The 2018 results show that Turbon has divested the US companies. Surplus property has been sold, and show a greater emphasis on Turbon Electric as the Turbon printing segment shows a continued decline.
Consolidated income for 2018 was €65.2 million ($73.1 million) compared to €72.8 million ($81.6 million) in the previous year. The gross margin in the financial year 2018 was at 18.4 percent, which was significantly below the previous year’s level of 23.2 percent.
The lower sales were attributed to the ongoing one-off restructuring costs of inventory reductions; receivables write-offs and staff reductions. A total of €1.1 million ($1.23 million) was included in the cost of sales and reduced the gross margin by 1.7 percentage points.
The Turbon Printing segment generated revenues of €53.1 million ($59.5 million) in 2018, which accounted for 81.4 percent of total sales. Compared to 2017, where the printing segment made sales of €69 million ($77.3 million), which accounted for 94.8 percent of total sales. Laser cartridge sales were €33.0 million ($36.9 million) in 2018 compared to €58.6 million ($65.7 million) in 2017.
Turbon Printing remains a key focus in the development, production and distribution of office printing supplies. The most significant part of the turnover is from the sale of toner and inkjet cartridges. Turbon also offers Managed Print Services (MPS) and produces printed and unprinted paper rolls for POS systems and ATMs, Bank checks and punch-through forms Banks, retail chains and service companies (e.g. Hotels) in the Arab region.
Turbon sales markets were in Europe and Asia (including the Arab world) and Africa. The US Business was abandoned in 2018, and US customers are supplied with laser cartridges direct from the factory in Romania.
EBIT (earnings before interest and taxes) amounted to – €6.1 million (- $6.8 million) compared to the previous year’s €3.7 million ($4.1 million). Earnings before taxes amounted to – €7.0 million (- $7.8 million) compared to the previous year’s €2.9 million ($3.2 million).
In the Group, Turbon is cautiously planning for 2019 a turnover of totalling €60.0 to €65.0 million ($67 to $72 million) and earnings before taxes to be between €0.5 and €1.5 million ($0.56 and $1.68 million). At the same time, Turbon expects the printing segment sales to decline further in 2019, predicting turnover for the segment of €47.0 to €50.0 million ($52 to $56 million).
The headcount has reduced by 24 percent and at the end of 2018, the worldwide headcount was 796 people, down from 1050 in 2017.
Property assets have been disposed of during 2018, including property in Thailand. Apart from a long-term loan for the headquarters property in Hattingen, Turbon said it expects to see all other bank loans repaid.
While Turbon Printing continues its turnaround, the Turbon Electric division is growing steadily in the German-speaking markets of Europe. The division is active in cable assembly, the development and production of hardware and software in electronic assemblies and devices which shows significant growth rates as the “megatrend” of digitalisation intensifies. Turbon expects an increase in the need for electrical and electronic solutions in the coming years and a disproportionate market growth. The current market demand is for increasingly more complex solutions, while the overall market is still highly fragmented.
Editor’s Opinion: The Turbon turnaround is similar to turning a supertanker, it takes time, and you have to know the right direction. Acknowledging the change in the imaging market and adjusting for it, is slow and painful, but necessary. One stand out item is the repayment of bank debt, which will enable them to move forward and puts them in a stronger position than some of their competitors.
