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GROUP ECONOMIC AND BUSINESS REPORT

General economic and business conditions

Overall economic environment

In 2020, the global economy was significantly affected by the COVID-19 pandemic, contracting by 3.5% in the past year according to analyses by the International Monetary Fund (IMF). In the previous year, the global economy had grown by 2.8%. This means the decline was 0.9 percentage points lower than assumed in the October 2020 WEO forecast, according to the IMF. The second half of the year saw a recovery that was stronger than expected. Massive political support programs to contain the crisis prevented a more dire outcome. Central banks, including the U.S. Federal Reserve ("Fed") and the European Central Bank (ECB), supported fiscal stimulus programs by further expanding their expansionary monetary policy measures. The renewed spread of the pandemic at the end of the year demonstrated the global economy’s continued vulnerability to setbacks. Economic growth declined in all developed economies as well as in the emerging markets and developing countries – with the exception of China – in 2020.
According to the IMF, the U.S. economy contracted by 3.4% in 2020, 0.9 percentage points less than assumed in October 2020. The second half of the year in particular featured elevated economic momentum, a declining unemployment rate and a recovery in consumption. U.S. growth was 2.2% in 2019.
In the People’s Republic of China, the economy grew by 2.3% in 2020, weakening by 3.5 percentage points compared with the previous year. Rapid containment of the pandemic, public investment and liquidity support from the central bank ensured that the Chinese economy returned to growth starting in the second quarter of 2020.
Economic activity in the eurozone declined by 7.2% in 2020, compared with economic growth of 1.3% in 2019, according to the IMF. A decline of 8.2% was still being forecast as of October 2020. An additional bond-buying program by the ECB and extensive measures by Member States, including short-time work programs, wage subsidies, loan and aid programs for businesses and tax deferrals cushioned the economic impact of the pandemic in the third and fourth quarters.
According to the Federal Statistical Office (Destatis), Germany’s economic output declined by 4.9% in 2020, following growth of 0.6% in the previous year. With a decline of 11.3%, the second quarter of 2020 was the low point. Economic activity recovered in the third and fourth quarters but remained negative in the face of a new wave of infections in the fall and additional lockdown measures. Overall, the economic slump was less severe than the -5.7% experienced in the financial and economic crisis of 2008/2009, but it left clear traces in all sectors of the economy. Production was massively curtailed in both the service and manufacturing sectors. Economic output in the manufacturing sector declined by 9.7% compared with 2019 and by as much as 10.4% in the processing industry.
The impact of the pandemic was also clearly visible on the demand side. At 3.5%, gross fixed capital formation recorded its sharpest decline since the financial and economic crisis of 2008/2009. Capital expenditure for machinery, equipment and vehicles decreased by 12.5% compared with the previous year. COVID-19 also had a massive impact on foreign trade, with exports and imports of goods and services declining in 2020 for the first time since 2009, while exports shrank by 9.3% and imports fell by 7.1% compared with the previous year. Export business slowed noticeably, especially at the beginning of the pandemic: In March 2020, with closed borders, disrupted logistics and broken supply chains restricting exports. Although exports picked up again in the eight months that followed, this was not enough to compensate for the slump.
Numerous measures to cushion the economic impact included a temporary reduction in the rate of value-added tax, an extension of short-time work to 24 month (instead of the previous 12 months), financial support measures for businesses, and an economic stimulus package from the federal government. The outbreak of the COVID-19 pandemic ended a 10-year period of growth in Germany’s economy.
Development of relevant industries

In Germany, the recovery of the German machinery production industry from the pandemic-related slump in the spring of 2020 was largely better than expected in the second and third quarters of the past fiscal year. By the end of the fourth quarter of 2020, COVID-19 again had an increasingly firm grip on the world and the capital goods industry. However, the containment measures were less drastic than in the first half of the year, particularly in industry. In view of a better-than-expected third quarter, the German Engineering Federation (VDMA) revised its expectations for the past fiscal year slightly upward. According to preliminary calculations, the VDMA expects a somewhat smaller decline of 14% to 197 billion euros instead of the 17% drop in production originally forecast for 2020. Accordingly, order intake and sales were both 9% below comparative figures from 2019. However, the VDMA reports that many businesses are reporting lower losses than feared in the summer. By contrast, the impact of the pandemic on the export-centric German machinery sector was also reflected in order intakes. While domestic business remained 6% below the previous year’s level, foreign demand fell by 13%., In the months of November and December 2020, the prevailing reluctance to invest began to subside, and order intake in the mechanical engineering sector exceeded the comparatively low previous-year level for both domestic and foreign orders. The recovery thus continued with a hopeful outlook.

