Gesco (GSC1) H2 2023 earnings summary

Executive summary

• 2023 sales were €560.7m and EBIT €35.9m, down from €582.3m and €49.4m after two record years; results were in line with the November forecast.

• Weak German demand and volatile material prices weighed on results, especially at Doerrenberg; the other nine subsidiaries collectively exceeded prior-year results.

• Internationalisation, operational excellence and digitalisation remain strategic priorities; the portfolio transformation is described as largely complete.

Financial highlights

• Sales fell 3.7% YoY to €560.7m; EBITDA was €59.0m versus €67.7m, and EBIT was €35.9m versus €49.4m.

• Net income after minority interests declined to €20.9m from €33.8m; EPS was €1.93 versus €3.12.

• Adjusted for €5.1m of non-cash impairments at AstroPlast and Funke, net income after minority interests was within the November forecast range of €19.5m–€21.5m.

• Incoming orders declined 7.8% to €542.7m; year-end order backlog fell to €196.4m from €220.6m.

• Operating cash flow rose to €32.2m from €10.7m; investing cash flow was -€21.8m, including €20.3m of PP&E and intangible-asset investment.

Outlook and guidance

• FY2024 sales are expected to rise moderately in the single-digit percentage range; consolidated net income after minority interests is expected to increase moderately, excluding impairments.

• Demand is expected to remain weak in H1 2024, with activity potentially improving in H2; most subsidiaries had order books extending into H2.

• Higher labour costs may pressure earnings; MAPEX market-share initiatives and OPEX efficiency actions are intended to offset cost headwinds.

• GESCO SE expects investment income and net income broadly at 2023 levels, with an equity ratio above 80% if the portfolio remains materially unchanged.