EQS-News: INDUS performs in line with expectations in a difficult environment

INDUS performs in line with expectations in a difficult environment

• Sales at EUR 839.1 million, EBIT at EUR 64.1 million
• EBIT margin improves in Q2 and reaches 8.7%
• Strong free cash flow
• Forecast adjusted as markets will lack momentum in further course of the year

Bergisch Gladbach, 13 August 2024 – In the first half of 2024, the portfolio companies of stock exchange listed INDUS Holding AG generated sales of EUR 839.1 million. Because of the weak economy, business activity was slower than in the previous year (EUR 904.1 million), as had been expected. Adjusted EBITA amounted to EUR 73.9 million (previous year: EUR 94.5 million), due, among other things, to significant wage and salary increases. The Group generated operating income (EBIT) of EUR 64.1 million (previous year: EUR 84.9 million). The EBIT margin stood at 7.6% at the six-month stage (previous year: 9.4%). In the second quarter, the EBIT margin increased against the first quarter and reached 8.7%, which was almost on a par with the same period of the previous year (8.8%).

“In the rough waters of the first half of 2024, our portfolio companies as a whole performed in line with expectations,” said Dr. Johannes Schmidt, Chairman of the INDUS Group’s Board of Management. “And they did so although the economy remained weak. It is quite remarkable that our portfolio companies were able to clearly improve the EBIT margin in the second quarter thanks to operational excellence and strict cost management.”

Earnings per share clearly above previous year

Earnings after taxes rose by EUR 10.4 million to EUR 32.1 million (previous year: EUR 21.7 million) – especially due to the fact that the charges arising from discontinued operations in the previous year did not recur. As a result, earnings per share, at EUR 1.21, clearly exceeded the previous year’s EUR 0.80.

Three acquisitions in the first half of the year – further acquisitions planned

Operating cash flow rose to EUR 53.3 million in the first six months of 2024 (previous year: EUR 39.2 million). The seasonal increase in working capital was clearly below the prior year level. Consequently, free cash flow also picked up to EUR 41.2 million (previous year: EUR 35.2 million). At 38.0%, the equity ratio on 30 June 2024 was higher than on 31 December 2023 (37.3%).

“Our strong free cash flow gives us sufficient leeway to continue making acquisitions as planned,” said Schmidt. “In the first half of the year, we were already able to strengthen the Engineering and Infrastructure segments with a total of three acquisitions. Several M&A projects are now nearing completion. We are confident that we will fully utilize our annual M&A budget of approximately EUR 70 million.”

Despite declining sales: Infrastructure grows EBIT and EBIT margin, Materials improves margin in Q2 compared to previous quarters

Reflecting the continued weakness in the construction sector, sales in the Infrastructure segment declined to EUR 276.8 million (previous year: EUR 291.3 million). Especially the decline in housing construction and the uncertainty in the heat pumps segment had an adverse effect on business activity. At the same time, the segment companies were able to grow their EBIT to EUR 29.7 million (previous year: EUR 25.1 million). The EBIT margin increased to 10.7% (previous year: 8.6%). Incoming orders also picked up slightly to EUR 282.9 million (EUR 272.1 million). INDUS now projects a slight decrease in segment sales for the full year, with EBIT expected to increase strongly and the EBIT margin assumed to stand between 10% and 12%.

The EBIT margin in the Materials segment amounted to 9.4% in the first half of the year (previous year: 11.5%). The companies clearly increased their profitability in the second quarter, when the EBIT margin reached 10.9% and exceeded the levels of the three previous quarters. EBIT amounted to EUR 27.9 million (previous year: EUR 38.1 million). In contrast to the good first half of 2023, customers were holding back on placing orders in the first six months of 2024. Pressure on prices also increased. Sales amounted to EUR 295.8 million (previous year: EUR 331.5 million). The Board of Management now projects decreasing sales and a strong decrease in EBIT for the full year. The EBIT margin is still expected to stand between 7% and 9%.

The weak demand also put a damper on the Engineering segment, whose companies generated sales of EUR 266.1 million (previous year: EUR 280.7 million). The segment’s EBIT amounted to EUR 13.9 million (previous year: EUR 25.9 million), with the EBIT margin at 5.2% (9.2%). Orders totalling EUR 264.1 million were received in the first six months of the year (previous year: EUR 258.3 million). Orders for cleanroom systems, sorting systems and packaging machines increased particularly strongly. The order backlog rose to EUR 403.9 million (EUR 385.4 million as of 31 December 2023). In view of the weak overall market trend, however, INDUS has adjusted its forecast and now projects slightly decreasing sales, a strong decrease in EBIT and an EBIT margin of between 6.5% and 8.5%.

Weak economy weighs on expectations

“In view of the reduced growth forecasts for the German economy, our portfolio companies also had to adjust their expectations for the second half of the year,” said Schmidt. “The weak construction and agricultural machinery sector in particular is having an adverse effect on the performance in the Infrastructure and Materials segments.”

INDUS now projects sales of between EUR 1.70 billion and EUR 1.80 billion (previously: EUR 1.85 billion to EUR 1.95 billion) and operating income (EBIT) of between EUR 125 million and EUR 145 million (previously: EUR 145 million to EUR 165 million) for the full year 2024. The EBIT margin is expected to stand between 7.0% and 8.0% (previously: 7.5% to 8.5%). The free cash flow forecast remains unchanged at over EUR 110 million.

The complete interim report is available here. An overview of the key performance indicators is available here.

About INDUS Holding AG:

Established in 1989 and headquartered in Bergisch Gladbach, INDUS Holding AG is a leading specialist for sustainable corporate development in the German-speaking SME sector. INDUS acquires two to three technology-oriented and promising industrial engineering companies for the Engineering, Infrastructure, and Materials segments annually. As a value-driven investment company with a clear focus on defined growth topics, INDUS provides its operationally independent portfolio companies with active, long-term support in their corporate development, especially in the fields of innovation, market excellence, operational excellence, and sustainability. SDAX-listed INDUS Holding AG has been included in the Prime Standard of the Frankfurt Stock Exchange (DE0006200108) since 1995. INDUS generated sales of around 1.8 billion euros in 2023. For more information, visit www.indus.de.

Note:

This press release contains forward-looking statements. These statements are based on the current views, expectations and assumptions of the management of INDUS Holding AG and comprise known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. INDUS Holding AG assumes no obligation to update forward-looking statements.