The robotics and automation sector also expects a 2020 slump that is similar in its severity to that experienced by the mechanical engineering sector. Due to the pandemic, the VDMA expects a decline of 11% in order intake and 19% in sales for the past fiscal year 2020, with heterogeneous trends seen in the subsectors. While Integrated Assembly Solutions and the robotics subsector recorded a 12% decline in order intake and a 23% drop in sales, industrial image processing orders were down by 7% and sales dropped by 8%. According to the VDMA Robotics + Automation Association, the pandemic has demonstrated how vulnerable industrial production has become in global value chains. At the same time, it also harbors great opportunities in the fight against the pandemic. The rapid conversion of production lines for the production of respirator masks as well as medical equipment and accessories underscores the potential of great automation depth.

According to the German Association of the Automotive Industry (VDA), the 2020 coronavirus crisis had an enormous impact on international markets. Sales fell in almost all countries throughout the world, in some cases quite drastically. Of the three major sales regions, Europe suffered the greatest decline. The five largest markets in Europe saw double-digit declines across the board. In Europe, 24% fewer new passenger cars were registered overall in 2020. Sales volumes declined by 25% percent in France, by 28% in Italy and by 29% in the United Kingdom. Spain was hit comparatively hard with a decline of 32%. Following a mild recovery in the third and fourth quarters, European passenger car sales in December 2020 remained 4% below the previous-year level. 2020 was also a challenging year for the German automotive market. In 2020 as a whole, the domestic market contracted by 19%, while exports shrank by 24%. In December 2020, the German automotive market grew by 10% despite the lockdown in the second half of the month. In the United States, the light vehicle market (cars and light trucks) finished the year with an overall decline of 15%. This was the first time since 2012 that the U.S. market dropped below the 15 million mark. U.S. light vehicle sales were up by 6% in December 2020. By contrast, China was largely able to put the pandemic and its consequences for automotive sales behind it. Following a rapid recovery, the decline was reduced to 6% overall in 2020. In December of the past year, the Chinese automotive market again achieved growth of 7%, marking the eighth consecutive month of increase.

For 2020 as a whole, a decline in sales of around 4% is expected in the medical technology industry according to an October survey of the members of industry association SPECTARIS, although signs of recovery were also seen at the beginning of the fourth quarter, mirroring that of other industries. The expected decline for international business was 6%. It was claimed that smaller businesses in particular would suffer more from the consequences of the pandemic, with higher declines in sales expected. Compared with other sectors, the vision care industry in Germany came through the coronavirus year relatively unscathed, according to the association. However, it will be forced to absorb the highest revenue losses within the SPECTARIS sectors in 2020. The German vision care industry expects a decline of around 10%, although the final figures were not yet available at the time this report was in preparation.

After 11 years of growth, the waste and recycling technology sector is looking back on 2020 with a decline in sales of approximately 3%. In the spring of 2020, the Waste and Recycling Technology Association of the German Engineering Federation (VDMA) was still expecting another year of growth. The industry as a whole is quite diverse in its positioning. Manufacturers of mobile waste treatment technologies suffered from supply chain problems due to the pandemic. Plant engineers faced project delays related to the coronavirus. By contrast, specialized manufacturers of machinery such as shredders have been able to finish the year with positive results, according to the association. On the other hand, order intake declined, falling short of the previous year’s level by 2.9%. As previously, the 27 countries of the European Union remain the sector’s most important sales market. With an export share of 12.4%, North America again takes first place among the non-European markets. Asia follows with a share of 6.2%. According to the trade association, the export ratio is a stable 68%.

