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Bergisch Gladbach, 13 August 2024

INDUS performs in line with expectations in a difficult environment

- Sales at EUR 839.1 million, EBIT at EUR 64.1 million
- EBIT margin improves in Q2 and reaches 8.7%
- Strong free cash flow
- Forecast adjusted as markets will lack momentum in further course of the year

In the first half of 2024, the portfolio companies of stock exchange listed INDUS Holding AG generated sales of EUR 839.1 million. Because of the weak economy, business activity was slower than in the previous year (EUR 904.1 million), as had been expected. Adjusted EBITA amounted to EUR 73.9 million (previous year: EUR 94.5 million), due, among other things, to significant wage and salary increases. The Group generated operating income (EBIT) of EUR 64.1 million (previous year: EUR 84.9 million). The EBIT margin stood at 7.6% at the six-month stage (previous year: 9.4%). In the second quarter, the EBIT margin increased against the first quarter and reached 8.7%, which was almost on a par with the same period of the previous year (8.8%).

“In the rough waters of the first half of 2024, our portfolio companies as a whole performed in line with expectations,” said Dr. Johannes Schmidt, Chairman of the INDUS Group’s Board of Management. “And they did so although the economy remained weak. It is quite remarkable that our portfolio companies were able to clearly improve the EBIT margin in the second quarter thanks to operational excellence and strict cost management.”

Earnings per share clearly above previous year

Earnings after taxes rose by EUR 10.4 million to EUR 32.1 million (previous year: EUR 21.7 million) – especially due to the fact that the charges arising from discontinued operations in the previous year did not recur. As a result, earnings per share, at EUR 1.21, clearly exceeded the previous year’s EUR 0.80.

Three acquisitions in the first half of the year – further acquisitions planned

Operating cash flow rose to EUR 53.3 million in the first six months of 2024 (previous year: EUR 39.2 million). The seasonal increase in working capital was clearly below the prior year level. Consequently, free cash flow also picked up to EUR 41.2 million (previous year: EUR 35.2 million). At 38.0%, the equity ratio on 30 June 2024 was higher than on 31 December 2023 (37.3%).

“Our strong free cash flow gives us sufficient leeway to continue making acquisitions as planned,” said Schmidt. “In the first half of the year, we were already able to strengthen the Engineering and Infrastructure segments with a total of three acquisitions. Several M&A projects are now nearing completion. We are confident that we will fully utilize our annual M&A budget of approximately EUR 70 million.”

Despite declining sales: Infrastructure grows EBIT and EBIT margin, Materials improves margin in Q2 compared to previous quarters

Reflecting the continued weakness in the construction sector, sales in the Infrastructure segment declined to EUR 276.8 million (previous year: EUR 291.3 million). Especially the decline in housing construction and the uncertainty in the heat pumps segment had an adverse effect on business activity. At the same time, the segment companies were able to grow their EBIT to EUR 29.7 million (previous year: EUR 25.1 million). The EBIT margin increased to 10.7% (previous year: 8.6%). Incoming orders also picked up slightly to EUR 282.9 million (EUR 272.1 million). INDUS now projects a slight decrease in segment sales for the full year, with EBIT expected to increase strongly and the EBIT margin assumed to stand between 10% and 12%.

The EBIT margin in the Materials segment amounted to 9.4% in the first half of the year (previous year: 11.5%). The companies clearly increased their profitability in the second quarter, when the EBIT margin reached 10.9% and exceeded the levels of the three previous quarters. EBIT amounted to EUR 27.9 million (previous year: EUR 38.1 million). In contrast to the good first half of 2023, customers were holding back on placing orders in the first six months of 2024. Pressure on prices also increased. Sales amounted to EUR 295.8 million (previous year: EUR 331.5 million). The Board of Management now projects decreasing sales and a strong decrease in EBIT for the full year. The EBIT margin is still expected to stand between 7% and 9%.

The weak demand also put a damper on the Engineering segment, whose companies generated sales of EUR 266.1 million (previous year: EUR 280.7 million). The segment’s EBIT amounted to EUR 13.9 million (previous year: EUR 25.9 million), with the EBIT margin at 5.2% (9.2%). Orders totalling EUR 264.1 million were received in the first six months of the year (previous year: EUR 258.3 million). Orders for cleanroom systems, sorting systems and packaging machines increased particularly strongly. The order backlog rose to EUR 403.9 million (EUR 385.4 million as of 31 December 2023). In view of the weak overall market trend, however, INDUS has adjusted its forecast and now projects slightly decreasing sales, a strong decrease in EBIT and an EBIT margin of between 6.5% and 8.5%.

