down compared with 31 December 2022 (Euro 73,559 thousand, of which Euro 21,606 thousand relating to the Clean Tech Solutions segment). At 30 September 2023, derecognised receivables disposed through maturity factoring stood at Euro 17.9 million (Euro 16.1 million at 31 December 2022).
Trade payables are down by Euro 3,832 thousand from Euro 98,033 thousand as at 31 December 2022 to Euro 94,201 thousand as at 30 September 2023 (of which Euro 23,065 thousand relating to the Clean Tech Solutions segment).
Fixed capital, amounting to Euro 144,582 thousand and inclusive of Euro 12,472 thousand for right-of-use assets recognised pursuant to IFRS 16 – Leases, is down compared with the figure as at 31 December 2022 by Euro 10,749 thousand, mainly due to the write-down recognised in the first half of the year on deferred tax assets recognised on prior year losses.
As at 30 September 2023, TFR (employee severance indemnity) and other provisions totalled Euro 13,021 thousand, up by Euro 1,214 thousand compared with 31 December 2022 (Euro 11,807 thousand) and by Euro 2,835 thousand compared with the same period of the prior year (Euro 10,186 thousand). This increase is primarily linked to nonrecurring provisions recognised during the period for warranties (Euro 1,908 thousand) and other risks (Euro 600 thousand).
Net invested capital (Euro 193,028 thousand, equal to 62.1% of rolling turnover) is down compared with 31 December 2022 (Euro 198,207 thousand, equal to 64.7% of turnover) following the increase in operating capital, more than offset by the reduction in fixed capital due to the above-mentioned write-down of deferred tax assets (classified in other non-current assets) and the increase in TFR (employee severance indemnity) and other provisions.
| (Thousands of Euro) | |||
|---|---|---|---|
| 30/09/2023 | 31/12/2022 | 30/09/2022 | |
| Cash and cash equivalents | 21,198 | 62,968 | 59,268 |
| Current financial assets and derivative instruments | 20,253 | 412 | 0 |
| Bank financing and short-term loans | -38,060 | -103,629 | -34,279 |
| Current right-of-use liabilities | -2,872 | -3,196 | -3,252 |
| Other current financial liabilities | -5,861 | -3,956 | -2,435 |
| Net short term indebtedness | -5,342 | -47,401 | 19,302 |
| Non-current bank loans | -77,764 | -8,169 | -80,062 |
| Non-current right-of-use liabilities | -10,547 | -11,314 | -12,405 |
|---|---|---|---|
| Other non-current financial liabilities | -20,578 | -24,456 | -27,887 |
| Non-current assets for derivative financial instruments | 422 | 103 | 1,422 |
| Net medium-long term indebtedness | -108,467 | -43,836 | -118,932 |
| Commitments for the purchase of equity investments | -618 | -1,086 | -640 |
| Net Financial Position | -114,427 | -92,323 | -100,270 |
| Net Financial Position – adjusted (*) | -100,816 | -77,242 | -85,395 |
| - of which Green Transportation | -85,908 | -68,511 | -66,401 |
| - of which Clean Tech Solutions | -14,908 | -8,731 | -18,994 |
(*) Not including the effects of the adoption of IFRS 16 - Leases, the fair value of derivative financial instruments and the payable for put/call options for the acquisition of equity investments
The Net Financial Position as at 30 September 2023 is equal to Euro 114,427 thousand (Euro 92,323 thousand as at 31 December 2022), of which Euro 13,419 thousand due to the application of IFRS 16 - Leases, a positive Euro 426 thousand due to the fair value of derivative financial instruments and Euro 618 thousand relating to the payable for put/call options relating to Metatron Control System shares.
The adjusted Net Financial Position, so net of these amounts, would have amounted to Euro 100,816 thousand, of which Euro 85,908 thousand linked to the Green Transportation segment and Euro 14,908 thousand to the Clean Tech Solutions segment.