Business development of the Group

The 2020 fiscal year of MAX Automation SE was significantly influenced by the COVID-19 pandemic. In the first half of the year in particular, the effects of the coronavirus crisis were visible in a significant decline in order intake in the MAX Group. As a result, at the end of April 2020, MAX Automation had to retract the forecast for the 2020 fiscal year published with the 2019 annual financial statements and, in view of the high volatility of business development and the associated lack of forecasting ability, was also unable to issue a new forecast in the further course of the fiscal year. It was not possible to issue a full-year forecast for fiscal 2020 for sales and operating earnings before interest, taxes, depreciation and amortization (EBITDA) until February 2021. This amounted to mEUR 305 for sales and mEUR 5.5 for EBITDA.

Immediately after the pandemic containment measures were imposed in March 2020, the Management Board set up a crisis task force to continuously analyze and assess the situation and make decisions on this basis. In addition, measures to safeguard liquidity and reduce costs were adopted in order to keep the risks for the MAX Group as low as possible and to ensure the company’s ability to operate. The Group companies largely kept their respective operations running. Short-time working was used selectively where it was sensible and necessary. The health and safety of MAX Group employees has always been a top priority.

Consolidated order intake of the MAX Group decreased by 15.9 % to mEUR 319.6 in 2020 due to pandemic-related investment reluctance (previous year: mEUR 379.9). From the third quarter of 2020, the MAX Group once again recorded a more stable trend in order placement and achieved high order intake, particularly in the month of December. Overall, the core business areas recorded a robust performance in the pandemic environment. The performance here was driven primarily by demand in the medical technologies and packaging automation fields in the Evolving Technologies segment. While demand in Environmental Technologies was lower year-on-year due to the pandemic and low oil prices, the planned growth in the Process Technologies segment failed to materialize against the background of the pandemic with delays in awarding major e-mobility projects. The Non-Core Business was characterized by further restructuring. Accordingly, order intake declined as planned with the plant closures of the IWM Automation companies.

At the Group level, the order backlog increased to mEUR 209.4 (31 December 2019: mEUR 199.5), up 5.0 % on the previous year. The order backlog in the core business areas increased in 2020 particularly with the growth in medical technology in the Evolving Technologies segment. While Environmental Technologies recorded a slightly lower order backlog than a year earlier, this decreased in the Process Technologies segment as existing projects were processed. The order backlog in Non-Core Business decreased as planned with the termination of projects in the closed IWM Automation companies. The MAX Group’s consolidated order development reached a book-to-bill ratio of 1.04 (previous year: 0.89).

The MAX Group achieved sales of mEUR 307.0 in 2020 (previous year: mEUR 425.5). The expectation originally formulated at the beginning of the year that sales would be between mEUR 380 and 410 in 2020 was therefore not achieved. The adjusted forecast for sales was mEUR 305. The Group’s sales performance was impacted in particular by COVID-19-related delays in projects and commissionings. Business was impacted in almost all Group companies in the core business areas Process Technologies and Evolving Technologies by production interruptions with customers, border closures and quarantine regulations. In contrast, with a high order backlog and only insignificant delays due to the pandemic, production in the Environmental Technologies segment continued almost under normal conditions. In the Non-Core Business, sales decreased in particular due to the closure of the IWM Automation companies and as a result of production stops during the pandemic with customers in China and Europe.

The pandemic significantly slowed down the targeted earnings growth of the MAX Group. However, operative earnings before interest, taxes, depreciation and amortization (EBITDA) improved to mEUR 5.7 compared to the previous year (2019: mEUR -0.9). Nevertheless, the original expectation of an EBITDA of between mEUR 16 and 20 could not be maintained here either. The full-year forecast published in February 2021 showed a figure of mEUR 5.5 for EBITDA. The improvement in EBITDA is attributable in particular to the significantly reduced loss situation in the Non-Core Business. Although the core business was clearly positive overall, it had to report a sharp year-on-year decline in its operating result against the background of the pandemic. EBITDA decreases in the Process Technologies and Evolving Technologies segments resulted mainly from lower sales. In contrast, the Environmental Technologies segment exceeded its prior-year earnings. The segment therefore made the largest contribution to the Group’s overall result.

In summary, the MAX Group can look back on a satisfactory year against the background of the coronavirus crisis. In a market environment characterized by the pandemic, the Group was able to hold its ground and close the year in line with adjusted expectations.

