Financial and press releases
INDUS acquires hidden champion in growing construction industry
- Solid financial year 2020 in line with expectations
- Proposed dividend of EUR 0.80 at prior year level
- Noticeable recovery expected in transition year 2021; good start to the year
INDUS Holding AG, a German exchange-listed company, will acquire 70 percent of the shares in WIRUS Fenster GmbH & Co. KG (WIRUS) headquartered in Rietberg-Mastholte in the district of Gütersloh. Employing some 245 people, the highly profitable window manufacturer generated sales revenues of approx. EUR 56 million in 2020. The WIRUS product range comprises plastic and aluminum windows, sliding, front and side entrance doors as well as privacy shields and sun protection systems. Following the latest acquisitions of JST and WIRUS, INDUS now has 48 investments in its portfolio.
“The general conditions for attractive acquisitions have improved noticeably,” says Dr. Johannes Schmidt, Chairman of the Board of Management of the INDUS Group. “By making the second acquisition within the past four months, we clearly underline our growth ambitions.” WIRUS complements the INDUS portfolio in the Construction/Infrastructure segment. There is still good potential for growth in the construction industry. “With an above-average level of digitalization in sales, production and logistics as well as strong growth, WIRUS embodies the hidden champion we are looking for in our portfolio,” says Dr. Schmidt. “Lean manufacturing, just-in-time delivery without intermediate storage and the networking of the complete supply chain via the ERP system make the organization of WIRUS so efficient.” Christoph Ruoff, Managing Director and principal owner since 2002, will stay at the company’s helm as Managing Director. The Ruoff family will continue to hold 30 percent of the shares in WIRUS. The acquisition is subject to approval by the antitrust authorities.
Solid business performance in FY 2020 thanks to broad-based portfolio
In the financial year 2020, INDUS Holding AG generated sales of EUR 1.56 billion (previous year: EUR 1.74 billion) and thus achieved its forecast (EUR 1.45 billion – EUR 1.6 billion) confirmed in the interim report for the third quarter of 2020 in spite of the sharp drop caused by the coronavirus crisis. Against the background of the COVID-19 pandemic and the structural transformation in the automotive industry, earnings before interest and taxes (EBIT) stood at EUR 25.1 million (previous year EUR 117.9 million). The EBIT margin was 1.6% (previous year 6.8%). Non-cash impairment losses on goodwill, property, plant and equipment and intangible assets totaling EUR 40.6 million were recognized in the INDUS Group’s profit/loss already in the second and third quarters. The EBIT margin before impairment losses stood at 4.2% (previous year 7.8%).
Earnings before taxes (EBT) came in at EUR 9.6 million (previous year EUR 99.0 million). Earnings after taxes amounted to EUR -26.9 million (previous year EUR 60.1 million).
Total assets stood at EUR 1.73 billion at the reporting date, and were thus below the prior year level (EUR 1.81 billion) due to impairment losses, a deliberately restrictive investment policy in the COVID-19 year as well as active working capital management. With equity at EUR 676.4 million (previous year EUR 727.7 million), the equity ratio reached 39.1%, which was only slightly lower than in the previous year (40.2%). Net debt amounted to EUR 518.9 million at the end of the year (previous year EUR 546.2 million). The repayment term (net debt/EBITDA) is 3.3 years (previous year 2.4 years), while gearing (net debt/equity) is 77% (previous year 75%). “INDUS was able to maintain high cash flow and stable balance sheet ratios even in the difficult financial year 2020,” says Rudolf Weichert, Chief Financial Officer of INDUS. “This is also the result of the measures defined in the PARKOUR strategy program aimed at increasing financial excellence.”
Investments in the total amount of EUR 53.5 million (previous year EUR 107.5 million) focused on the selective improvement of value-added processes through investments in property, plant and equipment (EUR 44.1 million). An amount of EUR 8.4 million was invested in intangible assets such as new ERP systems.
Construction/Infrastructure segment again posts record results; performance of other segments impeded by COVID-19
The INDUS portfolio comprised 46 companies as of the reporting date. Unimpressed by the coronavirus crisis, the EBIT margin in the most profitable segment, Construction/Infrastructure, reached a new high of 16.8% in 2020. By contrast, the Automotive Technology segment’s sales and earning were adversely affected by strong effects of the coronavirus pandemic and the structural transformation of the automotive industry. In the context of the INTERIM SPRINT program, one direct investment and one sub-subsidiary were sold. The repositioning exercises of the two largest series suppliers continue to proceed according to plan; new contracts have been won, also in the important e-mobility segment. While portfolio companies in the Engineering segment held up well during the crisis, they were unable to fully offset the COVID-related market slump in the second quarter although the market started to recover in the fall. The Medical Engineering / Life Science segment also felt the effects of the two lockdowns on sales and earnings. The Metals Technology segment, which now generates the highest sales revenues of all segments, suffered only slight losses in 2020 as international sales of carbide products picked up. The measures taken in the context of the shutdown of BACHER AG reduced the segment’s operating result. The shutdown will be completed by mid-2021.
High operating cash flow secures liquidity also in times of crisis
Operating cash flow in the past financial year increased to EUR 174.4 million (previous year EUR 167.7 million). This is primarily attributable to the fact that working capital declined noticeably by approx. EUR 64 million due to the reduction in inventories. The company deliberately built up a liquidity buffer in 2020 as a precaution against the potential effects of the coronavirus pandemic. Cash and cash equivalents totaled EUR 194.7 million as of the reporting date (previous year EUR 135.1 million). The INDUS Group used part of these fund to finance the acquisition of control room specialist JST in January 2021.
Divided at prior year level
Against the background of the strong cash flow and the improved outlook for the financial year 2021, the Board of Management and the Supervisory Board will propose a dividend at the prior year level of EUR 0.80 per share to the Annual Shareholders’ Meeting on 26 May 2021. This means that around 55% of INDUS Holding AG’s distributable profit will be paid out. The dividend proposal takes into account the forecast for 2021 and thus a significant improvement of the financial position compared with the previous year.
Outlook on 2021: Noticeable recovery while uncertainty remains high
“2021 will be a year of transition for the INDUS Group – with the improving macroeconomic trend and the effects of the INTERIM SPRINT set of measures providing tailwind for our portfolio companies,” says Dr. Johannes Schmidt, Chairman of the INDUS Board of Management. “We aim to further increase the performance of our portfolio companies in 2021 with the help of our PARKOUR strategy program. Besides the core points of the program, “Strengthen the portfolio structure”, “Promote innovation” and “Increase performance”, we will place an even stronger focus on promoting sustainable operation in all INDUS companies.”
Given the overall environment, the forecast for the financial year 2021 is still subject to uncertainty. In view of the good start in January and February 2021, the Board of Management projects sales of between EUR 1.55 billion and EUR 1.70 billion and a return to clearly higher earnings before interest and taxes (EBIT) of EUR 95 million to EUR 110 million. This forecast does not take into account new acquisitions at the first and second tier. “The recent acquisitions of JST and WIRUS show that the M&A market is picking up again and offers further attractive targets for our Group,” says Dr. Johannes Schmidt.