The following table illustrates the trend in total cash flow:
| 30/09/2023 | 31/12/2022 | 30/09/2022 |
|---|---|---|
| -13,049 | 5,831 | -6,309 |
| -6,423 | -39,020 | -6,260 |
| -19,472 | -33,189 | -12,569 |
| 0 | 0 | -30,683 |
| -916 | -439 | 0 |
| -20,388 | -33,628 | -43,252 |
| 0 | 58,554 | 58,598 |
| -2,857 | -3,872 | -2,782 |
| -23,245 | 21,054 | 12,564 |
(*) net of expenses incurred
In the first nine months of 2023, cash absorption amounted to Euro 23,245 thousand (cash generation of Euro 12,564 thousand in the first nine months of 2022), primarily linked to operations management (Euro -13,965 thousand) inclusive of non-recurring expenditure for voluntary resignation incentives - and investment activities and cash outflows for leases (overall a negative Euro 9,280 thousand). The significant reduction compared with the same period of the previous year can be attributed to the deteriorating profit from ordinary operations already described above as well as positive cash flows deriving from the share capital increase concluded in the third quarter of 2022 (Euro 58,598 thousand, net of expenses incurred).
Investments in property, plant, machinery and other equipment totalled Euro 2,839 thousand (Euro 1,850 thousand as at 30 September 2022) and refer to the investments made by the Group in production plants and moulds connected to the launch of new products, particularly new generation electronic and mechanical products.
The increase in intangible assets amounted to Euro 3,873 thousand (Euro 4,531 thousand at 30 September 2022) and mainly referred to the capitalisation of costs of development projects relating to:
In the first nine months of 2023, Landi Renzo S.p.A. generated revenues of Euro 104,469 thousand compared with Euro 101,321 thousand in the same period of the prior year. The EBITDA totalled Euro -2,500 thousand (inclusive of Euro 3,489 thousand in non-recurring charges), compared with Euro 3,691 thousand at 30 September 2022 (of which Euro 1,268 thousand in non-recurring charges), while the net financial position was Euro -83,595 thousand compared with Euro -68,453 thousand as at 31 December 2022.
At the end of the period, the Parent Company's workforce numbered 285 employees, basically in line with 31 December 2022 (289).
During the quarter just ended, the further significant attenuation of the effects of the pandemic continued. In any event, the management continued to monitor the pandemic in order to evaluate any adjustments to prevention measures, with a view to protecting the health of employees and associates as well as guaranteeing full operating activities. In this regard, during the first nine months of 2023 there were no slowdowns or interruptions of activities.
The management believes that the continuation of the Russia-Ukraine conflict does not substantially impact the assumptions and therefore the implementation of the Group's future plans, by virtue of the diversification of the Landi Renzo Group's business in terms of its presence in international markets worldwide and the products offered and technologies developed.
Please note that already starting in 2022, prudential write-downs were recognised on receivables due from Russian or Ukrainian customers, also taking into account the specific situation of each of them.
The Landi Renzo Group deals with related parties at conditions considered to be arm's length on the markets in question, taking account of the characteristics of the goods and the services supplied.
Transactions with related parties include:
In accordance with Consob Regulation 17221/2010, and pursuant to Article 2391-bis of the Italian Civil Code, the Board of Directors has adopted the specific procedure for transactions with related parties. The new procedures, adapted to Consob resolution no. 21624 of 10/12/2020, are published on the Company's website.
of the Committee for Transactions with Related Parties, authorised the non-recourse assignment to Girefin S.p.A. (related party pursuant to the Related Party Procedure, as Girefin S.p.A., along with Gireimm S.r.l., companies owned by the Landi Trust, indirectly hold control over the Company through GBD Green by Definition S.p.A.) of residual receivables amounting to Euro 1,710 thousands still owed to the Company from AVL Italia S.r.l. to which the Company previously sold a business unit. This assignment of receivables will take place for an equivalent value of Euro 1,575 thousands (sum rounded down) and therefore with a discount of 4.50% to be paid in a lump sum on assignment with respect to the timing agreed upon at the time of the sale of the business unit, which called for this residual amount of Euro 1,710 thousands to be paid in three instalments in the course of the next 3 years. The assignment transaction was evaluated as a "related party transaction of less significance" pursuant to the Procedure for the management of related party transactions, most recently updated by the Company on 9 February 2022, in compliance with the requirements laid out in Consob Regulation no. 17221 of 27 March 2010 as amended. The prior non-binding favourable opinion on the interest, cost-effectiveness and substantial fairness of the relative conditions was provided by the Company's Committee for Transactions with Related Parties, consisting of three independent directors.