Sales and result of operations

In 2020, the MAX Group recorded a 27.8 % drop in sales to mEUR 307.0 in line with adjusted expectations, in particular as a result of COVID-19-related delays in projects and commissionings (previous year: mEUR 425.5). The export share of sales rose to 72.2% (previous year: 63.2%). In the North American business and in China, the MAX Group increased its sales, whereas the Group’s sales markets in Germany, Europe and the rest of the world were affected by sales declines. The share of the service and spare parts business rose to 21.6% in the same period (previous year: 18.6%).

The Group’s total output in 2020 decreased by 25.1 % to mEUR 299.2, mainly due to slower project progress and changes in inventories (previous year: mEUR 399.3). The Group’s lower total output was offset by cost savings and higher project margins. Other own work capitalized decreased slightly to mEUR 2.2 (previous year: mEUR 2.3).

MAX Automation’s other operating income increased by 26.7 % to mEUR 14.1 (previous year: mEUR 11.1). The background to this is that it was possible to release warranty provisions for projects that had fallen out of warranty. Provisions for vacation and bonuses were also reversed and positive currency effects were achieved at some Group companies.

The MAX Group’s cost of materials decreased by 32.5 % to mEUR 136.9 due to the lower project volume (previous year: mEUR 202.7). At 45.8%, the cost of materials ratio was below the level of the previous year despite lower total output (2019: 50.8 %).

Personnel expenses decreased by 12.9 % to mEUR 121.2 in 2020, mainly due to the closure of the IWM companies and the use of short-time working as a result of the coronavirus crisis (previous year: mEUR 139.1). The personnel expense ratio rose to 40.5% with lower total output (previous year: 34.8%). With the exception of a few employees, the workforce was deliberately not adjusted to the reduced overall output since the MAX Group will be dependent on its well-trained specialists once the economic crisis triggered by the pandemic is over.

MAX Automation’s depreciation and amortization increased by 68.7 % to mEUR 25.1 (previous year: mEUR 14.9). As a result of the coronavirus crisis, the goodwill of ELWEMA Automotive GmbH and iNDAT Robotics GmbH had to be written down as part of the annual impairment tests. In addition, impairment losses were recognized on the fixed assets of ELWEMA Automotive GmbH as a result of the impairment test.

The MAX Group’s other operating expenses decreased by 30.2 % to mEUR 48.5 in 2020 (previous year: mEUR 69.4), mainly due to lower additions to warranty provisions, lower travel expenses due to the pandemic as well as lower legal and lower consulting costs. In addition, expenses for the closure of IWM Bodensee were still included in the previous year. Expenses from exchange rate differences rose to mEUR 2.2 (previous year: mEUR 1.2).

Group earnings before interest and taxes (EBIT) fell by 23.4 % to mEUR -19.5 in 2020 (previous year:
‎mEUR -15.8) as a result of COVID-19-related changes, and the EBIT margin – in relation to sales – decreased to -6.3% (previous year: -3.7%).

The Group financial result improved to mEUR -9.0 (previous year: mEUR -18.1) and mainly includes interest expenses for the syndicated loan. The previous year included valuation allowances for a loan and the use of a bank guarantee for the equity-accounted investment MAX Automation (Asia Pacific) Co. Ltd. as well as for a payment claim against a former Group company.

MAX Automation’s result from income taxes amounted to mEUR 2.2 (previous year: mEUR -1.2). The deviation from the previous year is mainly based on the fact that the recognition of deferred tax assets on loss carryforwards was adjusted upwards due to a higher recoverability.

The pandemic slowed down the targeted recovery of the MAX Group. However, with the further streamlining of the non-core business, it was possible to reduce the loss for the year by 25.8 % to mEUR -26.3 (previous year: mEUR -35.5), corresponding to earnings per share of EUR -0.90 (previous year: EUR -1.18).

Asset position

In 2020, the MAX Group recorded a decline in total assets of 15.2 % to mEUR 281.8 (31 December 2019: mEUR 332.4). Fixed assets (excluding deferred taxes) are financed through equity and non-current liabilities. Current assets cover current liabilities.

