Maschinenfabrik Berthold Hermle (MBH3) H1 2024 earnings summary

Executive summary

• H1 2024 revenue and orders declined amid weak demand; EBIT fell faster than sales, while performance was slightly better than expected and the industry.

• Automation, service quality and international expansion helped cushion the downturn; a further marked slowdown is expected in H2.

Financial highlights

• Revenue was €241.8m, down 7.4% YoY; order intake fell 6.2% to €250.9m and backlog declined 20.0% to €139.6m.

• EBIT decreased 22.1% to €38.5m; pretax income was €40.6m vs €50.4m, and net income was €29.8m vs €37.1m.

• EPS was €5.96 per ordinary share and €5.99 per preferred share, compared with €7.42 and €7.44, respectively.

• H1 capex in property, plant, equipment and intangibles rose 49.2% to €19.4m; depreciation was €6.7m vs €5.8m.

Outlook and guidance

• FY2024 revenue is forecast to decline by a high single-digit percentage in the best case, or by ~20% in an adverse scenario; the current expectation is the midpoint or lower half of that range.

• FY2024 earnings are expected to fall disproportionately to revenue, pressured by lower utilization, higher Q4 labor costs, regulatory expenses and energy prices that cannot be fully passed on.

• H2 demand is expected to weaken further as July demand and economic indicators deteriorated; the existing backlog’s cushioning effect is fading.

• Medium-term demand for high-quality automation solutions and machining centers is expected to grow, supported by labor scarcity and customers’ efficiency needs.