Nabaltec AG (DE:NTGG) achieved extremely strong earnings growth in FY17, despite the drag on revenue growth and margins caused by the temporary shutdown of the US production facility for aluminium hydroxide flame retardants, Nashtec, in August 2016 when its main supplier (and JV partner) went into administration. Management secured the remaining stake in Nashtec in March 2017, enabling it to move forward with plans to re-open an enlarged facility in Q218. It also plans to construct production facilities for refined hydroxides and boehmite in the US, thus opening up additional applications for flame retardants as well as entering the e-mobility sector.
Growth during FY17 despite US plant shut down
Revenues rose by 5.9% y-o-y during FY17 to €168.6m. Functional Filler revenues grew by 2.8% to €112.2m as although capacity was constrained while Nashtec was out of action, Nabaltec was able to push through price increases for fine hydroxides. Technical Ceramics revenues increased by 12.6% to €56.4m, benefiting from a recovery in the steel industry and strong sales of ceramic raw materials. EBIT margin expanded by 3.1bp to 10.8% as the cost of shipping product from Germany to the US was offset by efficiency gains arising from operating the main German plant at capacity and by the fine hydroxide price increases. The September placing at €23.0/share raised €18.4m (gross), supporting US capacity expansion and a €10.5m reduction in net debt to €25.9m.
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