H+H International (HH) Q2 2024 earnings summary

Executive summary

• Double-digit revenue growth in the UK and Poland in H1 2024, while Germany experienced a 25% revenue decline and no signs of recovery.

• Capacity is being ramped up in the UK (Pollington plant reopening) and Poland, with the plant network streamlined and Borough Green plant temporarily closed.

• Conditional agreement to sell Warsaw plant land for PLN 110 million (approx. DKK 190 million), expected to improve liquidity and financial gearing.

• Group revenue and sales volumes were flat year-over-year, with organic growth offset by country mix and lower prices in Poland.

• Cash flow from operating activities improved to DKK 56 million in Q2 2024, driven by destocking and reduced inventories.

Financial highlights

• Q2 2024 revenue was DKK 725 million, with H1 2024 revenue at DKK 1,369 million, both flat year-over-year.

• Gross margin before special items declined to 18% in Q2 and H1 2024 (from 24% in 2023), mainly due to destocking and unfavorable gas contracts.

• EBIT before special items was negative DKK 5 million in Q2 2024 (Q2 2023: positive DKK 38 million); H1 2024 EBIT before special items was negative DKK 26 million (H1 2023: positive DKK 59 million).

• Free cash flow improved to DKK 22 million in Q2 2024 (Q2 2023: negative DKK 161 million).

• Special items in H1 2024 include DKK 93 million loss on gas contracts, DKK 17 million loss on gas sold, and DKK 32 million restructuring costs.

Outlook and guidance

• 2024 revenue growth guidance narrowed to around 0% (from -5% to +5%).

• EBIT before special items for 2024 guided to DKK 50–100 million (previously DKK 50–150 million), reflecting German market weakness and plant closures.

• Sale of Warsaw land (DKK 190 million sales price, DKK 140–150 million net gain) will reduce net debt but is treated as a special item and does not impact guidance.

• Guidance assumes building activity at 2023 levels, stable prices, and no major FX changes.