Groupe Gorgé reports declining 3D printing revenue in Q2 2020 results

Groupe Gorgé, the French industrial engineering organization and parent company of 3D printer manufacturer and service provider Prodways Group, has reported its financial earnings for the second quarter of 2020. 

For the three months ending June 30, 2020, Groupe Gorgé generated consolidated revenue of €49.5 million. This figure is down 35.2 percent compared to the same period in 2019 when Groupe Gorgé’s revenue was €76.4 million. In the first half of 2020, the business reported a total combined revenue of €108 million, down 20.2 percent compared to the €135.4 million earned in the first half of 2019. 

Groupe Gorgé attributed its reduced revenue to a fall in demand within its aerospace business, caused by the effects of the COVID-19 pandemic. The wider aerospace sector has been hit hard by the global outbreak, with GE Aviation cutting 25% of its workforce in May and Boeing’s recent Q2 numbers showing a similar percentage drop in revenue.

Since the outbreak began, Groupe Gorgé has made cost savings and reduced production output in a bid to mitigate losses caused by the business slowdown. While the Group has not ruled out further investment for the rest of the year, it has committed to review its COVID-related losses via an “in-depth review” of its finances. 

Combined revenues across Group Gorge's portfolio, including 3D printing subsidiary Prodways, have declined compared to last year. Photo via Prodways.
Combined revenues across Groupe Gorgé’s portfolio, including 3D printing subsidiary Prodways, have declined compared to last year. Photo via Prodways.

Groupe Gorgé financial results

Revenue at Groupe Gorgé is reported across three main segments: Smart Safety Systems, Protection of High-Risk Installations, and 3D printing. Smart Safety Systems, which relates to the group’s provision of robotics, aerospace, and simulation products for the defense and industrial sectors, contributes the largest share of the company’s consolidated revenue.

In the most recent financials, Smart Safety Systems generated €20.5 million in revenue, a 42.8 percent reduction compared to the €35.9 million reported in Q2 2019. Overall, in H1 2020, the Smart Safety Systems segment generated total revenue of €43.1 million, a 24.5 percent decrease on the €57.1 million reported in the same period last year.

(in € millions) Q2 2019 Q2 2020  Change (%)
Smart Safety Systems 35.9 20.5 -42.8
Protection of High-Risk Installations  22.9 17.8 -22.5
3D Printing 17.9 11.4 -36.5

Groupe Gorgé has attributed its revenue decline to the pandemic’s effect on its aerospace business. Introducing health measures impacted its “production and project execution” according to the company, and its robotics sector was particularly affected, declining by 18.9 percent in H1 2020. Groupe Gorgé’s robotics business had been its saving grace in the first quarter, reporting a 12.8 percent rise in revenue, but that too is now turning a loss. 

The company’s 3D printing division revenue was €11.4 million for Q2 2020, a 36.5 percent drop compared to the €17.9 million reported in Q2 2019. In H1 2020, Groupe Gorgé’s 3D printing segment recorded €26.8 million in revenue, a 24 percent reduction on the €35.3 million earned the previous year. According to the Group, the total shutdown of practitioners’ offices during the COVID-19 lockdown also adversely affected its 3D printing business.

(in € millions) H1 2019 H2 2020  Change (%)
Smart Safety Systems 57.1 43.1 -24.5
Protection of High-Risk Installations  43.5 38.5 -11.5
3D Printing 35.3 26.8 -24

When Q1 results were released in April, the Western European lockdown had only just begun, but since then many medical practices have been forced to close. As a result, the closures have been particularly damaging to Groupe Gorgé’s strong audiology and dental revenue stream. What’s more, while the company’s revenues dropped 11 percent in the first quarter, its income from materials had risen by 25 percent, driven by its increased install base. Now the growth of Groupe Gorgé’s flourishing materials business has also been stunted by the economic uncertainty caused by the pandemic. 

Group Gorge's revenues from its dental and medical businesses were badly hit by the European lockdown. Photo via Group Gorge.
Groupe Gorgé’s revenues from its dental and medical businesses were badly hit by the European lockdown. Photo via Groupe Gorgé.

Prodways also posts revenue losses 

Groupe Gorgé’s growth had seemed resilient to the pandemic’s hostile business environment before the latest financial results were released. In Q1 2020 the company’s consolidated revenue was at -0.4 percent overall, and in 2019 it reported a net profit of €23.1 million. The company’s 3D Printing business, in particular, handled by its subsidiary Prodways, experienced strong activity in H1 2019, influenced by the distribution of its SOLIDWORKS software.

Now Prodways has also seen its growth halted, announcing a loss of revenue in its Q2 results. For the three months ending June 30, 2020, Prodways generated revenue of €11.4 million, down 36.5 percent from the €17.9 million earned in the same period last year. The drop in income was due to a decline in both the company’s products and systems sales which fell by 30.4 percent and 20.9 percent respectively during Q2 2020. 

The company was able to secure major contracts to supply liquid resins to two European dental specialists during Q1 2020. According to Prodways, both these firms were expected to use several dozens of tonnes of materials once their production cycles had stabilized, but the adverse economic climate has prevented this from happening.

Despite this loss of revenue, the company did report business growth in its medical activities for the month of June, indicating signs of a recovery. Prodways’ software distribution activity also remains strong, having signed its biggest ever contract ever during the second quarter. Solidscape, a Prodways’ subsidiary, agreed two new deals to equip customers in the jewelry sector with several dozen machines. As a result, the company is “confident in its business model and the long-term opportunities in its markets.”

Dealing with the pandemic and Q3 2020

In a statement issued alongside its Q2 figures, Groupe Gorgé expressed confidence about its outlook in the second half of 2020, and “expects revenue to recover.” Moreover, while the company “remains cautious” of the ongoing uncertainties caused by the pandemic, it considers its markets to be diverse and not to be among the worst hit. 

While COVID-19 restrictions have impacted on its aerospace business in particular (worth ten percent of its overall revenue), the business has stated that it already has “strong momentum” for a Q3 recovery. Groupe Gorgé subsidiary ECA Group, for instance, is expecting to sign an export contract worth more than €20 million in Q3 2020, for the supply of unmanned mine warfare systems. 

Nearly fifty percent of the business’ workforce was placed on reduced working hours during the pandemic, in an attempt to minimize its overheads. Further cost savings and production adjustment initiatives are also planned, in order to mitigate the economic downturn caused by the pandemic. Nonetheless, the company has made it clear that its upcoming review into the pandemic’s consequences won’t affect its cash flow. 

The business remains in a solid financial position with more than €80 million in liquid capital, and €30 million in confirmed credit lines available. As of June 30, 2020, Groupe Gorgé’s also had a backlog of €617 million, slightly down on the record €640.2 million reported on June 30, 2019. 

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Featured image shows the Prodways ProMaker P1000 X 3D printer on display at Formnext 2019. Photo via Prodways.