Uncertainties surrounding the geopolitical and macroeconomic context continue to influence market trend visibility in the remaining months of 2023.
In the Green Transportation segment, a slight increase in revenues is expected in the final quarter of 2023 compared with the third quarter, driven by sales in the OEM channel. The increase in profitability indicators in the third quarter makes it possible to forecast an improvement in Adjusted EBITDA in the fourth quarter compared to what was recorded in the first part of the year.
In the "Clean Tech Solutions" segment, the postponement to the subsequent year of several important projects expected for 2023, not previously planned, significantly impacted third quarter performance, in terms of the reduction in turnover as well as profitability (Adjusted EBITDA). However, in the fourth quarter of 2023, turnover is expected to increase, thus improving profitability over the third quarter of this year.
Cavriago, 13/11/2023
Chief Executive Officer Annalisa Stupenengo
The Interim Management Report as at 30 September 2023, which has not been audited, has been prepared in compliance with art. 154 of Italian Legislative Decree no. 58 of 24 February 1998, as amended, and with the (Issuers' Regulations) issued by Consob (Italian Securities and Exchange Commission). Therefore, the provisions of the IAS on infra-annual financial information (IAS 34 – Interim Financial Reporting) were not adopted.
The Interim Management Report as at 30 September 2023 has been prepared in accordance with the IAS/IFRS. To this end, the data of the separate financial statements of the Italian and foreign subsidiaries have been reclassified and adjusted accordingly.
The line-by-line method is used for consolidation, which consists of stating all the items of assets and liabilities in their entirety, excluding the joint venture Krishna Landi Renzo India Private LTD Held, consolidated using the equity method.
Except for what is laid out below, the accounting standards, and the valuation and consolidation criteria used in preparing the Interim Management Report as at 30 September 2023 are not different to those used in drawing up the consolidated financial statements closed at 31 December 2022, which should be referred to for further information.
As well as the interim values as at 30 September 2023 and 2022, the financial data for the year ended on 31 December 2022 is shown for the purpose of comparison.
Already starting from the financial statements closed as at 31 December 2022, in order to allow for greater comparability and understanding of Group cost trends, some costs were reclassified between the items "Cost of raw materials, consumables and goods and change in inventories" and "Personnel costs", classifications also applied in the course of 2023. For comparative purposes, the profit and loss figures as at 30 September 2022 were restated accordingly.
The functional and reporting currency is the Euro. Figures in the schedules and tables herein are in thousands of Euro.
The accounting standards and calculation methods used for the preparation of this Interim Management Report were not modified compared to those used to prepare the consolidated financial statements at 31 December 2022. Please note that the valuation and measurement of the accounting items shown are based on International Accounting Standards and the relative interpretations currently in force, and that no new accounting standards were applied early.
The preparation of the Interim Management Report requires the directors to apply accounting standards and methods that are sometimes based on difficult and subjective assessments and estimates derived from past experience and based on assumptions that are considered reasonable and realistic given the circumstances. Application of these estimates and assumptions affects the amounts presented in the financial statements, such as the Consolidated Statement of Financial Position, the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Shareholders' Equity and the Consolidated Cash Flow Statement, and in disclosures provided. Estimates are used in recognizing goodwill, impairment of fixed assets, development expenditure, taxes, provisions for bad debts and inventories write-down, employee benefits and other provisions. The estimates and assumptions are reviewed periodically and the effects of all changes are normally reflected immediately on the income statement.
However, some valuation processes, especially the more complex ones such as establishing any loss in value of noncurrent assets, are normally carried out to a fuller extent only during the preparation of the annual financial statements, when all the necessary information is available, except for those cases in which there are impairment indicators that require an immediate assessment of possible losses in value.
The Group performs activities that do not on the whole present significant seasonal or cyclical variations in total sales over the year, except for the signing of new supply contracts for the OEM channel which may involve planned and differing delivery schedules in the individual quarters.
The policies and principles of the Landi Renzo Group for the identification, management and control of risks related to the activity are described in detail in the Consolidated Financial Statements as at 31 December 2022, to which you may refer for a more complete description of such aspects.
