Factsheet

Strategy and Financial Targets

Glaston has reviewed its strategy and updated its financial targets for the strategy period 2018–2021 as a result of its acquisition of Bystronic glass.

The foundation of the strategy remains unchanged; we continue to seek growth in our core business and to win in services through digitalization. Combining the strengths of Bystronic glass and Glaston as well as leveraging the know-how Bystronic glass adds to our business, provides us with unique opportunities to build a strong machinery and services offering as well as the ability to capture new growth opportunities. Implementing a joint operating model will support us in reaching our strategic goals and in realizing the full synergy potential of combining Glaston and Bystronic glass.

Our overall strategic goal remains unchanged: our ambition is to be the industry’s innovative technology leader, realizing its customers’ highest ambitions in glass.

Glaston’s purpose is to build a better tomorrow through safer, smarter, and more energy-efficient glass solutions. The demand for environmentally sustainable and energy-efficient solutions, tightening safety standards as well as growing visual and functional quality requirements of glass, increasingly affect the way our customers operate as well as impact the specifications they require from their glass processing technology partners.

Our strategy is divided into four key themes:

GROWTH IN CORE
NEW GROWTH OPPORTUNITIES

SERVICES
JOINT OPERATING MODEL

UPDATED FINANCIAL TARGETS:

  • Annual growth of net sales exceeding market growth* (CAGR)
  • Comparable operating margin (EBITA)** above 8% at the end of the strategy period. EBITA excludes amortizations of purchase price allocations.
  • Comparable return on capital employed (ROCE)** of more than 14% at the end of the period

*Flat glass market growth over the cycle.
**Calculation of key ratios:

Comparable EBITA excluding amortizations of purchase price allocations: Result before amortization of purchase price allocations +/- items affecting comparability

Comparable return on capital employed, % (Comparable ROCE):  (Profit / loss before taxes + amortization of purchase price allocations +/- items affecting comparability + financial expenses x 100) / (Equity + interest-bearing liabilities, average of 1 January and end of the reporting period)

President & CEO's Review

President & CEO Arto Metsänen in the Q1 2019 Interim Report, published on 29 April 2019:

“The first quarter of 2019 quarter has been historic for Glaston thanks to the acquisition of Bystronic glass. The acquisition complements our offering significantly and we will be able to offer products to our architectural and automotive industry customers on a comprehensive basis. We are shifting into a completely new size class, which will bring us economies of scale and opportunities to develop our operations for our customers’ benefit. Customers have responded very well to the acquisition and are looking forward to new, broader practical cooperation opportunities.

As we anticipated in our financial statement 2018 bulletin, first-quarter net sales and comparable operating result were low. This was primarily due to the low number of new orders in the third quarter and early fourth quarter of last year but also to, among other things, the protracted Brexit negotiations and other uncertainties reflected in Europe as a whole, which led to a slightly quieter than expected first quarter. Our sales were down 12% on a comparable basis and the comparable operating result was low. Orders received also declined slightly from the previous year, reflecting the high ordering activity at the end of 2018. In our strategy, we are focusing on our Services business, and I am particularly satisfied with how services for our heat treatment machines developed in the first quarter. Orders received, net sales and profitability of service operations all improved during the review period.

The activity in the Emerging Technologies unit picked up at the beginning of the year and we are in negotiations regarding several interesting projects in both Asia and the US. During the beginning of the year, two small projects in value but strategically important, translated into orders. They are the Emerging Technologies unit’s first orders for the automotive and aviation industries.

The formalities of the Bystronic acquisition have been completed, all official permits have been obtained, and we can now start the integration process. In our integration work, we will focus primarily on effectively integrating our sales and service functions, while ensuring that we achieve our cost synergies within the set timeframe. Work on pro forma figures is well under way and we will publish an updated strategy, and financial objectives as soon possible.”

Guidance

Outlook 2019
As in Glaston’s Q1 2019 Interim Report, published on 29 April 2019:

Bystronic glass will be consolidated as part of Glaston Corporation from 1 April 2019 and consequently, Glaston will have two reporting segments: Glaston and Bystronic glass. The Company estimates the acquisition to be earnings enhancing, also in terms of comparable earnings per share when compared to the situation excluding the acquisition. As stated in the stock exchange release, published on 12 February 2019, the Company will disclose information regarding its 2019 full-year outlook at a later stage. In addition, Glaston plans to publish Glaston’s and Bystronic glass’ unaudited combined financial information for 2018 and the first quarter of 2019 at the latest in connection with the planned rights issue, which is expected to begin during the second quarter of 2019.