Non-current assets decreased by 13.8 % to mEUR 121.9 (31 December 2019: mEUR 141.4), in particular due to the impairment losses recognized as a result of the impairment tests of ELWEMA Automotive GmbH and iNDAT Robotics GmbH. Intangible assets also decreased by 53.6 % to mEUR 3.2 (31 December 2019: mEUR 6.8) and goodwill by 16.6 % to mEUR 38.6 (31 December 2019: mEUR 46.2). Property, plant and equipment decreased by 4.9 % to mEUR 44.1 (31 December 2019: mEUR 46.3), mainly as a result of reclassifications due to the intended sale of the land and building from the closed IWM Automation GmbH to assets held for sale.

Investment property, after impairment losses from fair value adjustments, amounted to mEUR 6.4 (31 December 2019: mEUR 7.5). The value of other long-term financial assets decreased by 71.2 % to mEUR 1.9 (31 December 2019: mEUR 6.7). The main reasons for this were the repayment of a silent partnership in the amount of kEUR 800, which arose in connection with the management buy-out of altmayerBTD GmbH & Co. KG, and the repayment of a bridging and vendor loan in the amount of mEUR 2.5 by the former non-controlling interest ESSERT GmbH. Part of the outstanding loan to ESSERT GmbH was also written off in the amount of mEUR 1.6.

Deferred tax assets increased by 25.8 % to mEUR 13.1 (31 December 2019: mEUR 10.4), mainly as a result of the increased value of losses carried forward due to the integration of Vecoplan AG into MAX Management GmbH.

Overall, the share of non-current assets in total assets rose to 43.3% in 2020 (31 December 2019: 42.5%).

Current assets decreased by 16.3 % to mEUR 159.9 in 2020 (31 December 2019: mEUR 191.0), in particular as a result of inventory reductions due to the lower volume of business, which was caused by the coronavirus. Contractual assets were recognized mainly as a result of the closure of IWM Automation companies with a decrease of 18.1 % to mEUR 33.6 (31 December 2019: mEUR 41.0). Trade receivables decreased by 40.4 % to mEUR 27.1 due to payments received (31 December 2019: mEUR 45.4).

Tax receivables increased by 68.6% to mEUR 2.2 in 2020 (31 December 2019: mEUR 7.1).

Cash and cash equivalents increased by 17.6 % to mEUR 47.7 in 2020 due to the increase in operating cash flows (31 December 2019: mEUR 40.6). Overall, the share of current assets in total assets fell to 56.7% (31 December 2019: 57.5%). At the Group level, working capital decreased by 45.6 % to mEUR 39.1 due to high advance payments from customers and a simultaneous reduction in inventories and receivables (31 December 2019: mEUR 72.0).

Financial position

The capital structure of the MAX Group in the 2020 fiscal year was influenced by the further restructuring of the non-core business and by pandemic-related devaluations of companies. Accordingly, the equity of MAX Automation as of 31 December 2020 decreased by 41.2 % to mEUR 39.9 (31 December 2019: mEUR 67.9). The MAX Group thereby reported an equity ratio of 14.2 % at the end of 2020 (31 December 2019: 20.4 %).

In 2020, non-current liabilities decreased by 6.9 % to mEUR 142.0 (31 December 2019: mEUR 152.5). The MAX Group reduced non-current liabilities to banks by 5.3 % to mEUR 114.2 (31 December 2019: mEUR 120.6). Deferred tax liabilities decreased by 24.6 % to mEUR 8.2 (31 December 2019: mEUR 10.9) mainly due to the impairment losses recognized at ELWEMA Automotive GmbH and the final acceptance of projects whose sales is recognized over time according to the cost-to-cost method.

Current liabilities decreased by 10.8 % to mEUR 99.9 in 2020 (31 December 2019: mEUR 112.0). Trade payables decreased by 52.5 % to mEUR 23.7 (previous year: mEUR 49.8), mainly due to the closure of the IWM Automation companies and the reclassification of advance payments received to contractual liabilities for projects with non-periodic revenue recognition. As a result, contractual liabilities increased to mEUR 41.1 (previous year: mEUR 18.6). Miscellaneous other current provisions decreased by 25.4 % to mEUR 11.7 (previous year: mEUR 15.6). The decrease is mainly due to the fact that it included obligations for restructuring of mEUR 3.6 in 2019.