The scope of consolidation includes the Parent Company Landi Renzo S.p.A. and the companies in which it holds a direct or indirect controlling stake according to IFRS. The consolidation area has not changed compared with 31 December 2022.
Under Article 3 of Consob Resolution no. 18079 of 20 January 2012, Landi Renzo S.p.A. decided to adopt the optout system envisaged by Articles 70, par. 8, and 71, par. 1-bis of Consob Regulation no. 11971/99 (as amended). It is therefore able to opt out from the disclosure of the information documents listed in Annex 3B to the Consob Regulation, on occasion of significant mergers, demergers, increases in capital through contribution of goods in kind, acquisitions and disposals.
| (Thousands of Euro) | |||
|---|---|---|---|
| ASSETS | 30/09/2023 | 31/12/2022 | 30/09/2022 |
| Non-current assets | |||
| Land, property, plant, machinery and other equipment | 13,396 | 14,015 | 13,763 |
| Development costs | 9,519 | 11,141 | 11,047 |
| Goodwill | 80,132 | 80,132 | 80,707 |
| Other intangible assets with finite useful lives | 15,587 | 17,263 | 17,957 |
| Right-of-use assets | 12,472 | 13,618 | 14,756 |
| Equity investments measured using the equity method | 2,635 | 2,496 | 2,806 |
| Other non-current financial assets | 1,183 | 847 | 807 |
| Other non-current assets | 1,140 | 1,710 | 1,710 |
| Deferred tax assets | 8,518 | 14,109 | 12,303 |
| Non-current assets for derivative financial instruments | 422 | 103 | 0 |
| Total non-current assets | 145,004 | 155,434 | 155,856 |
| Current assets | |||
| Trade receivables | 69,219 | 73,559 | 61,552 |
| Inventories | 81,770 | 76,680 | 81,719 |
| Contract work in progress | 13,264 | 20,429 | 28,750 |
| Other receivables and current assets | 17,685 | 17,148 | 18,454 |
| Current financial assets | 20,253 | 412 | 1,422 |
| Cash and cash equivalents | 21,198 | 62,968 | 59,268 |
| Total current assets | 223,389 | 251,196 | 251,165 |
| TOTAL ASSETS | 368,393 | 406,630 | 407,021 |
| (Thousands of Euro) | |||
|---|---|---|---|
| SHAREHOLDERS' EQUITY AND LIABILITIES | 30/09/2023 | 31/12/2022 | 30/09/2022 |
| Shareholders' equity | |||
| Share capital | 22,500 | 22,500 | 22,500 |
| Other reserves | 78,009 | 91,698 | 91,802 |
| Profit (loss) for the period | -27,728 | -14,281 | -10,115 |
| Total Shareholders' equity of the Group | 72,781 | 99,917 | 104,187 |
| Minority interests | 5,820 | 5,967 | 6,524 |
| TOTAL SHAREHOLDERS' EQUITY | 78,601 | 105,884 | 110,711 |
| Non-current liabilities | |||
| Non-current bank loans | 77,764 | 8,169 | 80,062 |
| Other non-current financial liabilities | 20,578 | 24,456 | 27,887 |
| Non-current liabilities for rights of use | 10,547 | 11,314 | 12,405 |
| Provisions for risks and charges | 7,080 | 5,484 | 5,206 |
| Defined benefit plans for employees | 3,175 | 3,413 | 3,776 |
| Deferred tax liabilities | 2,766 | 2,910 | 1,204 |
| Total non-current liabilities | 121,910 | 55,746 | 130,540 |
| Current liabilities | |||
| Bank financing and short-term loans | 38,060 | 103,629 | 34,279 |
| Other current financial liabilities | 5,861 | 3,956 | 2,435 |
| Current liabilities for rights of use | 2,872 | 3,196 | 3,252 |
| Trade payables | 94,201 | 98,033 | 90,045 |
| Tax liabilities | 2,477 | 3,697 | 4,411 |
| Other current liabilities | 24,411 | 32,489 | 31,348 |
| Total current liabilities | 167,882 | 245,000 | 165,770 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 368,393 | 406,630 | 407,021 |
| (Thousands of Euro) | ||
|---|---|---|
| 30/09/2023 | 30/09/2022 | |
| CONSOLIDATED INCOME STATEMENT | restated | |
| Revenues from sales and services | 221,138 | 216,351 |
