Financial and press releases
INDUS raises sales despite harsher market environment
- Sales in the first nine months reach approximately EUR 1.3 billion (+11.4%)
- EBIT before impairment climbs to EUR 86.8 million
- Uncertain conditions have negative impact on Automotive Technology
- EBIT forecast adjusted for 2021 financial year
The INDUS Group continued its positive overall performance in the first nine months. In spite of an increasingly complex market environment, characterized in particular by materials shortages and price increases, sales of the INDUS portfolio companies rose by 11.4% to EUR 1.296 billion (9M 2020: EUR 1.164 billion). This means that INDUS was able to make up for the sales revenues that were lost as a result of sales and closures implemented in the context of the INTERIM SPRINT program. The new acquisitions – JST, WIRUS and FLACO – contributed to the increase in sales, with the Group’s inorganic growth at 3.2%.
Earnings before interest and taxes (EBIT) before impairment amounted to EUR 86.8 million (9M 2020: EUR 45.1 million). The EBIT margin before impairment climbed from 3.9% in the previous year to 6.7%.
The automotive market is characterized by growing uncertainty, as far-reaching cost-cutting measures implemented by car makers are also affecting companies in the development and prototype construction sectors. As a result and in view of the changed outlook, INDUS recognized an impairment loss of EUR 5.7 million on an investment in the Automotive Technology segment in the context of the scheduled impairment test. Another impairment loss of EUR 2.5 million arose in connection with the expected disposal of the WIESAUPLAST Group and the resulting revaluation of assets and liabilities of the portfolio company. It is highly likely that the series supplier will be sold in the near future. The INDUS Board of Management is in advanced talks with a strategic investor. At EUR 78.6 million, earnings before interest and taxes (EBIT) were up by EUR 74.3 million on the previous year (EUR 4.3 million). The EBIT margin climbed to 6.1% (9M 2020: 0.4%). Earnings per share amounted to EUR 1.48, up from EUR -1.40 in the previous year.
Operating cash flow for the first nine months totaled EUR 74.1 million (9M 2020: EUR 98.2 million). Working capital increased as expected due to the strong pick-up in business activity, the deliberate stockpiling of materials that are difficult to procure, but also due to higher material prices and a resulting increase in inventory assets. Investments in property, plant and equipment and intangible assets rose to EUR 43.1 million and were thus noticeably higher than the deliberately restrictive investments in the COVID year 2020 (9M 2020: EUR 28.1 million). A further EUR 62.9 million was invested in strengthening the portfolio through the acquisitions of JST, WIRUS and FLACO. Cash and cash equivalents stood at EUR 161.2 million at the end of the quarter, providing a comfortable starting position for planned acquisitions in the defined growth industries. At 40.8%, the equity ratio was above the target of 40%.
Strong performance of the Engineering segment
The Construction/Infrastructure segment increased sales revenues by 14.3% to EUR 338.0 million (9M 2020: EUR 295.6 million). An EBIT margin of 16.0% shows that the portfolio companies again generated very high earnings (9M 2020: 18.0%). Thanks to targeted stockpiling, the segment has not experienced any major materials shortages so far.
The Automotive Technology segment increased its sales to EUR 213.0 million (9M 2020: EUR 198.2 million). The EBIT margin before impairment improved to -15.6% in the first nine months (9M 2020: -20.7%). Against the background of the shortage of chips, OEM’s order releases declined noticeably as of the third quarter, though. The shortage of materials has a direct impact on a portfolio company operating in the measurement technology sector. Also, rising material prices can be passed on to the OEMs only in part and with a certain time lag. On balance, the framework conditions and the outlook for the segment remain uncertain.
The portfolio companies in the Engineering segment increased their sales by 19.7% to EUR 311.9 million (9M 2020: EUR 260.5 million). At 11.5% (9M 2020: 5.5%), their EBIT margin is steadily approaching the high pre-crisis level. Incoming orders also remain on the increase. The complementary addition of FLACO, a manufacturer of fluid management products and systems, helped to further strengthen the segment.
Sales in the Medical Engineering / Life Science segment rose to EUR 110.6 million (9M 2020: EUR 106.7 million). The EBIT margin climbed to 8.1% (9M 2020: 7.3%). The moderate recovery in the segment thus continued.
Sales in the Metals Technology segment amounted to EUR 323.0 million, up 6.5% on the previous year (9M 2020: EUR 303.3 million). At 8.6%, the EBIT margin clearly exceeded the prior year level (9M 2020: 3.4%), with positive effects primarily provided by the measures implemented in the context of the INTERIM SPRINT program. The discontinuation of the portfolio company BACHER has been completed in the meantime. However, rising raw material prices are expected to adversely affect the segment in the future.
Materials shortages increasingly noticeable
The negative effects of the supply chain disruptions and materials shortages are expected to continue over the course of the year. The tight situation in the procurement markets is affecting the manufacturing industry in particular and is putting growing pressure on production capacity. The INDUS portfolio companies have faced greatly increased material prices for several months, which have to be offset by price increases for end products. “It is primarily the market environment for automotive technology companies which has deteriorated further since the third quarter”, says Dr. Johannes Schmidt, Chairman of the INDUS Board of Management. “Chip shortages, rising material prices and a more restrictive spending policy are weighing heavily on series suppliers, but also on our development-related portfolio companies.”
In view of this growing uncertainty in the automotive market environment, the Board of Management now projects earnings before interest and taxes (EBIT) of between EUR 95 million and EUR 110 million for the transitional year 2021. In the forecast dated 11 August 2021, EUR 100 million to EUR 115 million were projected. INDUS confirms its sales forecast of between EUR 1.6 billion and EUR 1.75 billion.
The full interim report is available on the here. An overview of the key performance indicators is available here.