Some of Glaston’s (excluding Bystronic glass) orders received in the latter part of 2018 will be delivered in the second half of the year, which will shift net sales and operating result to later than normal.

Previous Outlooks

Glaston’s Outlook 2019, published on 12 February 2019 in Glaston’s 2018 Financial Statement Bulletin:
The company’s business is seasonal and, historically, the first quarter of the year is generally the weakest and the fourth quarter the strongest. Net sales and comparable operating profit are expected to be low for the first quarter of 2019, due to the low number of new orders received in the third quarter and the beginning of the fourth quarter of last year.

Deviating from Glaston’s disclosure policy and due to the timetable of the Bystronic glass acquisition, Glaston will disclose information on its outlook for the whole of 2019 at a later stage.

As in Glaston’s January-September 2018 Interim Report, published on 31 October 2018: 
Glaston’s outlook is unchanged. We expect the full-year comparable operating profit to improve from 2017. (Full-year 2017 comparable operating profit was EUR 5.0 million according to the new revenue recognition standard IFRS 15).

As in Glaston’s Q2 2018 Half-Year Financial report, published on 9 August 2018:

Glaston’s outlook has remained unchanged. We expect the full-year comparable operating profit to improve from 2017. (Full-year 2017 comparable operating profit was EUR 5.0 million according to the new revenue recognition standard IFRS 15).

As in Glaston’s Q1 2018 Interim Report,  published on 23 April 2018:

The steady order intake of the previous six months and positive market development create good conditions for profitable growth in 2018. We expect the full-year comparable operating profit to improve from 2017. (Full-year 2017 comparable operating profit was EUR 5.0 million according to the new revenue recognition standard IFRS 15).

As in Glaston’s Financial Statements Bulletin, published on 8 February 2018:

Although the order book at the end of 2017 was lower than the previous year, the good order intake of the second half of the year and positive market development create good conditions for profitable growth in 2018. We expect the full-year comparable operating profit to improve from 2017. (Full-year 2017 comparable operating profit was EUR 5.4 million.)

As in Glaston’s  Q3/2017 Interim Report, published on 30 October 2017:

OUTLOOK REVISION
Glaston’s January–September comparable operating result was EUR 2.8 million, i.e. at the same level as the whole of 2016. Previously, the full-year 2017 comparable operating result was expected to improve from 2016.

Glaston revises its outlook and now expects the full-year 2017 comparable operating result to be EUR 4.0–5.5 million. (Previous outlook: We expect the full-year comparable operating result to improve from 2016. In 2016 the comparable operating result was EUR 2.8 million.)

As in Glaston’s Half Year Financial Report, published on 10 August 2017:

After a quiet first quarter, the glass processing market became more active to some extent in the second quarter. The prolonged uncertainty in the global economy and increasing political tensions in some regions are impacting customers’ willingness to invest, and decision-making times have lengthened. There are no visible signs of a permanent change in the market, however. We expect the positive market development to continue.

Good order book at start of the year, positive market development and the cost-saving measures undertaken create good conditions for the development of operations in 2017. We expect the full-year comparable operating result to improve from 2016. (In 2016 the comparable operating result was EUR 2.8 million.)

As in Glaston’s Q1 2017 Interim Report, published on 26 April 2017:

In the first quarter of 2017, the glass processing market was quiet, as anticipated. The prolonged uncertainty in the global economy and increasing political tensions in some regions will impact customers’ willingness to invest, and decision-making times have lengthened. There are no visible signs of a permanent change in the market, however. We expect that positive market development will still continue.

A higher order book than the previous year, positive market development and the cost-saving measures undertaken create good conditions for the development of operations in 2017. We expect the full-year comparable operating result to improve from 2016. (In 2016 the comparable operating result was EUR 2.8 million.)

As in Glaston’s Financial Statements release, published on 10 February 2017:

The development of the glass processing market was positive at the end of 2016. There are currently no signs of a weakening of the market, and positive development is expected to continue. Despite good demand, customers are often taking longer to make their investment decisions due to the uncertain global economy and political developments.

