Topsoe Annual Report 2017: Focus on consolidating the business

• Continuing operations generated revenue of DKK 5,011 million, EBIT of DKK 595 million (equaling an EBIT margin of 12%), and net profit of DKK 403 million.
• The overall financial results were negatively impacted by the sale of the automotive and stationary DeNOx business areas.

Topsoe’s continuing operations of delivering catalysts, technology, and related services to the chemical and refining industries remain very profitable and generated revenue of DKK 5,011 million and EBIT of DKK 595 million in 2017. Catalyst revenue increased by 4%, whereas technology revenue decreased by 17%. EBIT margin was 12%, and net profit was DKK 403 million.

The financial results were negatively impacted by the sale of Topsoe’s automotive and stationary DeNOx business areas. This one-time effect amounted to a loss of DKK 422 million, mainly related to asset impairment. Consequently, net profit was reduced to DKK -19 million. In contrast, the 2016 results were positively affected by the significant one-time effect of restarted Iranian contracts that impacted both revenue and EBIT by DKK 122 million.

"We have focused on consolidating our company, improving profitability, and strengthening our product and service portfolio in 2017. While we have seen satisfactory progress in these long-term efforts, the associated costs have made their mark on the 2017 results, which consequently do not meet our overall growth ambitions," says Bjerne S. Clausen, CEO, Topsoe.

The mature markets for Topsoe’s core catalysts and technologies grow at rates below average GDP growth. Accordingly, Topsoe has intensified its efforts to develop innovative products that can, in combination with new market penetration, secure a growth above the market average in the coming years.

In June 2017, we announced the divestment of our automotive and stationary DeNOx business areas. As the market had evolved, it was no longer realistic for Topsoe to make these business areas financially attractive, and it was necessary to find a new owner better positioned in a market characterized by price competition and dominated by large players. The buyer is an optimal new owner, who saw the opportunity to complete their already extensive emissions control catalysts portfolio by acquiring Topsoe’s technologies and taking over production facilities as well as a large number of highly qualified employees.

While the impairments related to the divestment affected profit negatively, the DKK 900 million sales proceeds impacted our cash flow positively and served to reduce net debt. This positions Topsoe to expand its profitable core business and sharpen its focus on developing groundbreaking sustainable solutions.

A number of innovative products were introduced during 2017, including the sulfuric acid catalyst LEAP5™, the SynCOR Ammonia™ technology, and HiPerFuel™ that upgrades landfill gas to clean natural gas. During the year, Topsoe also expanded its R&D presence in the Chinese growth market by entering into R&D partnerships with Yanchang Petroleum Group and Wison Engineering. In November, we announced a partnership with Braskem, a leader in sustainable specialty chemicals, centered on commercializing Topsoe’s groundbreaking MOSAIK™ solution that forms the basis for a growing portfolio of bio-based chemicals.

In 2017, Topsoe began a digitalization venture with initial focus on digitalization of services, and new applications are already being tested in close collaboration with customers. Digitalization across our processes and business activities will be a strategic focus area in the years to come.

The coming year
Topsoe has consolidated its business in 2017 and the results are expected to materialize as profitable growth in the coming years. However, a number of external factors may impact the progress, including international sanctions, the availability of customer financing for large technology projects, and changes in currency exchange rates.

Topsoe expects 2018 revenue to be in line with or slightly above the revenue from continuing operations in 2017, i.e., DKK 5,000 million. The EBIT margin for 2018 is expected to be in the range of 10-12%.

The half-yearly report will be published on August 8, 2018. 

Read the full annual report on www.topsoe.com/annual-report-2017 

Five-year summary
Below is a summary of the Group’s financial highlights for the five most recent years.

The ratios have been prepared in accordance with the recommendations and guidelines issued by the Danish Society of Financial Analysts.

1) Income statements for 2016 and 2017 consist of continuing operations with discontinuing operations in a separate line. 2015 and before include the business activities divested in 2017.
2) Ratios for 2016 and 2017 apply to continuing operations.
3) Figures for 2013-2015 have not been restated with the sale of the emissions control business in 2017. Figures for 2013-2015 are therefore not comparable to figures for 2016-2017, where the divested business is presented as discontinuing operations.

About Haldor Topsoe A/S
Haldor Topsoe is a world leader in catalysis and surface science, committed to helping our customers achieve optimal performance. We enable our customers to get the most out of their processes and products, using the least possible energy and resources, in the most responsible way. We are headquartered in Denmark and have project development, R&D, engineering, production plants, and sales & service across the globe. In 2017, the revenue from continuing operations was DKK 5,011 million, and by the end of 2017 we employed approximately 2,300 employees. www.topsoe.com