Glaston Corp. saw a major drop in orders received for the fourth quarter period of October through December 2019. The orders received were $53.7 million*. That’s down from the pro forma amount of $69.2 million from the period of October through December 2018.
Glaston Corp.’s acquisition of Bystronic Glass was completed on April 1, 2019. Glaston has prepared unaudited pro forma financial information to illustrate the impact of the Bystronic acquisition on the group’s operational result and financial position and to improve the comparability of financial information. The unaudited pro forma financial information for 2018 in these financial statements is presented as if the acquisition would have already been completed on January 1, 2018.
While the company’s orders received decreased from the same period last year, net sales were up from $49 million in the pro forma fourth quarter of 2018 to $51.6 in the fourth quarter of 2019.
In the fourth quarter of 2019 uncertainty continued, particularly in the European heat treatment machines market, but there was a slight recovery in demand. Demand for insulating glass machines has continued to be good in all market areas and this is expected to continue into 2020. Challenges remain in the automotive glass market and the same trend is expected to continue, at least in the short term.
The coronavirus epidemic that began in China at the end of 2019 is causing uncertainty for the market outlook and, if prolonged and extended, might affect the company’s development.
Due to the project nature of the company’s business, the number of orders might fluctuate significantly from one quarter to the next, impacting the company’s net sales and earnings with a delay of approximately three to six months. The company’s after-sales services, which account for over 30% of the company’s net sales, are less cyclical and provide stability to the business.
“Climate change is one of the megatrends affecting Glaston and improving energy efficiency is strongly supporting demand for insulating glass equipment both in the U.S. and Europe. We have a strong market position and demand, particularly for Bystronic’s thermo plastic spacer technology, has been strong throughout the year,” says president and CEO Arto Metsänen. “… In contrast, challenges in heat treatment have continued and at the beginning of the fourth quarter we initiated measures to improve operational profitability. It now appears that the bottom has been reached in the Europe, Middle East and Africa area, with demand picking up in the final quarter after the previous quiet quarters. Orders received in the quarter for heat treatment machines were significantly below the busy glasstec fourth quarter of 2018. The downturn in the automotive glass market also continued.
“The emerging technologies unit received a significant order in the last quarter of the year. The project began as a development and engineering project for a U.S. customer operating in the transportation and aviation industry. The engineering project was completed in the third quarter and it led to an equipment order in the fourth quarter,” adds Metsänen. “The product development of the Heliotrope project continues, and it is approaching a product that can be industrialized. Negotiations regarding the company’s near-term financing, in which Glaston didn’t participate, were concluded during the fourth quarter.”
Metsänen says that despite market and other challenges, the company’s pro forma net sales remained at the previous year’s level. He says the integration of Bystronic with Glaston has succeeded in combining the operations faster than expected.
“The planned integrations of operational functions have been completed, a new organization has been published and overlapping functions have been removed. The measures already taken will result in annual cost savings of more than [$4.37 million]. At the time of the acquisition, we estimated that we will achieve this level of savings by 2021,” he says. “The merging of various IT and customer management systems, the integration of the Bystronic brand with Glaston, and the development of a common digital product platform, are the next steps in concluding the integration.”
*Editor’s Note: The financial results were converted from Euros to U.S. dollars on February 11, 2020.