Financial and press releases

INDUS Group achieves solid business performance

Bergisch Gladbach, 14 November 2018

• Sales up 4.4%; good organic growth
• EBT up 6.3% as a result of improved net interest
• Rising material and wage costs increase pressure on EBIT
• Program to boost operational excellence launched

In the first nine months of the fiscal year 2018, the INDUS Group recorded a solid economic trend. Sales revenues of INDUS Holding AG increased by 4.4% to EUR 1,274.9 million in the reporting period (9M previous year: EUR 1,221.1 million), of which 3.1% was organic growth. Earnings before interest and taxes (EBIT) climbed 1.4% to EUR 116.1 million (9M previous year: EUR 114.5 million), with third-quarter EBIT already affected by increased material and personnel expenses. Adjusted for the effects of company acquisitions, EBIT amounted to EUR 123.9 million (9M previous year: EUR 123.8 million). At the bottom line, the INDUS Group’s EBIT margin for the first nine months of 2018 stood at 9.1%, while the adjusted EBIT margin was 9.7%.

Construction/Infrastructure boom continues; growing pressure on Automotive Technology margins

The portfolio companies in the Construction/Infrastructure segment continue to operate at the highest level. At 14.9%, the EBIT margin of this segment even exceeded the previous year’s excellent 14.7%. The Automotive Technology segment recorded a moderate increase in revenues, which is attributable to the good performance of the entities upstream and downstream of automotive series production and those with an engineering focus. The segment’s EBIT were clearly adversely affected by an unexpected slump in earnings of a portfolio company supplying series manufacturers and by the continued strong pressure on margins. In spite of a moderate slowdown compares to the previous year, the Engineering segment again made a good contribution to earnings, although a negative one-time effect weighed on the bottom line in the third quarter. The companies in the Medical Engineering / Life Science segment are feeling the effects of increasingly fierce competition. The momentum in the Metals Technology segment declined somewhat in the third quarter due to the ongoing repositioning exercise of a portfolio company and greatly increased materials prices. At the bottom line, the segment remains on track.

Earnings before taxes (EBT) of the INDUS Group rose by 6.3% to EUR 102.5 million (9M previous year: EUR 96.4 million). This is due to fact that INDUS acquired the remaining shares in three portfolio companies, which improved net interest income. Earnings after taxes climbed to EUR 66.7 million (9M previous year: EUR 62.6 million). Earnings per share stood at EUR 2.69 (9M previous year: EUR 2.52).

Operating cash flow declined to EUR 14.8 million in the reporting period (9M previous year: EUR 56.1 million). This is due, among other things, to the deliberate increase in inventories in anticipation of further rising materials prices. Working capital is to be reduced by the end of the year but will stay above the prior year level.

INDUS projects revenues of between EUR 1.65 billion and EUR 1.70 billion and earnings before interest and taxes (EBIT) of between EUR 154 million and EUR 160 million for the full year 2018. Against the background of the growing pressure on margins and the adverse effects on earnings outlined above, full-year earnings will probably come in at the lower end of the range.

Promotion of operational excellence in the portfolio companies

“We used the economic boom to launch strategic programs and make our portfolio companies fit for the future,” says Dr. Johannes Schmidt, Chairman of the INDUS Board of Management. “Besides the successfully established program aimed at strengthening the innovation capacity of our portfolio companies, we have now initiated a program for increased operational excellence. Over the coming months, a comprehensive package of INDUS advisory and support services will systematically increase the performance and profitability of the portfolio companies. The first lean management training courses and lean projects have already been launched.”

The results of the sustainability rating of oekom research AG show that the company relies on an integrated development approach which comprises INDUS’ social and economic performance. On 9 November 2018, ISS-oekom confirmed the c+ prime status for INDUS Holding AG, a classification first obtained by the company at the end of 2015.

The full interim report of INDUS Holding AG for the period ended 30 September 2018 is here available for download.

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