Financial and press releases
INDUS Group remains robust in challenging market environment
- Sales up by approx. 11% in H1 2022
- Noticeable sales and EBIT growth in three segments
- Losses in Automotive Technology segment increased further due to high costs
- Forecast adjusted
In the first half of the year 2022, INDUS Holding AG, a stock exchange listed holding company, increased its sales by 11.1% to EUR 944.9 million (H1 2021: EUR 850.3 million). 8.2% of this increase in sales was organic growth. The INDUS Group’s operating income (EBIT) amounted to EUR 51.1 million (H1 2021: EUR 56.3 million). It was adversely affected by sharply rising material and energy costs and higher freight and logistics costs. This affected primarily the Automotive Technology segment. The EBIT margin stood at 5.4% (H1 2021: 6.6%).
“The INDUS Group has delivered a respectable performance in spite of the deteriorating global and economic situation. In total, four out of five segments easily reach our target margin of 10% + X,” says INDUS CEO Dr. Johannes Schmidt.
Noticeable sales and EBIT growth in three segments despite difficult conditions
The companies in the Construction/Infrastructure segment again showed a very good performance, with sales (+21.0% to EUR 261.5 million) and EBIT (+9.3% to EUR 38.9 million) clearly higher than in the previous year. WIRUS, a new acquisition, contributed to this increase. Supply chain disruptions and material price increases impacted the EBIT margin. At 14.9% (H1 2021: 16.5%), however, the latter remained at a high level and at the upper end of the target range of 13-15%.
The companies in the Engineering segment also increased their sales by a noticeable 24.3% year-on-year to EUR 247.2 million. The increase was driven by FLACO and TECALEMIT Inc., two acquisitions from 2021, and by the most recent acquisitions, HEIBER + SCHRÖDER and HELD, but also by broad organic growth of 10.0%. The segment’s EBIT increased by 31.3% to EUR 26.0 million, while the EBIT margin climbed to 10.5% (H1 2021: 10.0%).
Sales in the Medical Engineering/Life Science segment rose by 5.7% to EUR 77.4 million, especially due to growth in optical lenses and rehabilitation technology. The segment’s EBIT of EUR 5.0 million (H1 2021: EUR 5.8 million) was influenced by higher material prices and logistic costs, which are difficult to pass on to customers. The EBIT margin stood at 6.5% (H1 2021: 7.9%).
The Metals Technology segment recorded an increase in both sales (+7.5% to EUR 235.2 million) and EBIT (+37.2% to EUR 26.9 million). The sales loss resulting from the discontinuation of BACHER was more than offset. The segment’s EBIT should be seen against the background of two one-time effects, as the discontinuation of BACHER weighed on the bottom line in the previous year, and income from the sale of a property was generated in the first half of 2022. This was one of the reasons why the EBIT margin increased to 11.4% (H1 2021: 9.0%). The Metals Technology companies are also feeling the effects of increased material and energy prices, which can be passed on to customers to different extents and depending on contract terms.
Sales in the Automotive Technology segment amounted to EUR 123.3 million, which was 14.1% below the prior year level (H1 2021: EUR 143.5 million). This is due to the sale of the WIESAUPLAST Group at the end of 2021. The segment’s EBIT decreased to EUR -40.4 million (H1 2021: EUR -19.5 million). This includes an impairment loss recognized in Q1 2022
in the total amount of EUR 4.6 million. The massive increase in material and energy prices and the higher freight and logistics costs had a particularly adverse impact on series suppliers’ earnings. It has not been possible yet to pass the increased costs on to customers. The aim is to adjust selling prices at least partially in the second half of 2022. “Developments in the Automotive Technology segment remain challenging,” says Dr. Schmidt. “In light of the ongoing negative overall conditions, the status of the ongoing restructuring and the planning for the coming years, which will be updated as scheduled, we will be looking closely in the coming weeks at continuation scenarios with series suppliers.”
Working capital to be reduced noticeably by the end of the year
With a view to cushioning supply chain disruptions and material price increases, the portfolio companies have deliberately built up inventories. As a result of the sharp rise in sales, receivables have also picked up. Working capital has risen to EUR 603.5 million (31 December 2021: EUR 457.5 million), but is to be reduced noticeably by the end of the year. Cash flow from operating activities stood at EUR -39.7 million in the first six months (H1 2021: EUR 22.8 million). Cash and cash equivalents amounted to EUR 115.3 million (31 December 2021: EUR 136.3 million).
Forecast adjusted in view of poorer framework conditions
“Every day, our portfolio companies are mastering the complex challenges in the difficult macroeconomic environment,” says Dr. Johannes Schmidt. “They are primarily feeling the sometimes extreme increases in the prices of materials and energy. Passing these increased costs on to customers is more or less successful, depending on the line of industry.”
Against the background of many portfolio companies passing on price increases due to increased inflation, the INDUS Board of Management now projects higher consolidated sales of between EUR 1.90 billion and EUR 2.00 billion for the financial year 2022. Operating income (EBIT) will be adversely affected by higher material prices in the Automotive Technology segment as well as by foreseeable increases in personnel and energy costs for the entire portfolio in the second half of the year. INDUS expects operating income (EBIT) of between EUR 100 million and EUR 115 million for the year as a whole. In the forecast dated 23 March 2022, the company had projected sales of between EUR 1.80 billion and EUR 1.95 billion and operating income (EBIT) of between EUR 115 million and EUR 130 million. The consequences of a potential gas cut-off have not been taken into account, as the macroeconomic effects of such a cut-off on the INDUS portfolio companies cannot be realistically estimated at present.
The full interim report is available on the here. An overview of the key performance indicators is available here.