A higher order book than the previous year, positive market development and the cost-saving measures undertaken create good conditions for the development of operations in 2017. For the first quarter, a relatively small number of deliveries are scheduled, as a result of which the comparable operating result for the period is expected to be lower than the corresponding period a year earlier.

Glaston expects the full-year comparable operating result to improve from 2016. (In 2016 the comparable operating result was EUR 2.8 million.)

As in Glaston’s January-September 2016 Interim report, published on 31 October 2016:
In the final quarter of the year, the glass processing market is expected to develop positively and new machine orders to grow markedly compared with the third quarter.

The good second-quarter order intake and the large number of deliveries scheduled for the fourth quarter will increase net sales considerably in the latter part of the year compared with previous quarters. The savings measures undertaken will also have a positive impact on the result.

Glaston revised its outlook on 4 August 2016. Glaston expects 2016 net sales to be approximately EUR 105–110 million and the comparable operating profit to be approximately EUR 2–4 million. (In 2015 net sales were EUR 123.4 million and comparable operating profit was EUR 6.1 million).

As in Glaston’s January – June 2016 Half Year Financial Report, published on 9 August 2016:

In the second half of the year, the glass processing market is expected to remain challenging as economic uncertainty continues.

In Europe, a deterioration of the economic outlook and increased instability in the operating environment will be reflected in customers’ investment decisions. Despite this, Central and Eastern Europe offer growth opportunities. We expect stable development in the North American market. In South America, the market will remain quiet, particularly in Brazil. In the Asian market, we expect cautious growth.

Glaston expects 2016 net sales to be approximately EUR 105 – 110 million and the comparable operating profit to be approximately EUR 2 – 4 million. (In 2015 net sales were EUR 123.4 million and comparable operating profit was EUR 6.1 million).

As in Glaston’s Interim report Q1/2016, published on 28 April 2016:
Glaston still expects the overall market to develop on a cautiously positive note. The North American market and the EMEA area are expected to develop positively. We expect the Asian markets to remain stable at their current level. In China, market activity continues to be low. In South America, market continues to be subdued, particularly in Brazil.

In the heat treatment machines market, no significant changes are anticipated, and we expect demand for heat treatment machines to remain at the previous year’s level. The outlook for the services market continues to be cautiously positive.

Glaston’s outlook remains unchanged. Due to the subdued market situation and the reduced order book, we expect 2016 net sales to be slightly below the 2015 level. We expect the operating profit, excluding non-recurring items, to be at the 2015 level. (In 2015 net sales were EUR 123.4 million and comparable operating profit, excluding non-recurring items, was EUR 6.1 million).

 

As in Glaston’s Financial Statement Bulletin 2015, published on 11 February 2016: OUTLOOK
In the final quarter of 2015, signs of caution appeared in Glaston’s markets. Looking at 2016, we expect the overall market to develop positively but cautiously.

We expect the North American market to continue to develop well also in 2016. We expect the EMEA area to develop positively. In Asia, we expect the Chinese market to remain stable at its current level, and we expect growth in the Pacific area.

The heat treatment machines market will continue to be reasonably subdued. We expect that demand for new heat treatment machines will be weaker than the previous year during the early part of the year. Despite a challenging market outlook, Glaston’s position in the market is good. Our wide product range corresponds excellently with customers’ needs. As the technology leader, we will continue our goal-oriented development work, in which digitalisation and new technologies will present new business opportunities.

The outlook for the services market is cautiously positive. Our growth objectives are supported by Glaston’s strong market position, comprehensive service network and up-to-date product range.

Due to the subdued market situation and reduced order book, we expect 2016 net sales to be slightly below the 2015 level. We expect the operating profit, excluding non-recurring items, to be at the 2015 level. (In 2015 net sales were EUR 123.4 million and operating profit, excluding non-recurring items, was EUR 6.1 million).

Business Operations

Glaston’s operations are divided into the Machines and Services business areas. Our products and services are mainly oriented towards the construction, appliance, automotive and solar industries.

Glaston’s Machines business’ product portfolio covers a wide and technologically advanced range of glass processing machines for the flat tempering, bending, bending-tempering and laminating of glass.

