HERMLE impacted by the economy in the first five months of 2024
Automation solutions and internationalisation stabilise demand
Forecast for the year as a whole unchanged
Shareholders’ meeting approves increased distribution of €15.05 per preference share (previous year € 11.05)
Gosheim, 3 July 2024 – As expected, Maschinenfabrik Berthold HERMLE AG recorded subdued demand in the first five months of 2024 due to the economic situation. The incoming orders of the Swabian automation and machine tool specialist fell across the Group by 8.2% to €208.2 million compared to the same period of the previous year (previous year €226.9 million). Of this, €74.2 million came from domestic customers (previous year €78.0 million) and €134.0 million from international customers (previous year €148.9 million). As of 31 May 2024, the HERMLE Group's order backlog amounted to € 149.6 million (previous year €186.2 million).
HERMLE therefore outperformed the German machine tool industry as a whole which, according to the VDW industry association, received around 23% fewer new orders in the first five months of 2024. HERMLE benefits from a broad product and solution portfolio in the field of automation, a portfolio which is being continuously expanded. In this high-growth segment, which has stabilised demand in the year to date, the company positioned itself early on as a full-service provider.
HERMLE Group turnover fell by 9.4% to €189.1 million by the end of May 2024 (previous year €208.8 million). The business volume in Germany totalled €67.1 million (previous year €78.9 million) and outside Germany €122.0 million (previous year €129.9 million). This results in a further increase in the export ratio to 64.5% (previous year 62.2%), reflecting the great importance of HERMLE's internationalisation strategy. The profit fell at a much faster rate than sales; this is due not only to lower capacity utilisation but also to higher personnel costs.
At the company's Shareholders' Meeting today, the HERMLE Executive Board cited uncertain economic and political conditions in Germany and Europe, further increases in wage and material costs, the growing shortage of skilled labour, numerous geopolitical conflicts and rampant bureaucratisation, which is weakening the important EU internal market, as the main reasons for the industry's reluctance to invest. At the same time, HERMLE is observing slower momentum in many overseas markets; this is further hampered by very slow export authorisation procedures.
As demand was still subdued in June, the company is sticking to its previous forecast: For 2024 as a whole, HERMLE expects that, even in the best-case scenario, sales will not reach the previous year's good level (previous year: €532.3 million). In the unfavourable scenario of further intensified cooling, sales could fall by around 20%. From today's perspective, a value in the middle or lower half of this range is to be expected, although swings in both directions are still possible due to the high level of uncertainty. The operating result is expected to develop at a significantly lower rate than sales (previous year €115.8 million). In addition to the lower capacity utilisation and the further increase in personnel costs in the metal industry in the fourth quarter due to collective wage agreements, further increases in regulatory expenses and energy prices, which cannot be passed on sufficiently in the current market environment, are likely to have an impact.
Irrespective of the current weakness in demand, HERMLE expects demand for its high-quality automation solutions and machining centres to increase in the medium term. The company is therefore implementing an extensive investment programme for its production sites: In Zimmern ob Rottweil, work is currently underway on the interior of the new buildings for the expansion of mineral casting production, a second large parts production facility and additional assembly and storage areas. Commissioning is scheduled for the end of 2024. In the first half of 2024, the company moved into modernised premises for spindle assembly and training at its headquarters in Gosheim. The next step is to build a new application centre and a canteen for the employees.
During today’s shareholders’ meeting, the resolution to raise the dividend was passed, along with the approval of other proposals put forward by the management. For 2023, shareholders will receive a dividend of €15.05 (previous year €11.05) per preference share and €15.00 (previous year €11.00) per ordinary share. The distribution consists of an unchanged basic dividend of €0.85 or €0.80 and a bonus per share increased from €10.20 to €14.20. Based on the year-end share price for 2023, this results in a dividend yield of 7% for the preference share. The basis for the increased distribution is the very satisfactory business development in 2023 in which HERMLE achieved new sales and profit highs.
In order to give the workforce a share in the company's success and to honour their valuable contribution, employees in Germany will again receive a performance bonus following the dividend payment; this performance bonus will be linked to the increased dividend.
As of 31 May 2024, HERMLE had 1,551 employees across the Group (31.5.2023: 1,433; 31.12.2023: 1,511). In the year to date, new appointments have been made in the areas of service, materials management and design, among others. In addition, we took on around 20 employees from the former Gebr. Grieswald GmbH & Co. KG, Burladingen. HERMLE acquired this specialist for high-precision grinding parts on 1 April 2024 as part of an asset deal, thereby strengthening its core competence in spindle assembly. The plant in Burladingen will continue to operate as HERMLE's third production site in the region and will be increasingly geared towards HERMLE's requirements in the coming months in order to increase the proportion of spindle parts supplied in-house. Investments in the automation of the site are also planned.
Press contact: Redaktionsbüro tik GmbH, Gabriele Rechinger,
T 0911 988 170 72, E-Mail: info@tik-online.de
Image material: Maschinenfabrik Berthold HERMLE AG, Udo Hipp,
T 07426 95 6238, E-Mail: udo.hipp@hermle.de