Weak economy weighs on expectations

“In view of the reduced growth forecasts for the German economy, our portfolio companies also had to adjust their expectations for the second half of the year,” said Schmidt. “The weak construction and agricultural machinery sector in particular is having an adverse effect on the performance in the Infrastructure and Materials segments.”

INDUS now projects sales of between EUR 1.70 billion and EUR 1.80 billion (previously: EUR 1.85 billion to EUR 1.95 billion) and operating income (EBIT) of between EUR 125 million and EUR 145 million (previously: EUR 145 million to EUR 165 million) for the full year 2024. The EBIT margin is expected to stand between 7.0% and 8.0% (previously: 7.5% to 8.5%). The free cash flow forecast remains unchanged at over EUR 110 million.

The complete interim report is available here. An overview of the key performance indicators is available here.

Note:
This press release contains forward-looking statements. These statements are based on the current views, expectations and assumptions of the management of INDUS Holding AG and comprise known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. INDUS Holding AG assumes no obligation to update forward-looking statements.

Axel Meyer

COO Engineering
Axel Meyer (German citizen, born 1968) has been a member of the INDUS Board of Management since October 2017.

Until joining INDUS, he held various management positions at Schuler AG, most recently as Managing Director of Schuler Pressen and Head of the Service Division of the Schuler Group, Goeppingen, Germany.

Previously, Axel Meyer worked as a member of the Board of Management of the international management consultancy IMAGIN Prof. Bochmann AG, Eppstein im Taunus, Germany. He started his professional career in the Schuler Group's Solid Forming Division, initially in global sales and later as Division Manager.

Axel Meyer studied industrial engineering in Germany and the USA and earned a Master of Mergers & Acquisitions (LL.M.) at the Frankfurt School of Finance & Management while working. 

Gudrun Degenhart

COO Materials Solutions
Gudrun Degenhart (German citizen, born 1970) has been a member of the Board of Management of INDUS since October 2023.

She has more than 20 years of experience in the management and development of portfolio companies in Europe, USA and the Asia-Pacific regions.

Before joining INDUS, Gudrun Degenhart was CEO for the German portfolio companies of the international service group ISS. She previously worked for the thyssenkrupp Group, including as CEO of the international business unit for special lifts and as CEO of Materials Western Europe and Asia-Pacific. She gained experience in medium-sized companies as a board member of the construction technology company Schöck.

A graduate in business administration, she began her career by building up the Central and Eastern European activities of the construction specialist Lindner Group. 

Dr. Jörn Großmann

COO Infrastructure
Dr. Jörn Großmann (German citizen, born 1968) has been a member of the INDUS Board of Management since January 2019.

Up until joining INDUS, he worked for the Dutch group Aalberts Industries, with his last position being the sole managing director of Impreglon, Lüneburg, Germany.

He previously held various positions at the Georgsmarienhütte Group, initially becoming managing director of Mannstaedt, Troisdorf, Germany and later managing director of GMH Edelstahl Service Center Burg and GMH Engineering. Before Dr. Großmann became the managing director of Buderus Feinguss, Moers, Germany, he worked as a development engineer and as a technical director for Doncasters Precision Castings, Bochum, Germany.

He studied material sciences and earned a doctorate in the field of natural sciences.

Dr. -Ing. Johannes Schmidt

CEO
Dr. -Ing. Johannes Schmidt (German citizen, born 1961) has been a member of the Board of Management of INDUS since January 2006. He has assumed the position of CEO since July 2018.

Dr. -Ing. Schmidt was previously the sole managing director of ebm-papst Landshut, Germany, a manufacturer of ventilation motors and fans. During his tenure there, his main achievements included advancing the development of new product platforms and the internationalization of production sites.

Dr. -Ing. Schmidt began his career at Richard Bergner, a manufacturer of electrical instruments from Schwabach, Germany. He initially led product development before rising to the position of managing director during his 12 years at the company.

Schmidt, who studied mathematics, gained an engineering doctorate in mechanics from the Technical University of Darmstadt. 

Rudolf Weichert

CFO
Rudolf Weichert (German citizen, born 1963) is the CFO of INDUS.

Before joining the INDUS Board of Management in June 2012, he was a Partner at KPMG for nine years. He spent three of these years in Detroit, Michigan, United States, where he worked mainly with companies in the engineering, and materials trading industries.

Mr. Weichert, who holds a masters degree in business administration, worked for KPMG for about 20 years, primarily in the firm’s Duesseldorf office, where he worked mainly with multinational manufacturing corporations.