Flat tempering machines are the most significant product group and the FC Series™ tempering line has a strong position in the market.  The renewed ProL™ laminating line has been well received by Glaston’s customers.

A strong market position, broad product portfolio, strong customer relations and diverse development work will take the Machines business forward in the direction shown by the Glaston’s strategy.

In 2018 the Machines’ net sales totalled EUR 65.2 million.

Glaston’s Services business provides glass processing machine maintenance services, machine upgrades and modernisations and spare parts required in glass working. The Services business’ remote monitoring and diagnostics services as well as training and consulting help customers improve the efficiency of their processes.

Glaston’s offering ensures uninterrupted production capacity for our customers and efficient usage throughout a machine’s lifecycle. Our comprehensive service network is one of the most important factors in our competitiveness.

In 2018 Services’ net sales totalled EUR 37.6 million.

Research and Development

Glaston’s technology leadership is based on continuous, customer-oriented product development, enabling us to consistently bring to the market more advanced technology to meet customers’ changing needs.

Our product development is guided by the development of solutions requiring deeper technological expertise and by new business opportunities presented by digitalisation. Our position is particularly strong in developing technologically demanding products. The most advanced glass processing machines developed by Glaston have risen to the status of standards in many countries. We hold patents for all of our key solutions.

The energy saving and energy consumption of tempering machines have been important drivers of Glaston’s product development. This work has yielded results, as a comprehensive analysis made in the autumn showed, for example, that in the low-emissivity glass tempering process, energy consumption has decreased by an average of 30% over the past 10 years.

In 2018, our R&D expenditure was 3.7% of net sales.

Glaston utilises new technology and the opportunities presented by digitalisation to develop products and make them better, more efficient and more reliable. Glaston brings to glass manufacturing new sensor, processing, interface and cloud service technologies. By utilising cloud services and opportunities offered by IIoT, Glaston helps its customers use their equipment as efficiently as possible.

Glaston has been involved in a nanotechnology project in California since the latter part of 2015.  Heliotrope Technologies is developing for the market a new electrochromic smart glass technology, which gives end-users the opportunity of regulating, for example, the heat and light transmittance of glass in a building or vehicle, precisely and quickly.  A further advantage over solutions already on the market is significantly lower production costs.

Why invest in Glaston

Glaston is a frontrunner in glass industry technologies and services, responding globally to the glass processing needs of the architectural, solar, appliance and automotive industries. Demand for Glaston’s products and services is dependent on demand for glass and glass processors’ capacity.

Demand for glass is expected to grow by around 3–5% annually in the coming years. Demand for smart glass is expected to grow by 12–15 %.

Growth factors:

Construction growth is driven by:

  • Urbanisation, safety; legislation, regulations and instructions
  • Environmental factors » growing demand for energy-saving glass and new types of glass
  • Design » use of glass in buildings is increasing, and particularly use of special glass

Automotive industry growth is driven by:

  • Increasing number of vehicles, particularly in developing countries
  • Design
    • Relative share of glass is growing, particularly special glass
    • Use of thin glass, lighter vehicles

Solar energy industry growth is driven by:

  • Growing environmental awareness
    • Investments in renewable energy sources
  • Costs
  • Paris climate agreement 2015
  • Favourable regulatory environment
  • In line with our growth strategy, Glaston is increasing its investment in product development and emerging technologies. In 2018 R&D expenditure was approximately 3.7% of net sales.
  • Our technology leadership is based on continuous, customer-oriented product development, enabling us to consistently bring to the market more advanced technology to meet customers’ changing needs.
  • At the heart of product development is digitalisation, which facilitates the shift towards automatic glass processing.

Innovative glass technologies and digitalisation will bring significant new business opportunities.

A frontrunner in its field, Glaston established in January 2017 the Emerging Technologies unit, which offers consulting and engineering services for smart glass and energy glass window production as well as solar energy applications. The unit also sells and delivers the required production lines.

Glaston is involved in active discussions with a number of companies on developing new glass technologies and their practical application. Glaston’s role in possible future projects may include, for example, advanced glass coatings for automotive and aviation industry products or the development and assembly of production lines for glass-related solar energy applications.

