Leading machine tool manufacturer DMG MORI AKTIENGESELLSCHAFT (ETR: GIL) has announced that it saw a 34% increase in customer orders during Q1 2021.
Thanks to renewed demand from the company’s core target markets, its order intake rose significantly in Q1 2021, from the €440 million generated in Q1 2020 to €590 million. In response, DMG MORI has raised its order forecast for 2021 from €1.7 billion to €2 billion, and its overall revenue guidance from €1.7 billion to €1.8 billion.
Compared to the €708 million in orders the firm achieved back in Q1 2019, it’s still 17% off the pace, and its consolidated revenue of €422 million in Q1 2021, remains 8% short of the €458 million reported in Q1 2020. Despite this, DMG MORI’s shares only fell by 2% after the results were published, indicating an understanding among investors that the company is now progressing towards a return to annual growth.
“We started the year well and look forward with confidence to the further course of business,” Christian Thönes, Chairman of DMG MORI’s Executive Board. “We continue to innovate and invest and are focusing on our strategic fit of automation, digitization and sustainability. It is already clear that our strategy is paying off.”
“For 2021, we have a lot of tailwind and are therefore raising our forecast significantly.”
DMG MORI’s Q1 2021 financials
DMG MORI doesn’t break down its earnings by segment, but it says that in Q1 2021 its orders increased “in almost all industries,” and that its automation and end-to-end digitization products (including its Lasertec 3D printers), performed particularly well. By contrast, the firm also said that its services business continued to struggle during Q1 2021, due largely to COVID-19 restrictions, many of which remain in effect.
Given that 70% of DMG MORI’s orders came from international clients in Q1 2021, such travel bans will have affected its wider growth prospects, although it still generated €415 million from customers abroad, 40% more than in Q1 2020. The firm’s overall revenue was also hampered by its low order backlog at the start of the year, and it now anticipates a “time lag” before its resurgent demand is reflected in turnover.
In terms of operational spending, the company was able to cut its expenditure on personnel from €141 million in Q1 2020 to €127 million in Q1 2021, without dramatically reducing its headcount. Despite this, and what DMG MORI has described as other “stringent and sustainable cost management” decisions made during Q1 2021, its EBITDA still fell from the €43.2 million achieved in Q1 2020 to €27.7 million.
|DMG MORI Financials (€)||Q1 2020||Q1 2021||Variance (%)||Q1 2019||Q1 2021||Variance (%)|
3D printing-driven order growth?
DMG MORI only slightly reduced its R&D outlay during Q1 2021, from the €17.6 million spent in Q1 2020 down to €16.3 million, and it has stated its intention to continue building on its manufacturing portfolio. However, in the shorter-term, the company has set its sights on a “strategic triad” of automation, digitization and sustainability, and there’s evidence to suggest these goals shaped its strategy throughout Q1.
On the digitization front, DMG MORI made significant progress during the first quarter, by contracting Sigma Labs to provide a melt pool monitoring system for its Lasertec SLM machines. Adopting PrintRite3D should now allow users of DMG MORI systems to more easily abort failed prints, helping to reduce their lead times and material costs.
The company has also begun working with Sigma Labs and IN4.OS as part of the wider ‘Smart Factories of the Future’ initiative. During the project, the firm’s Lasertec printers are set to be utilized as a means of producing mission-critical parts for aerospace and defense partners. While it’s unclear whether the program has returned any revenue, at the very least, it will serve to showcase the potential of DMG MORI’s technologies.
The launch of the company’s Lasertec 30 Dual SLM system, meanwhile, has already yielded significant revenue. In October 2020, motorsport supplier JRM Group became the first in the UK to install the second iteration of the machine, and even though the sale is likely to have been accounted for in Q4, the transaction bodes well for its demand in the medical, automotive and aerospace sectors.
Earlier in 2020, DMG MORI also released a new gantry-type 5-axis CNC machine in the form of the Lasertec 400 Shape. Designed to produce parts with deep and narrow features, the system comes equipped with a multi-directional printhead, and the company now intends to add a mid-range Lasetec 200 Shape machine to its portfolio in the near future.
DMG MORI’s updated outlook
Looking ahead to 2021, DMG MORI says that the cost and availability of certain raw materials remains “challenging,” but it’s otherwise confident that it can sustain its recent upturn in demand. Provided that the pandemic continues to recede, the firm believes that recent research showing global machine tool market growth of 15%, will come to fruition by the end of the year.
In order to take advantage of this anticipated market recovery, the company plans to launch a new subscription-based model for some of its machines, while expanding further into China. As part of a €75 million investment in the country, DMG MORI intends to build a fully-digitized 35,000m2 production facility in Pinghu, Shanghai, which is expected to open towards the end of 2022.
“DMG MORI is strategically and financially well-positioned thanks to high innovative strength, consistent cost management and stringent liquidity securing,” said DMG MORI’s Executive Board via a statement in its financials. “With our global footprint, far-reaching service offerings and digitization solutions, we offer everything integrated, end-to-end and sustainable from a single source – worldwide.”
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Featured image shows DMG MORI’s Bielefeld company headquarters. Image via DMG MORI.