| Other revenues and income | 1,296 | 582 |
| Cost of raw materials, consumables and goods and change in inventories | -138,294 | -132,925 |
| Costs for services and use of third-party assets | -41,579 | -39,455 |
| Personnel costs | -37,373 | -34,289 |
| Allocations, write-downs and other operating expenses | -6,310 | -3,194 |
| Gross operating profit | -1,122 | 7,070 |
| Amortisation, depreciation and impairment | -12,771 | -13,065 |
| Net operating profit | -13,893 | -5,995 |
| Financial income | 891 | 988 |
| Financial expenses | -8,341 | -5,484 |
| Exchange gains (losses) | -1,614 | 1,128 |
| Income (expenses) from equity investments | -173 | -288 |
| Income (expenses) from joint ventures measured using the equity method | 134 | 778 |
| Profit (loss) before tax | -22,996 | -8,873 |
| Taxes | -5,615 | -1,019 |
| Net profit (loss) for the Group and minority interests, including: | -28,611 | -9,892 |
| Minority interests | -883 | 223 |
| Net profit (loss) for the Group | -27,728 | -10,115 |
| Basic earnings (loss) per share (calculated on 225,000,000 shares) | -0.1232 | -0.0450 |
| Diluted earnings (loss) per share | -0.1232 | -0.0450 |
| (Thousands of Euro) | ||
|---|---|---|
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | 30/09/2023 | 30/09/2022 |
| Net profit (loss) for the Group and minority interests: | -28,611 | -9,892 |
| Profits/losses that will not be subsequently reclassified in the Income Statement | ||
| Remeasurement of employee defined benefit plans (IAS 19) | 79 | 222 |
| Total Profits (Losses) that will not be subsequently reclassified in the income statement |
79 | 222 |
| Profits (Losses) that could subsequently be reclassified in the income statement | ||
| Share of other comprehensive income of equity investments measured using the equity method |
5 | 0 |
| Fair value of derivatives, change for the period | -43 | 480 |
| Exchange rate differences from the translation of foreign operations | 1,288 | 615 |
| Total profits/losses that will be subsequently reclassified in the income statement |
1,250 | 1,095 |
| Profits/losses recorded directly in Shareholders' Equity after tax effects | 1,329 | 1,317 |
| Total consolidated income statement for the period | -27,282 | -8,575 |
| Profit (Loss) for Shareholders of the Parent Company | -27,135 | -9,256 |
| Minority interests | -147 | 681 |
| (Thousands of Euro) | ||
|---|---|---|
| CONSOLIDATED CASH FLOW STATEMENT | 30/09/2023 | 30/09/2022 |
| Cash flows from operations | ||
| Pre-tax profit (loss) for the period | -22,996 | -8,873 |
| Adjustments for: | ||
| Depreciation of property, plant and machinery | 3,166 | 3,154 |
| Amortisation of intangible assets | 7,032 | 7,285 |
| Depreciation of right-of-use assets | 2,573 | 2,626 |
| Loss (Profit) from disposal of tangible and intangible assets | -360 | -121 |
| Impairment loss on receivables | 880 | 710 |
| Net financial charges | 9,064 | 3,368 |
| Net Income (Expenses) from equity investments measured using the equity method | -134 | -778 |
| Profit (loss) attributable to interests | 173 | 288 |
| -602 | 7,659 | |
| Changes in: | ||
| Inventories and contract work in progress | 2,074 | -23,086 |
| Trade receivables and other receivables | 3,387 | 1,597 |
| Trade payables and other payables | -14,864 | 12,073 |
| Provisions and employee benefits | 1,457 | 4 |
| Cash generated from operations | -8,548 | -1,753 |
| Interest paid | -4,786 | -3,202 |
| Interest received | 232 | 25 |
| Taxes paid | -863 | -1,378 |
| Net cash generated (absorbed) by operations | -13,965 | -6,308 |
| Cash flows from investments | ||
