NORMA Group Increases Profitability in the Second Quarter of 2023
- Sales in Q2 2023 grew by 1.9 percent compared to the same quarter of the previous year to 324.0 million euros
- Adjusted operating result (EBIT) increases to 27.1 million euros
- Adjusted EBIT margin at 8.4 percent
- Forecast for full year 2023 confirmed
NORMA Group grew slightly in the second quarter of 2023 and improved its profitability. Significant growth impulses were provided by the noticeably increased demand from the automotive industry and targeted price management. Lower demand in the area of water management was more than compensated for.
According to figures presented today, consolidated sales increased by 1.9 percent to 324.0 million euros compared to the same quarter of the previous year ( Q2 2022 : 317.9 million euros). The company grew organically by 4.0 percent between April and June 2023 . Negative currency effects related to the US dollar reduced sales growth by 2.0 percent. Adjusted earnings before interest and taxes (adjusted EBIT) rose sharply by 21.2 percent in the second quarter of 2023 compared to the same quarter of the previous year to 27.1 million euros ( Q2 2022 : 22.3 million euros). The adjusted EBIT margin was 8.4 percent and was therefore also above the previous year’s value ( Q2 2022 : 7.0 percent). The operating net cash flow was EUR 31.9 million in the second quarter of 2023 , an improvement compared to the comparable quarter of 2022 ( Q2 2022 : EUR 26.4 million).
CEO Guido Grandi: “We completed a successful second quarter and launched the first initiatives from our Step Up growth program. We have improved our profitability both compared to the same quarter of the previous year and compared to the first quarter of 2023. We also managed to cushion the effects of inflation. Our global presence and our broad portfolio of connection technology for vehicles, water management, mechanical engineering and other industries make us robust – this is paying off in the currently subdued overall economic environment . “
Strong growth in Europe and Asia, decline in America
In the EMEA region (Europe, Middle East and Africa) the growth trend of the first quarter of 2023 continued: Sales rose significantly by 12.4 percent to 136.6 million euros in the second quarter of 2023 compared to the previous year ( Q2 2022 : 121 .6 million euros). Negative currency effects reduced growth insignificantly by 0.3 percent. The strong organic growth of 12.7 percent is based primarily on a good recovery in the automotive industry and increased demand for connection solutions for cars of all drive types . Sales also increased in the area of industrial applications.
In the Americas region, sales fell by 6.9 percent to 144.5 million euros in the second quarter of 2023 compared to the same period last year ( Q2 2022 : 155.3 million euros). Organic sales fell by 5.2 percent; Currency effects additionally depressed sales development by -1.8 percent. After a strong quarter in the previous year, sales of connection technology for cars and commercial vehicles were lower. Water management products business was also lower after a very strong quarter last year, but improved compared to the first three months of 2023.
In the Asia-Pacific region, sales grew by 4.5 percent in the second quarter compared to the same period last year to 42.9 million euros ( Q2 2022 : 41.1 million euros). Organic sales rose sharply by 12.5 percent; Negative currency effects reduced sales growth by 8.1 percent. Above all, the increased demand from Chinese automobile manufacturers for connection technology compared to the previous year’s quarter, which was characterized by lockdown, led to a higher business volume in the region. The business with standard connection technology for water management and industrial applications, however, recorded lower sales than in the same period of the previous year.
First half of 2023: Growth and profitability in line with business expectations
In the first six months of the 2023 financial year, consolidated sales reached 639.0 million euros. This corresponds to an increase of 2.7 percent compared to the same period last year (H1 2022: 622.3 million euros). Organic sales grew by 3.1 percent in the six-month period; Negative currency effects reduced revenue by 0.4 percent. The adjusted earnings before interest and taxes (adjusted EBIT) amounted to a total of 49.7 million euros in the period January to June 2023 (H1 2022: 52.7 million euros). The adjusted EBIT margin was 7.8 percent ( H1 2022 : 8.5 percent). The operating net cash flow was negative at -12.9 million euros in the first half of 2023 (H1 2022: 9.8 million euros). One reason for this was investments in additional production capacities: In the first half of 2023, NORMA Group opened a new plant for water management products in the USA and expanded a location in China.
Guido Grandi: “NORMA Group performed well in the first half of the year. The business environment will remain challenging in the second half of the year. However, we have created a good starting position for the coming months and want to further increase our efficiency in production and logistics as the year progresses. We have identified a variety of growth opportunities in our strategic business areas of industrial applications, water management and mobility and new energies and will consistently exploit them.”
NORMA Group launched the five-year “Step Up” growth program in May 2023. The measures are divided, on the one hand, into growth and investment plans for the three strategic business units Industrial Applications, Water Management and Mobility and New Energies and, on the other hand, into measures to increase operational efficiency. With these measures, NORMA Group wants to ensure long-term profitable growth.
Forecast for 2023 confirmed
The Management Board confirms the expectations for the 2023 financial year published at the end of March with regard to growth, profitability and cash flow: NORMA Group is aiming for organic group sales growth in the mid-single-digit range for the year as a whole. In terms of profitability, the board expects an adjusted EBIT margin of around 8 percent for 2023 . The target value for the operating net cash flow is around 70 million euros.
www.normagroup.com
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