Pleasing third quarter in good economic situation
• Organic growth across all segments: revenues climb 13.5% after nine months
• Strong third quarter: EBIT up by 12.4%
• Overall forecast 2017 confirmed
Generating revenues of EUR 1.221 billion (Q1-Q3 2016: EUR 1.076 billion), the INDUS Group was able to expand its market position across all segments in the first nine months of 2017. This positive business trend was supported by the continued very good economic environment. Earnings before interest and taxes (EBIT) rose to EUR 114.5 million (Q1-Q3 2016: EUR 106.6 million). With EBIT coming in at EUR 41.8 million, the third quarter 2017 made a disproportionate contribution to this earnings growth (Q3 2016: EUR 37.2 million). Adjusted for the effects of initial consolidations, nine-month EBIT amounted to EUR 123.8 million (Q1-Q3 2016: EUR 114.9 million). Earnings per share improved by 9.6% to EUR 2.52 (Q1-Q3 2016: EUR 2.30).
The still strongly growing Construction/Infrastructure and Engineering segments benefited from an excellent market environment, which sent their revenues rising by more than 20% each. The Medical Engineering/Life Science segment also made good revenue and earnings contributions. The good economic activity is also reflected in a 12% increase in revenues in the Metals Technology segment. The two repositioning projects in the Automotive Technology and Metals Technology segments, which have influenced the EBIT margin of the INDUS Group in the current fiscal year (Q1-Q3 2017: 9.4%), are expected to be largely completed by mid-2018. As had been projected, the success of the measures is reflected in the fact that the EBIT margin climbed to 10.0% in the third quarter. Adjusted for non-operational charges, the EBIT margin stood at 10.2% in the first nine months (Q1-Q3 2016: 10.7%) and at 10.8% in the third quarter (Q3 2016: 10.9%).
Earnings after taxes increased to EUR 62.6 million (Q1-Q3 2016: EUR 57.1 million). While the operating cash flow, at EUR 56.1 million, fell short of the prior year level (Q1-Q3 2016: EUR 71.8 million), it picked up notably in the third quarter. The reduction in working capital is expected to generate cash flow in the fourth quarter. At EUR -14.8 million, net cash used for interest payments was clearly below the prior year level (EUR -18.2 million).
At EUR -75.4 million, net cash used in investing activities remained almost unchanged from the previous year (Q1-Q3 2016: EUR -75.8 million). Against the background of upcoming loan repayments in the fourth quarter, cash and cash equivalents, at EUR 128.3 million, were more or less at year-end level (31 Dec. 2016: EUR 127.2 million). The equity ratio stood at 40.1% as of 30 September 2017, which slightly exceeded the previous quarters as expected.
The acquisitions of measurement technology specialist M+P INTERNATIONAL, Hanover, and of the PEISELER Group, a supplier of dividing heads and swivel equipment based in Remscheid, mean that INDUS has already reached its annual targets for first-tier acquisitions. A second-tier acquisition is about to be completed shortly, while the acquisition of another direct investment is underway. “We are pursuing our strategy of acquiring further hidden champions to sustainably strengthen the INDUS portfolio with great determination,” says INDUS CEO Jürgen Abromeit. “In an overheated M&A market, we even rejected a few potential acquisitions. We will not buy at any price.”
“We used the good economic situation to get even fitter for the future,” Jürgen Abromeit summarises the first nine months of 2017. “We assume that the two repositioning projects will continue to proceed to plan. Some risks remain in the Automotive Technology segment, as OEMs are reluctant to make investments as a consequence of the emissions scandal and cartel allegations as well as the electromobility challenge.” The INDUS Board of Management has confirmed its forecast for the current fiscal year and projects sales revenues in excess of EUR 1.5 billion and earnings before interest and taxes (EBIT) of between EUR 145 and 150 million. The Board of Management expects the positive business trend to continue in 2018. The company will focus on continuing its strategy of qualitative growth. “In the coming months, we will have to successfully conclude the ongoing repositioning projects and find solutions for certain issues in the Automotive Technology segment. While doing so, we will not lose sight of the fundamental course: the current technology change is the key challenge for our portfolio companies. In our role as holding company, we have responded by launching the development bank scheme, which supports disruptive innovations at our subsidiaries.”
Click here to download the full interim report for the period ended 30 September 2017 of INDUS Holding AG.