2G energy AG (DE:2GBG) has diversified its activities, expanding export markets and developing service revenues, so that it is less exposed to changes in the regulatory environment for renewables and CHP in Germany. This supported a 13.5% year-on-year increase in sales during H117 and a substantial reduction in operating losses. We note that the first half is typically loss making while 2G Energy works on CHP projects for delivery in the second half.
Exports drive H117 sales growth
Group sales increased by 13.5% year-on-year to €72.4m, supported by exports, which accounted for over half of CHP sales for the first time, and service revenues. A more favourable product and country mix resulted in higher gross profit, leading to a narrowing in EBIT losses from €1.9m to €0.5m. This was achieved even though personnel costs were 9% higher because of the French sales office and additional service and R&D engineers. Net cash increased by €7.0m to €11.0m, despite a €1.0m investment in CHP plant for use by the in-house leasing operation. Order intake during the first eight months of FY17 was ahead of the same period in FY16, resulting in an order book totalling €122.7m at the end of August. This has encouraged management to refine previous FY17 revenue guidance of €160-180m to the top end of that range.
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