Ariston Holding (ARIS) H1 2024 earnings summary

Executive summary

• Q2 and H1 2024 experienced the weakest European heating demand in decades, with net revenues down 17% in Q2 to €621M and H1 revenues at €1,274M, reflecting normalization after a 2023 peak and ongoing destocking.

• Heat pump volumes in key European countries dropped over 40-50%, causing a heating market value decline of more than 30%.

• Service and parts business outperformed as maintenance was favored over renewal, while traditional gas and oil heating performed better than heat pumps.

• The Russian business was deconsolidated after a government decree, resulting in a €46M impairment.

• Management expects 2024 to be a bottom year, with a long U-shaped recovery anticipated from 2025 and a positive mid-term outlook.

Financial highlights

• Q2 2024 net revenues were €621M, down 17% year-over-year; H1 2024 net revenues were €1,274M, down 15.5%.

• Adjusted EBIT margin in Q2 was 4.3%, more than halved from last year; H1 adjusted EBIT was €57M (4.5% margin), down over 62%.

• Adjusted EBITDA margin for H1 was 8.9%, down from 13.6% a year earlier.

• Free cash flow in Q2 was €27M, up from €6M the prior year, with H1 free cash flow improving to -€23.9M from -€30.3M.

• H1 reported net loss was €31.9M, compared to a €101.6M profit in H1 2023.

Outlook and guidance

• 2024 revenue is expected to decrease by 12-15% year-on-year on a like-for-like basis, with adjusted EBIT margin guided at around 6%.

• No immediate market recovery is expected; H2 demand remains weak, with a gradual recovery anticipated from 2025.

• Mid-term fundamentals remain intact, with expectations of mid-single-digit organic growth and adjusted EBIT margin above 10% as demand recovers.

• Enhanced cost containment and efficiency initiatives are expected to deliver €70–80M impact in 2024.