As a result of the COVID-19 pandemic and the closure of the IWM Automation companies, other current financial liabilities, which are characterized by vacation benefits and overtime, decreased by 15.9 % to mEUR 13.2 (31 December 2019: mEUR 15.7). Liabilities from income taxes increased to mEUR 3.3 (31 December 2019: mEUR 2.2).

Net debt including lease liabilities of the MAX Group decreased to mEUR 85.3 as of 31 December 2020 (31 December 2019 incl. lease liabilities: mEUR 101.0; 31 December 2019 excl. lease liabilities: mEUR 81.3).

Liquidity development

The MAX Group recorded a cash inflow from operating activities for 2020 of mEUR 32.0 (previous year: cash outflow of mEUR 20.9). With a negative cash-effective annual result, the inflow resulted in particular from high advance payments from customers and a simultaneous reduction in inventories and receivables.

The cash outflow from investing activities of mEUR 5.2 (previous year: mEUR -10.3) reflects investments of mEUR -7.4 in property, plant and equipment and inflows of mEUR 3.4 from the repayment of loans to third parties.

In 2020, the cash outflow from financing activities of mEUR 19.8 resulted in particular from a lower utilization of the syndicated loan (previous year: cash inflow of mEUR 38.8).

Overall, there was an increase in cash and cash equivalents of mEUR 7.0 to mEUR 47.7 in the 2020 fiscal year (previous year: mEUR 40.6). After taking into account changes in cash and cash equivalents due to exchange rate movements and changes in the scope of consolidation, cash and cash equivalents amounted to mEUR 47.7 as of 31 December 2020 (31 December 2019: mEUR 40.6).

Investments

The MAX Group invested mEUR 10.5 in non-current assets in the 2020 fiscal year (2020: mEUR 8.5). Investments in the coronavirus year mainly related to investments in IT, technical equipment and machinery and plant and office equipment, in particular investments in new ERP systems at the companies and in a new turning and milling center at Vecoplan AG that had already been decided. Detailed information on investments in the segments can be found in the attached Segment Reporting in the notes.

Segment reporting
MAX Automation SE and its Group companies meet the demand for technologically complex and innovative components and system solutions for efficient, flexible and networked automation in industrial production. The individual companies focus on solutions for specific sectors.

Process Technologies segment

In the Process Technologies segment, the focus of bdtronic GmbH and its subsidiaries is on the development and production of machinery and equipment with integrated software solutions for high-precision production processes such as dispensing and impregnation, especially for customers in e-mobility, the electronics industry and medical engineering.
Due to the decline in production in the global automotive industry due to the coronavirus pandemic, order intake in the Process Technologies segment fell by 25.2 % to mEUR 46.8 (previous year: mEUR 62.5). The pandemic situation made negotiations difficult and led to order postponements. Typical customer acquisition activities, such as at trade fairs or exhibitions with normal and extensive levels of customer contact, could not take place. A general reluctance to invest also led to delays, particularly in the awarding of major projects in e-mobility. The expected growth in impregnation technology thus failed to materialize. At the end of the year, demand remained intact but was at a low level and below original expectations due to COVID-19. Projects in dispensing technology and service projects dominated order intake. As of December 31, 2020, the order backlog decreased by 18.3 % to mEUR 20.2 as a result of the fulfillment of existing orders (December 31, 2019: mEUR 24.7).
The Process Technologies sector recorded a drop in sales of 30.7 % to mEUR 50.9 (previous year: mEUR 73.4) as a result of COVID-19-related delays in projects and launches due to factors including lack of access to construction sites. The pandemic caused the growth originally targeted for 2020 to not be achieved. Projects in dispensing technology and a higher proportion of service projects made a particularly large contribution to sales revenues. Process Technologies generated 59.3 % of sales from orders outside Germany (previous year: 63.5 %).
As expected, earnings before interest, taxes, depreciation and amortization (EBITDA) fell to mEUR 6.9 (previous year: mEUR 14.8), a decrease of 53.7 % that was primarily attributable to lower sales. The segment made various growth investments in the first half of 2020, which led to an increase in the cost basis. Contrary positive effects on EBITDA were generated by the use of short-time work and the reversal of accruals for vacation and bonuses, among other measures. Although the EBITDA margin fell to 13.5% (previous year: 20.2%), it remained at a high level. EBITDA margins, which remain in the double-digit range, are primarily the result of unique selling proposition in dispensing technology.
Working capital decreased due to a reduction in project volume of 20.1 % to mEUR 13.3 (previous year: mEUR 16.6).
Excluding trainees, the number of employees in the Process Technologies segment rose by an annual average of 11.4 % to 409 (previous year: 368) in preparation for future growth. Due to the fact that well-trained professionals are needed for future growth, staffing levels were deliberately not adjusted to the reduced overall output. Instead, reduced working hour arrangements were used and credits in vacation and overtime accounts were used up in response to the reduced overall output.

