Financial and press releases
INDUS achieves EBIT margin of 9.4% in the first half of the year
- Stable performance despite slowing market momentum
- Guidance confirmed – Sales expected at lower end and EBIT margin at the upper end of the forecast range
In the first six months of 2023, the portfolio companies of listed INDUS Holding AG slightly expanded their business compared with the previous year: Sales rose by 2.0% to EUR 904.1 million (previous year: EUR 886.3 million). Operating income (EBIT) amounted to EUR 84.9 million (previous year: EUR 87.4 million). The EBIT margin was 9.4% (previous year: 9.9%).
After the reporting date, contracts were signed for the sale of SCHÄFER and SELZER, the two remaining portfolio companies in the discontinued operations. As a result, INDUS has completely disposed of the automotive suppliers of the former Automotive Technology segment. The effects of the divestments, including the operating losses, are largely reflected in the financial statements for the first half of the year. The negative result from discontinued operations amounted to EUR -25.8 million in the first half of the year (previous year: EUR
-36.2 million).
“Despite the slowdown in market momentum, our portfolio companies delivered a stable performance in the first six months of 2023,” says Dr. Johannes Schmidt, Chairman of the INDUS Board of Management. “The second half of the year will no longer be burdened by the discontinued operations. This clears the way for the Group’s real earnings power.”
At EUR 21.7 million, INDUS Group’s earnings after taxes were slightly up on the previous year (EUR 20.7 million). Thereof, earnings after taxes from continuing operations amounted to EUR 47.5 million (previous year: EUR 56.9 million). Earnings per share were EUR 1.76 for the continuing operations (previous year: EUR 2.10) and EUR -0.96 for the discontinued operations (previous year: EUR -1.34).
Engineering and Materials segments increase sales and EBIT
In the Engineering segment, the portfolio companies increased their sales by 4.0% to EUR 280.7 million (previous year: EUR 269.8 million). The companies acquired in 2022, HEIBER + SCHRÖDER and HELD, contributed 2.8% of this total through inorganic growth. The segment’s operating income (EBIT) also rose by 4.4% to EUR 25.9 million (previous year: EUR 24.8 million). Earnings increased in particular in the area of measuring technology and control engineering due to better availability of semiconductors. At 9.2%, the EBIT margin was at the previous year’s level and is expected to be between 9% and 11% for the full year.
The Infrastructure segment is feeling the effects of the significant slowdown in construction activity. Starting from a very high level, demand is weakening, especially in the new construction sector. At EUR 291.3 million, segment sales were almost on a par with the previous year (EUR 294.0 million). Operating income (EBIT) fell to EUR 25.1 million (previous year: EUR 35.4 million). The EBIT margin was 8.6% (previous year: 12.0%). For the full year, the Board of Management now expects an EBIT margin of between 9% and 11%. In January 2023, the segment was strengthened by the acquisition of QUICK Bauprodukte GmbH.
The Materials segment continued to perform very well, with purely organic sales growth of 2.9%. Sales increased to EUR 331.5 million (previous year: EUR 322.3 million) despite partly lower sales prices as a result of reduced material prices. Operating income (EBIT) grew by 15.1% to EUR 38.1 million (previous year: EUR 33.1 million). The EBIT margin increased to 11.5% (previous year: 10.3%). The overall slowdown in economic momentum and the expected imposition of an anti-dumping duty on imports of a key raw material will weigh on the segment’s EBIT in the second half of the year. However, the Board of Management now expects a slightly higher EBIT margin of between 7% and 9% for the full year.
Operating cash flow clearly above previous year
Cash flow from operating activities increased to EUR 39.2 million in the first half of the year (previous year: EUR -15.1 million). In the same period of the previous year, the portfolio companies had deliberately built up high inventories in view of the difficult supply situation. Against the background of more relaxed supply chains and slowly normalizing material prices, these inventories could now be reduced. Free cash flow, which was introduced as an additional performance indicator as part of the ‘PARKOUR perform’ strategy update, improved by around EUR 53 million to EUR 35.2 million (previous year: EUR -17.6 million). The equity ratio stood at 35.6% (31 December 2022: 36.3%).
Guidance confirmed despite economic slowdown
“Sentiment in the German economy is subdued. However, our portfolio companies have learned to react quickly to changes in a volatile environment,” says Dr. Johannes Schmidt. “They are actively tackling the current challenges, for example by continuously improving their operational excellence and through strict cost management. Following the swift sale of our discontinued operations, the Board is now focusing on the further development of our industrial technology portfolio. In particular, we are targeting acquisitions to strengthen our defined future fields.”
After the first six months of the financial year 2023, the Board of Management expects full-year sales to be at the lower end of the forecast range of EUR 1.9 billion to EUR 2.0 billion. Excluding possible impairment losses on goodwill, INDUS continues to project earnings before interest and taxes (EBIT) of between EUR 145 million and EUR 165 million. The EBIT margin is expected to be at the upper end of the forecast range of 7% to 8%. The Board of Management continues to forecast free cash flow above EUR 100 million for the full year.
The complete interim report is available here. An overview of the key performance indicators is available here.