Financial targets 2018–2021

  • Annual growth of net sales exceeding market growth* (CAGR)
  • Comparable operating margin (EBITA)** above 8% at the end of the strategy period. EBITA excludes amortizations of purchase price allocations.
  • Comparable return on capital employed (ROCE)** of more than 14% at the end of the period
  • *Flat glass market growth over the cycle.
    **Calculation of key ratios:
    Comparable EBITA excluding amortizations of purchase price allocations: Result before amortization of purchase price allocations +/- items affecting comparability
    Comparable return on capital employed, % (Comparable ROCE):  (Profit / loss before taxes + amortization of purchase price allocations +/- items affecting comparability + financial expenses x 100) / (Equity + interest-bearing liabilities, average of 1 January and end of the reporting period)

Mergers and Acquisitions

TimeCompany/IndustryEventDescription
1981Tamglass OyAcquisitionKyro acquires the entire share stock of Tamglass Oy, founded in 1970. Exports already account for 93 % of Tamglass’ net sales of FIM 54.7 million and the company has 148 employees. Kyro becomes a diversified company.
1985TecnomenAcquisitionKyro expands its electronics business by acquiring Tecnomen, which supplies Tamglass with automation and control systems. The company also operates in the field of telecommunications.
1986Glaston forest holdings and local electricity networkDivestmentThe company sells its forest holdings to Suomi-Salama and its local electricity distribution network to Oy Nokia Ab.
1995Glaston’s forest industry businessDivestmentKyro sells its forest industry business to Metsä-Serla Oy, amid a major restructuring of the entire sector.
1996Cattin MachinesAcquisitionCattin Machines, a Swiss manufacturer of safety glass machines, is acquired for the Tamglass Group.
2002Finton OyAcquisitionThe Tamglass Group’s glass processing business is supplemented by the balcony glazing manufacturer Finton Oy from Lahti Finland.
2002Uniglass OyAcquisitionThe Tamglass Group’s machine business is supplemented by the flat tempering machine manufacturer Uniglass Oy from Tampere Finland.
2003Z. Bavelloni Immobiliare S.p.A. and Glasto Holding B.V. as well as Suomen Lämpölasi OyAcquisitionKyro acquires Italian Z. Bavelloni Immobiliare S.p.A’s and Dutch Glasto Holding B.V’s all share as well as a majority shareholding in Suomen Lämpölasi Oy. Glaston Technologies, consisting of Tamglass and Bavelloni, becomes the world’s largest comprehensive supplier of glass processing machines, and its glass processing product range becomes the biggest in Finland.
2005Glaston’s hydropower and district heat distribution businessesDivestmentAt the end of the year, the Group sells its hydropower and district heat distribution businesses.
2007Glaston’s Energy BusinessDivestmentKyro sells its energy business area to M-real Oyj.
2007A+W Software AG GroupAcquisitionGlaston acquires the German A+W Software Group in July 2007, after which the Business Area, Software Solutions, is formed.
2009Tamglass Glass’s insulated and architectural glass processing operationsDivestmentGlaston Corporation’s subsidiary Tamglass Glass Processing Ltd. sells its insulated and architectural glass processing operations to INTERPANE Glass Oy.
2010Glass processing operationsDivestmentGlaston’s joint venture, the glass processing company INTERPANE Glass Oy, is sold to Rakla Finland Oy.
2013A+W Software GmbHDivestmentGlaston sells A+W Software to Constellation Software Inc. acting through its Friedman Operating Group.
2014GlassrobotsAcquisitionGlaston acquires the industrial property rights to all Glassrobots products.
2015Pre-processing machines businessDivestmentGlaston sells 100% of the shares of Glaston Italy S.p.A. to the local management of Glaston Italy S.p.A.
2017Pre-processing machines business in USA and CanadaDivestmentGlaston continues as a reseller of Bavelloni’s Pre-Processing machines in Mexico, Brazil and Singapore.
2018Tools businessDivestmentGlaston sells its Tools business to Italian Bavelloni S.p.A. The sale is carried out through a share deal of Glaston Tools S.r.l in Italy.
2019Bystronic glassAcquisitionGlaston acquires Bystronic Maschinen AG and Bystronic Lenhardt GmbH and their subsidiaries (“Bystronic glass”) from Conzzeta Group