HERMLE bucks a challenging environment
HERMLE bucks a challenging environment and invests in the future
Group-wide turnover after nine months down 4.5% year on year
New orders decreased by 10% to €m 337
Further slowdown in Q4 anticipated
Forecast for 2024 as a whole confirmed
Gosheim, 19 November 2024 – Maschinenfabrik Berthold HERMLE AG has performed well in 2024 despite the extremely challenging macroeconomic environment and successfully stabilised Group-wide turnover during the third quarter at the same level as the previous year. During the first nine months, Group-wide turnover at the Swabian automation and machine tool specialist fell 4.5% year on year to €m 363.8 (previous year: €m 380.9). This shows that HERMLE is more resilient than the German machine tool industry as a whole, which, according to the VDW industry association, reported a decline in turnover of 8% in the same period. Business volume at HERMLE fell domestically by 3.7% to €m 135.0 (previous year: €m 140.2) and internationally by 4.9% to €m 228.8 (previous year: €m 240.7). This led to an export quota of 62.9% (previous year 63.2%). This solid development was based on the company’s strong order backlog, which was further reduced in the third quarter and amounted to €m 103.8 at the end of September (31.12.2023: €m 130.5; 30.9.2023: €m 161.1).
Against the background of growing geopolitical uncertainty and government intervention, weak economic activity in Germany in particular and elsewhere in Europe as well as structural changes including in the automotive sector, the reluctance by industry to invest has grown more pronounced since the middle of the year. HERMLE is also increasingly impacted by this. Incoming orders across the Group during the first three quarters of 2024 fell 9.9% to €m 337.1 (previous year: €m 374.1). Of this total, €m 118.8 was generated domestically (previous year: €m 132.0) and €m 218.3 internationally (previous year: €m 242.1). According to VDW figures, new orders in the German machine tool industry as a whole fell by 23% during the reporting period. HERMLE attributes its better performance to a strong position in the automation sector and the associated growth in service activities as well as the increasing internationalisation outside Europe. Growth in demand in North America, for example, had a stabilising effect.
The earnings, financial and asset situation of HERMLE remained solid in the first nine months of 2024, even though profits fell much more sharply than sales, primarily due to the anticipated reduction in capacity utilisation. As at the end of September, the company still retained a high level of cash and cash equivalents and an equity ratio of 72.4% (31.12.2023: 72.5%; 30.9.2023: 70.0%).
This puts HERMLE in a strong position to implement the future projects it has started regardless of the current economic situation. These include, for example, the multi-year investment programme to expand its production sites, which has seen investments in property, plant and equipment and intangible assets increase from €m 19.9 to €m 32.9 during the reporting period. The focus here was on expanding the production site in Zimmern ob Rottweil, where the company commissioned another production line for automation components and additional storage areas during the third quarter. Other focal areas included the acquisition of Gebr. Grieswald GmbH & Co. KG, Burladingen, which specialises in high-precision grinding parts, as well as construction of the new premises for spindle assembly and measuring technology at the company headquarters in Gosheim. Work also began here on the demolition of old parts of the building to make way for a new application centre and an adjoining staff canteen. HERMLE also continues to invest in cyber security.
The company is currently driving forward another important future project to convert the entire product portfolio to Generation 2. In so doing, the company is redesigning the entire electrical architecture of its machining centres and bringing all interfaces up to the state of the art. HERMLE is also continuing its R&D activities at a high level in order to expand and continuously improve its product range.
The company is also sticking to its long-term human resources policy, which places particular importance on promoting young talent. As at 30 September 2024, HERMLE has increased the number of apprentices and dual-study students to 132 (previous year: 116) to counteract a future shortage of skilled workers. The company also increased its workforce at various international subsidiaries, at the divisions involved in automation solutions and as a result of the takeover of the former supplier Grieswald in April. As at the reporting date, the HERMLE Group employed a total of 1,600 employees worldwide (31.12.2023: 1,511; 30.9.2023: 1506).
HERMLE believes that the decline in demand will continue or even accelerate in the coming months. A wide range of global political tensions such as the wars in Ukraine and the Middle East as well as increasingly interventionist trade and industrial policies with the associated tariff conflicts between the EU and China and the US present significant risks. These are compounded by crippling over-regulation in Europe, a government crisis in Germany that is delaying important decisions and uncertainty about the future political course of the US. Due to these problems that overlap at multiple levels, HERMLE expects sluggish demand to persist. As a precautionary measure, the company has already decided to introduce production-free days in the fourth quarter of 2024 and has requested short-time working for individual departments. The company then plans to roll out short-time working across the majority of production areas during the first quarter of 2025. At the same time, it will focus on reducing flexitime accounts in the indirect areas in order to adapt flexibly to declining demand.
The forecast for the full year 2024 remains largely unchanged: HERMLE expects Group-wide turnover to fall by at least a high single-digit percentage or even slightly more than 10% compared to the previous year. Profits will decrease disproportionately. In addition to substantially weaker capacity utilisation in the fourth quarter, this can also be attributed to higher personnel costs during the year to date due to the expansion of the workforce, collectively agreed wage increases, stubbornly high sickness rates and the greater workload resulting from growing bureaucratisation and over-regulation. These factors are exacerbated by increasingly intense competition and spiralling fixed costs due to the expansion of the Zimmern production site.
Notwithstanding the present economic challenges, HERMLE is fundamentally well positioned for the years ahead and is fully prepared not only to withstand a prolonged economic slump but also to react quickly to the next upturn. Thanks to the company’s sound financial situation, future projects such as Generation 2 or the construction of the new application centre can be implemented even in times of economic weakness. The company also profits from its strong position in the automation sector, which continues to offer major growth opportunities, high product and service quality, increasing internationalisation and its competent and highly motivated team.
Press contact: Redaktionsbüro tik GmbH, Gabriele Rechinger, Phone +49 (0)911 988 170 72, E-Mail: info@tik-online.de
Image material: Maschinenfabrik Berthold HERMLE AG, Marketing Department, Email: marketing@hermle.de
