The CAREL Industries Board of Directors approved the consolidated results as of 31 December 2021, with consolidated revenues of € 420.4 million, up 26.8% compared to 2020 (+21.9% excluding the contribution from the acquisitions of ENGINIA and CFM) and a consolidated EBITDA of € 85.3 million (20.3% of operating revenues).
Statement by the Chief Executive Officer
Francesco Nalini, Group Chief Executive Officer, commented: “The year 2021 was characterised by different and contrasting phenomena. On one hand, the spread of the vaccine against COVID-19 prevented new closures of industrial and manufacturing plants and fuelled a strong recovery of the world economy. On the other, the shortage of raw materials, especially electronic materials, has halted global growth, which has also been put under pressure by the rise in inflation. This complex and sometimes contradictory context makes the results achieved by the Group even more significant: in fact, consolidated revenues at the end of 2021 grew by 26.8% (21.9% within the same scope of consolidation), which, thanks mainly to the phenomenon of operating leverage, was reflected in profitability, equal to 21.0%. This performance derives first and foremost from the ongoing implementation of CAREL’s strategy of diversification, internationalisation, and production mirroring, which has enabled the company to increase its resilience, in addition to its ability to seize the opportunities offered by the decidedly positive trends in all applications, including heat pumps, data centres, indoor air quality and the strong recovery of investments in refrigeration linked to the food retail sector. Particularly important was also growth through M&A: in 2021, in fact, two important transactions were completed, the acquisition of 100% of the share capital of ENGINIA, an Italian company specialised in components for air control units, and 51% of the share capital of CFM, one of the most important Turkish distributors, long-time partner of the Group, specialised in digital and on-field services. All this is based on a medium-term vision that sees business strategies increasingly permeated by ESG elements, as we expressed in our first multi-year sustainability plan to 2024, published in December and including 55 objectives (of which 22 social, 22 environmental and 11 governance), in turn divided into 68 specific targets, with investments close to 3 million euros. Sustainability, however, is not only prospective but also current. Examining, in fact, the main company KPIs from 2021 through the lens of the “European Taxonomy”, it emerges that 60.4% of revenues analysed as well as 49.5% of total investments were green-focused, i.e. they are not only eligible for but also perfectly aligned with the regulations. Sustainability, efficiency and resilience, combined with the enthusiasm that the women and men of CAREL have always shown, will therefore be the main elements to face future challenges.”
Main economic and financial highlights
Consolidated revenues came to €420.4 million, compared to €331.6 million as of 31 December 2020, an increase of 26.8% (21.9% within the same scope of consolidation). It is worth stressing that growth remains above 20% even compared with revenues from 2019, a year in which there was no impact of the pandemic.
In the year just ended, the deployment of the COVID-19 vaccine enabled a significant economic recovery also driven by new investments after the sharp slowdown experienced in 2020. However, the rapid increase in demand for raw materials caused two closely linked phenomena: on one hand, a shortage of electronic materials, which prevented the world economy from achieving its full potential, and on the other, a sharp rise in the price of energy commodities, especially in the second half of the year, which created a significant increase in inflation followed by a general reduction in margins. In this context, CAREL’s excellent performance is a result of geographical and product differentiation and a series of countermeasures, such as the so-called “chip-pivoting”, which have enabled further improvement in flexibility and resilience, although difficulties remain for some product families.
All the regions where the Group operates (EMEA – Europe, Middle East, Africa; Asia-Pacific; North America and South America) recorded growth at constant exchange rates exceeding 20%, due to a general recovery in demand, compounded by the acceleration of some of the more cyclical industries (which had been heavily impacted by the pandemic during 2020) and particularly strong performance in the high-efficiency heat pump, data-centre cooling and indoor air quality sectors. Growth in the Refrigeration market was also particularly positive: the resumption of the investment cycle in the large-scale retail sector continues to be robust, buoyed also by regulations, and food service recovery significantly accelerated.
The growth in revenues was also reflected in EBITDA, equal to € 85.3 million, up by 30.5% (including the contribution from the consolidation of Enginia and CFM for € 4.1 million) and in net profit, equal to € 49.1 (+39.7%).
Finally, net debt rose from € 49.6 million in 2020 to € 57.8 million mainly due to the cash-out relating to the acquisitions of Enginia and CFM (approximately € 35 million) and an increase of around € 15 million in net working capital, resulting from both the increase in revenues and an increased level of inventory to better manage the global shortages of electronic material. These elements were largely covered by significant generation of cash flow.
Significant events in the first few months of 2022
The first few months of 2022 are still affected by the continuing pandemic in many of the markets in which the Group operates; nevertheless, the measures put in place by the Group have ensured normal production activities at all plants.
Management is carefully monitoring developments in the Russia-Ukraine conflict; the Group operates in the areas involved with exclusively distribution activities whose volumes can be quantified as “low single-digit” with respect to the Group’s total revenues.
Sustainability and European Taxonomy
In December 2021, the Group presented its first Multi-year Sustainability Plan, summarised by the concept “Driven by the Future – Sustainability in action”. The Plan’s guidelines are intertwined with an industrial strategy that has always been attentive to the issue of sustainability. This attention is demonstrated by the fact that 60.4% of the revenues analysed, 59.6% of operating costs analysed and 49.5% of CAREL’s total investments in 2021 can be considered “green”, i.e. aligned with the “European Taxonomy”. In the first year of implementation of the aforementioned system, CAREL not only calculated the “eligible” part of the corresponding indicators (as required by the regulations), but went even further, calculating the so-called “aligned” percentage.
Finally, with the aim of giving a broader view of the main achievements in terms of sustainability, it is also worth mentioning that in 2021, CAREL entered into its first “sustainability-linked loan”, a loan agreement for 20 million euro characterized by the application of a mechanism that provides for the reduction of the interest rate upon the achievement of annual quantitative targets in regarding social sustainability, which in this case will concern the gender balance within the Group.