Environmental Technologies segment

In the Environmental Technologies segment, Vecoplan AG and its subsidiaries develop and install machinery and equipment for the sustainable use of primary and secondary raw materials and biomass, particularly for the recycling, energy and raw materials industries.
The business segment’s order intake for 2020 decreased by 20.7 % year-on-year to mEUR 111.3 (previous year:  mEUR 140.3). Overall, the trend in order development under the conditions of the pandemic exceeded management expectations. In addition to that, the order situation in the previous year was influenced by two major orders of a one-off nature in the United States amounting to 18 million euros. Demand for recycling solutions in the substitute fuel market was slowed primarily by lower oil prices. In Europe, the coronavirus pandemic affected demand for recycling and waste solutions for wood and biomass mainly in the second half of the year. A generally lower propensity to invest was reflected in particular by a reduction in the awarding of contracts for major projects. It was not until the end of 2020 that demand picked up again, allowing Vecoplan AG to record higher order intake. The order backlog as of December 31, 2020, was at mEUR 47.2, putting it slightly above the previous-year’s level (December 31, 2019: mEUR 47.5).
Due to the drop in order intake, the segment’s sales fell by 13.6 % year-on-year to mEUR 110.3 (previous year: mEUR 127.6). With a high order backlog and only insignificant project delays stemming from the pandemic, production was able to continue under conditions that were almost normal, making it unnecessary to use short-time work. However, segment sales were below management expectations overall. Sales were impacted by a major project in the United States that could not be commissioned in 2020, causing the revenue from this project to go unrecognized until the 2021 fiscal year. 90.2 % of segment sales were attributable to international business (previous year: 83.1 %). With a share of more than 30 percent, the service share of sales reached a high level.
Despite lower sales, earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 9.5 % to mEUR 14.2 (previous year: mEUR 12.9). High-margin services and reduced sales and marketing costs contributed to the higher-than-expected EBITDA. In addition, Vecoplan’s U.S. subsidiary benefited from a government loan from the Paycheck Protection Program in the amount of USD 950,900. The segment’s EBITDA margin improved to 12.8% (previous year: 10.1%).
Working capital decreased slightly by 2.2 % to mEUR 17.2 (previous year: mEUR 17.6).
Excluding trainees, the average number of employees in the Environmental Technologies segment rose by 4.0 % to 420 (previous year: 404), with an order situation that remains positive.