| Proceeds from the sale of property, plant and machinery | 289 | 121 |
| Purchase of property, plant and machinery | -2,839 | -1,850 |
| Purchase of intangible assets | -805 | -436 |
| Development costs | -3,068 | -4,095 |
| Variation in the consolidation area | 0 | -30,683 |
| Net cash absorbed by investment activities | -6,423 | -36,943 |
| Free Cash Flow | -20,388 | -43,251 |
| Cash flows from financing activities | ||
| Disbursements (reimbursements) of medium/long-term loans | -793 | 16,707 |
| Change in short-term bank debts | 2,847 | 1,342 |
| Share capital increase (*) | 0 | 58,598 |
| Repayment of leases (IFRS 16) | -2,857 | -2,782 |
| Net cash generated (absorbed) by financing activities | -803 | 73,865 |
| Net increase (decrease) in cash and cash equivalents | -21,191 | 30,614 |
| Cash and cash equivalents at 1 January | 62,968 | 28,039 |
| Net decrease/(increase) in short-term deposits (**) | -20,249 | 0 |
| Effect of exchange rate fluctuation on cash and cash equivalents | -330 | 615 |
| Closing cash and cash equivalents | 21,198 | 59,268 |
3.5. CONSOLIDATED CASH FLOW STATEMENT
(*) net of expenses incurred
(**) monetary time deposit loan granted
| (Thousands of Euro) |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share capital |
Statutory reserve |
Extraordinary and other reserves |
Share premium reserve |
Future share capital increase contributions |
Profit (loss) for the year |
Group shareholders' equity |
Profit (Loss) attributable to minority interests |
Capital and reserves attributable to minority interests |
Total shareholders' equity |
|
| Balance at 31/12/2021 (restated) |
11,250 | 2,250 | 4,552 | 28,946 | 8,867 | -1,020 | 54,845 | 1,522 | 4,216 | 60,583 |
| Profit (loss) for the year |
-1,122 | -1,122 | -6,310 | -7,432 | ||||||
| Actuarial gains/losses (IAS 19) |
222 | 222 | 222 | |||||||
| Translation difference |
157 | 157 | 458 | 615 | ||||||
| Valuation of cash flow hedge reserve |
480 | 480 | 480 | |||||||
| Total overall profits/losses |
0 | 0 | 859 | 0 | 0 | -1,122 | -263 | -6,310 | 458 | -6,115 |
| Share capital increase |
11,250 | 47,348 | 58,598 | 58,598 | ||||||
| Variation in the consolidation area |
0 | 105 | 105 | |||||||
| Allocation of profit |
8,111 | -9,131 | 1,020 | 0 | -1,522 | 1,522 | 0 | |||
| Balance at 30/09/2022 |
22,500 | 2,250 | 13,522 | 67,163 | 8,867 | -1,122 | 113,180 | -6,310 | 6,301 | 113,171 |
| Balance at | ||||||||||
| 31/12/2022 | 22,500 | 2,250 | 13,462 | 67,119 | 8,867 | -14,281 | 99,917 | 14 | 5,953 | 105,884 |
| Profit (loss) for the year |
-27,728 | -27,728 | -883 | -28,611 | ||||||
| Actuarial gains/losses (IAS 19) |
79 | 79 | 79 | |||||||
| Translation difference |
551 | 551 | 736 | 1,287 | ||||||
| Valuation of investments using equity method |
5 | 5 | 5 | |||||||
| Valuation of cash flow hedge reserve |
-43 | -43 | -43 | |||||||
| Total overall profits/losses |
0 | 0 | 592 | 0 | 0 | -27,728 | -27,136 | -883 | 736 | -27,283 |
| Allocation of profit |
0 | -14,281 | 14,281 | 0 | -14 | 14 | 0 | |||
| Balance at 30/09/2023 |
22,500 | 2,250 | 14,054 | 52,838 | 8,867 | -27,728 | 72,781 | -883 | 6,703 | 78,601 |
I, the undersigned, Paolo Cilloni, the Financial Reporting Officer of Landi Renzo S.p.A., declare
in accordance with art. 154-bis, part IV, title III, chapter II, section V-bis, of Italian Legislative Decree 58 of 14 February 1998 that, to the best of my knowledge, the Interim Management Report as at 30 September 2023 corresponds to the accounting documents, ledgers and records.
Cavriago, 13 November 2023
Financial Reporting Officer Paolo Cilloni
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