HUBER+SUHNER reports clear upward trend compared to second half of 2023 | 20.08.24

Key figures

Following low order intake in the second half of 2023, HUBER+SUHNER reported a strong rebound in demand in the first half of 2024, resulting in an increase in order intake of 14.9% compared to the strong prior-year period to CHF 521.0 million. This was 41.5% higher than the second half of 2023, underlining the clear upward trend.

Solid demand in aerospace and defense helped the Industry segment escape the low point it experienced in the second half of 2023, as expected. Despite a continued weak global market environment, the Communications segment reported a strong upward trend thanks to individual large project wins. After the strong recovery of the previous two years, the Transportation segment did not reach the highs of the prior year period.

At CHF 430.6 million, net sales were 9.8% below the prior-year level (CHF 477.3 million). Compared to the second half of 2023, however, this was a strong rebound of 15.2%. The book-to-bill rate improved to 1.21 (PY 0.95), increasing the order book to CHF 367.4 million. Adjusted for currency, copper price and portfolio effects, the net sales shortfall was 7.3%. Year-on-year, the net sales share by region remained stable with EMEA at 55% (PY 54%), APAC at 27% (PY 27%) and Americas at 18% (PY 19%).

At 9.6%, EBIT margin was within the medium-term target range of 9-12%, which was well above the figure for 2023 as a whole. This was driven by improved gross margin resulting from a higher share of net sales from the high-margin growth initiatives, and both lower inventory levels and production capacities.

Net profit for the first half of the year was CHF 34.8 million (PY CHF 38.2 million), helped by a further low tax rate. After the cancellation of 5% of the shares after the 2024 Annual General Meeting, the number of remaining shares is 19,190,000.

Free operating cash flow for the first six months was CHF 19.4 million (PY CHF 9.6 million). The global workforce was 4,150 (PY 4,278). This decrease was mainly due to China and Switzerland, where the workforce decreased to 1,171 (PY 1,184).

Industrial segment shows good profitability after low point in order intake

In the Industry market segment, order intake turned positive over the course of the reporting period. Of all subsegments, the aerospace and defense growth initiative reported the strongest year-on-year growth. Continued strong demand was driven by successes in both defense and space projects. The two subsegments of high-power charging and test and measurement also placed more orders than in the prior-year period. In contrast, the lower order intake from the second half of 2023 resulted in lower net sales in the first half of 2024 in all subsegments compared to the same period in the prior year. Order intake amounted to CHF 165.7 million (PY CHF 148.6 million) and net sales to CHF 134.8 million, which was 15.5% lower than in the prior-year period. This resulted in a book-to-bill rate of 1.23 (PY 0.93). The reported EBIT of CHF 22.9 million (PY CHF 30.2 million) corresponds to an EBIT margin of 17.0% (PY 18.9%).

High order intake and improved profitability in the communications segment in a challenging market environment

In the Communications market segment, order intake began to improve slightly in the last quarter of 2023 after a severe drop in demand in the second and third quarters of 2023, and increased significantly in the reporting year. This development was attributable to significant orders related to the expansion of the mobile communications infrastructure in Asia, as well as successes in the data center growth initiative. So far, there has been no recovery in the communications market as a whole. The data center business benefited from the growing demand for optical switches due to the expansion of the AI ​​infrastructure. In order to meet this increased demand for such high-tech products, construction of a new production site in Poland was started in the immediate vicinity of the existing site. The remaining two subsegments, manufacturers of communications equipment and fixed access networks, also reported significantly higher order intake. The positive momentum of order intake in the Communications segment has not yet been fully reflected in net sales, which were down on the prior-year period but 41.2% higher than in the second half of 2023. Order intake in the first half of the year amounted to CHF 214.9 million (PY CHF 148.1 million) and net sales to CHF 156.0 million, 8.2% lower than in the previous year. The book-to-bill ratio thus reached a high level of 1.38 (PY 0.87). With EBIT of CHF 10.4 million (PY CHF 6.2 million), the EBIT margin almost doubled year-on-year to 6.7% (PY 3.7%). This is also the result of the measures taken in the previous year to reduce both capacity and the cost base.

Solid profitability at lower volumes in the transport segment

After notable growth in the previous year, the Transport market segment suffered from a decline in order and sales volumes in the first half of 2024. In the Automotive sub-segment, the growth initiative for electric vehicles secured further important nominations from renowned commercial vehicle manufacturers. However, despite being ready for the market, the platforms are not selling as quickly as originally planned. The same pattern was observed in the second growth initiative ADAS (advanced driver assistance system). In the Railway sub-segment, order intake was slightly lower and net sales slightly higher compared to the same period last year. In the rail communication growth initiative in particular, an important milestone was achieved with the Deutsche Bahn (DB) project. The Transport segment reported orders of CHF 140.4 million, a decrease of 10.4% compared to the same period last year, while net sales amounted to CHF 139.8 million (PY CHF 147.9 million), a deficit of 5.5%. The book-to-bill ratio reached 1.00 (PY 1.06). With an EBIT of CHF 12.4 million (previous year CHF 15.5 million), the EBIT margin of 8.9% (previous year 10.5%) was slightly below the level of the Group as a whole.

Prospect

Compared to the weak second half of 2023, all segments reported growth in the first half of 2024, some of them even significant, both in order intake and net sales. The HUBER+SUHNER Group has thus held up well in an environment with various challenges and is in a solid position for the year as a whole. The company continues to see attractive opportunities in its target markets. In the Industry segment, the company sees further potential in the aerospace and defense sectors and expects renewed momentum in high-power charging in the medium term. In the global communications market, the recovery is likely to take somewhat longer across the board.

However, thanks to its unique technologies, HUBER+SUHNER expects to benefit from business opportunities that are independent of general market trends. In the transport market, market-ready electrified commercial vehicles are now available for almost all needs, and it should only be a matter of time before e-trucks and e-buses break through.

From today’s perspective, the company can confirm the communicated guidance for fiscal year 2024: organic net sales growth and an operating profit margin in the lower half of the medium-term target range of 9-12%. Accordingly, sales in the second half of 2024 are expected to be slightly higher than in the first six months. This guidance is based on the assumption that major influencing factors such as inflation, exchange rates, and economic and political conflicts do not have an excessively negative impact on business development.

This press release can also be found at www.hubersuhner.com/en/newsroom/company-news/news-ad-hoc-news

Half-year report 2024 online interactive reports.hubersuhner.com

Half-year report 2024 as PDF link

Letter to shareholders H1/2024 as PDF link

Media and Analyst Conference Presentation as PDF link

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