Financial and press releases
Construction/Infrastructure booming; Automotive Technology remains under pressure
- EBIT margin of approx. 16% for Construction/Infrastructure segment
- Automotive Technology segment posts operating loss of EUR 10.1 million (before impairment)
- Impairment losses of EUR 12.5 million recognized
- Operating cash flow up EUR 91.7 million on previous year
In the first nine months of 2019, the sales revenues of all companies in the five segments of INDUS Holding AG increased by 3.0% to EUR 1,312.8 million (9M previous year: EUR 1,274.9 million). Despite the well-known decline in the Automotive Technology segment, the Group generated earnings before interest and taxes (EBIT) before impairment of EUR 103.1 million (9M previous year: EUR 115.6 million). This is equivalent to an EBIT margin of 7.9% (9M previous year: 9.1%). Operating EBIT after non-cash impairment amounted to EUR 90.6 million.
“This is a time when we are feeling the strength of the INDUS portfolio,” said Dr. Johannes Schmidt, Chairman of the INDUS Board of Management. “The broad and diversified positioning of our Group enables us to achieve a solid result even at a time when the automotive market is undergoing a fundamental structural change.”
This is not least attributable to the Construction/Infrastructure segment, whose revenues were up by 8.7% on the very good prior year period to EUR 294.9 million. Earnings before interest and taxes even increased by a disproportionate 17.2% to EUR 47.0 million. The segment’s EBIT margin climbed to 15.9%. The air-conditioning operations made a particularly strong contribution to this earnings growth.
The performance of the Automotive Technology segment clearly reflects the upheaval in this industry, with series production suppliers recording a sharp 20% slump in revenues since August. ‘Pre and post-series’ companies are also feeling the investment restraint among the major car makers. Sales revenues declined by 9.2% to EUR 267.8 million in the first nine months of the year. This segment is now only the fourth largest in the INDUS portfolio. At EUR -10.1 million, operating EBIT were down by EUR 15.5 million on the previous year. The segment’s EBIT margin dropped to -3.8%. As expectations for the future deteriorated, additional non-cash impairment losses of EUR 12.5 million on goodwill and property, plant and equipment had to be recognized. As a result, the segment’s operating EBIT after impairment stood at EUR -22,6 million.
“Together with the management teams of the segment companies, we aim to define a package of measures by the end of 2019 which is expected to result in a sustainable improvement in the future performance of the Automotive Technology segment,” said Dr. Johannes Schmidt.
Between them, the companies of the Engineering segment have achieved good results in the year to date, with sales revenues climbing 15.7% to EUR 318.0 million in the first nine months of the year (9M previous year: EUR 274.9 million). EBIT rose by 9.1% to EUR 36.0 million. The EBIT margin stood at 11.3%. While some automotive-related segment companies are currently experiencing a decline in incoming orders, business at the other segment companies remains stable.
In the Metals Technology segment, revenues have declined slightly in the year to date, which is primarily attributable to the global downturn in the markets for carbide tools. In the first nine months of the year, the segment generated revenues of EUR 311.3 million, down 2.3% on the same period of the previous year At EUR 23.4 million, EBIT were approx. 5% below the high level of the previous year. The EBIT margin stood at 7.5%.
The Medical Engineering / Life Science segment has shown a very gratifying performance, with EBIT climbing by a disproportionate 11.1% to EUR 14.0 million. With the exception of the highly competitive nonwovens operations, all other segment companies contributed to this earnings growth. Sales revenues grew by 4.9 percent to a solid EUR 121.0 million. This was due in particular to the orthoses and medical stockings operations. Because of the demographic change, the smallest segment of the INDUS Group has excellent prospects for the future.
On a nine-month basis, the operating cash flow of the INDUS Group as a whole increased by EUR 91.7 million to EUR 106.5 million. This is primarily attributable to much lower working capital growth. “In the context of our efforts to promote the operational excellence of our portfolio companies, our program to reduce working capital is now bearing fruit,” says Dr. Johannes Schmidt. “The high cash flow gives us considerable leeway for further acquisitions, investments in the existing portfolio and the payment of dividends.”
As part of the PARKOUR strategy program, the INDUS Group acquired the second first-tier company – Dessauer Schaltschrank & Gehäusetechnik GmbH (DSG) – in September. While this most recent acquisition was made for the Metals Technology segment, MESUTRONIC was acquired for the Engineering segment in May of this year. The minority interest in TKI was sold to the majority shareholder at a profit in September.
For 2019 as a whole, the INDUS Group projects sales revenues of between EUR 1.72 billion and EUR 1.77 billion and operating EBIT before impairment of between EUR 129 million and EUR 135 million. These figures already include the profit contribution of EUR 16.8 million from the sale of TKI, which has since been received. EBIT after non-cash impairment will amount to between EUR 116 million and EUR 122 million.
The full interim report of INDUS Holding AG for the period ended 30 September 2019 is available for download at here.