A previously unknown virus, material shortage, geo-political turmoil, extreme energy prices and the resulting uncertainties have affected the world and ROTO for a couple of years now. Each in its own way and differently from one country to another. Even after two years, the war in Ukraine remains of significant influence, especially in Eastern Europe. The snowball effect of rising international commodity prices, which started in 2022, had a much broader impact, leading to inflation and increased wages.
Revenue and result
After the successful years 2021 and 2022, 2023 was moderate with a consolidated result after tax of € 6.3 million (2022: € 17.1 million).
Revenue decreased by 14.6% to € 236.4 million in 2023 (2022: € 276.8 million), largely explained by the decline in zinc prices for Rezinal and the strategical repositioning of De Boer Staal leaving the steel trade market. Although volumes decreased, this was not visible in the revenue of the Business Units Staco, Prestia and Rotocoat, due to better average prices.
The operating result of € 7.9 million (2022: € 31.9 million) was largely influenced by the zinc price development. While Rezinal contributed significantly in 2022, it experienced a negative operating result in 2023. Furthermore, the operational result of De Boer Staal was also affected by the relatively low steel prices.
The difference between the operating result and net profit after tax is explained by lower taxes and the effect on the non-controlling interest. Taxes amounted to € 1.6 million in 2023 (2022: € 8.3 million), which is directly related to a lower operating result. The effect on the non-controlling interest was a positive € 1.1 million (2022: negative € 6.0 million), which was directly influenced by Rezinal’s results.
As mentioned in our 2022 board report, the relative high zinc and steel prices in the previous period contain a potential risk when market prices decrease. This effect is visible in the 2023 financial statements. Agility in adapting our prices is challenging for our sales teams and has management’s full attention but also depends on the actions of competitors.
Investments
In 2023, ROTO invested € 8.5 million (2022: € 15.0 million) in its five Business Units. This included various strategic investments, such as in new machinery and equipment, replacement investments and several investments from a sustainability perspective, for example in solar panels. Thanks to the positive cash flow, nearly all investments in 2023 were financed from our own resources.
In 2024, investment ambitions rise to a level of € 12.4 million, apart from some larger strategical investments that are being prepared for further decision-making.
Group solvency, working capital and cash flow
Due to the good results, our group solvency, expressed as a percentage of total assets, increased from 46.1% at year-end 2022 to 52.4% at year-end 2023. No dividend was paid in 2023, and the 2023 net profit will be added to the general reserves.
As a result of lower zinc and steel prices, the working capital decreased to € 59.5 million at the end of 2023 (2022: € 65.7 million). The decrease was visible in working capital items such as stocks, trade receivables and trade payables. The consolidated cash position of € 22.2 million (2022: € 16.1 million) increased considerably despite repayments on external financing, as visible in the cash flow from financing activities.
The cash flow from operating activities amounted to € 24.2 million in 2023 (2022: € 11.3 million). The increase in operating cash flow of € 12.9 million (2022: increase of € 6.5 million) is attributable to the lower value of inventories based on the lower valuation of zinc prices, which has a positive effect on cash flows of more than € 31.2 million. On the other hand, operating cash flow is negatively affected by € 24.0 million based on the net result. Working capital management resulted in a positive contribution to the operating cash flow of € 12.2 million.
Cash flows (in € 1,000)
The cash flow from investment activities shows a decrease of € 7.3 million (2022: decrease of € 17.4 million), which is mainly explained by the investment level of € 8.5 million (2022: € 15.0 million) consisting of numerous smaller investments, excluding a strategic investment in machinery.
The cash flow from financing activities amounted to -/- € 9.6 million (2022: -/- € 8.4 million). Besides the agreed repayments on existing loans, ROTO voluntary made additional repayments of up to € 2.6 million to reduce the outstanding debt and thus interest costs. No dividend was paid in 2023. The financial position and operating cash flow are sufficient to continue activities without additional financing. In 2023, financing conditions were adapted to more appropriate levels for ROTO. ROTO complies with the agreements made with credit institutions.
The financial position and operating cash flow allow ROTO to continue activities without additional financing.
Liquidity
The quick ratio (cash and cash equivalents plus receivables in relation to current liabilities) amounts to 1.13 at the end of 2023 (2022: 0.94), indicating the favourable cash position. Cash positions and cash developments are monitored with the required attention and on a periodic basis.
The current ratio (including inventories) of 2.17 at the end of 2023 (2022: 2.14) is slightly higher because all current ratio elements are affected by decreasing raw material prices. The net cash position increased with a positive effect on the current ratio compared to last year’s closing.
Quick ratio per 31 december