Evolving Technologies segment

The Evolving Technologies segment brings together five different companies and offers its customers optoelectronic solutions, plants and machinery for use in medical engineering and packaging systems, along with robotic production systems and automation solutions.
In the 2020 fiscal year, the coronavirus crisis affected order intake to varying degrees at the companies in the segment. Thanks to ongoing high demand, packaging automation, medical technology and optoelectronics recorded very good order intake. For example, medical technology achieved, as expected, a major order in the field of in vitro diagnostics at the end of the year and will build systems for the fully automated production of pipettes (tip and cup technology) for its client over the next two years. By contrast, the onset of the pandemic had automation and robotics contending with declining demand. Nevertheless, order intake in the segment increased overall by 15.0 % to mEUR 130.5 (previous year: mEUR 113.5). The low level of order intake received by robotics during the year was compensated for by the other companies. Although the rise in demand in press automation from the third quarter onwards was not able to fully compensate for the declines of the previous months, orders were received from U.S. e-mobility suppliers and from China at the end of the year. Overall, Evolving Technologies recorded a 34.8 % increase in the order backlog to mEUR 108.7 (December 31, 2019: mEUR 80.7).
On the sales side, production interruptions at customers, border closures and quarantine regulations, along with ensuing delays in assembly and commissioning during the pandemic, weighed on the situation at all Group companies in the segment. The service business development was also negatively affected. However, based on a lower order backlog at the beginning of 2020, the overall decline in sales was in line with expectations adjusted for the pandemic. Sales decreased by 23.0 % to mEUR 104.9 (previous year: mEUR 136.2), with the segment’s international business generating 53.6 % of sales (previous year: 31.3 %).
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the Evolving Technologies segment were primarily affected by pandemic-related delays in the progress of press automation and robotics projects. The project delays combined with the slump in orders led to losses in robotics. Medical technology again made the largest contribution to EBITDA. Overall, the segment recorded a year-on-year decrease in EBITDA of 57.0 % to mEUR 7.3 (previous year: mEUR 16.9). The previous year’s figure also included special effects from fair value measurements. The segment’s EBITDA margin fell accordingly to 6.9 %, compared with 12.4 % in the previous year.
Working capital decreased to mEUR -2.9 (previous year: mEUR 7.7) as a result of high advance payments in medical technology and the reduction in receivables in press automation.
Excluding trainees, the average number of employees in the Evolving Technologies segment rose slightly to 558 (previous year: 549). In the course of the year, short-time work were selectively put to use at some Group companies. Vacation and overtime accounts were systematically used up in order to accommodate reduced workloads in some areas.

Non-Core Business segment

The Non-Core Business segment brings together companies that are no longer part of the MAX Group’s core business. This primarily includes ELWEMA Automotive GmbH (ELWEMA), which develops manufacturing solutions for cleaning, testing and assembly technology, in particular for engines, steering systems and transmissions. The remaining companies in the segment have either ceased operations or are completing existing customer projects (IWM Automation Bodensee GmbH, IWM Automation GmbH, IMW Automation Poland).
Accordingly, in contrast to previous years, the segment’s order intake is now determined solely by ELWEMA. Overall, order intake in 2020 fell by 51.3 % to mEUR 31.0 (previous year: mEUR 63.6) due to the closure of IWM Automation companies. In the meantime, ELWEMA benefited from strong demand for conversion and repeat projects relating to plant optimization and recorded a high number of order intake, especially in the second half of the year. However, a major order already in progress from a long-standing ELWEMA customer was canceled in January 2021. The project was originally scheduled for completion in 2022. With the completion of projects in the closed companies, the Non-Core Business recorded a decrease in the order backlog of 28.6 % to mEUR 33.3 (December 31, 2019: mEUR 46.6).
Segment sales were down from the previous year, primarily due to closures of IWM companies and coronavirus-related factors. Lockdowns and production shutdowns at customers in China and Europe affected project acceptances, resulting in major delays and underutilization. Overall, the segment recorded a decline in sales of 51.4 % to mEUR 43.6 (previous year: mEUR 89.8), with 85.2 % of sales (previous year: 82.6 %) being generated outside Germany.
The coronavirus-related project delays were also reflected in earnings before interest, taxes, depreciation and amortization (EBITDA). The cancellation of a major order was taken into consideration in the annual financial statements as a value-enhancing event within the scope of the inventory valuation, and inventories at ELWEMA were devalued accordingly. Internally generated intangible assets at the company were also adjusted in response to the coronavirus situation. Together with provisions for non-profitable projects at the IWM companies, the segment posted a decline in EBITDA to mEUR -13.3mEUR (previous year: mEUR -36.6), corresponding to an improvement of 63.6 %. The EBITDA margin rose to -30.5 % (previous year: -40.7 %).
As a result of the closures and final acceptance of projects still open, working capital in the Non-Core Business segment fell by 61.9 % to mEUR 11.9 (previous year: mEUR 31.2).
Excluding trainees, the average number of employees in the Non-Core Business segment fell by 46.7 % to 259 (previous year: 486) due to the closures. Due to underutilization of the company’s capacity, short-time work were introduced at ELWEMA. Vacation and overtime accounts were also used up in response to the reduced workload situation.
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