Carel Industries (CRL) H1 2024 earnings summary

Executive summary

• H1 2024 revenues were €291.5 million, down 11.7% year-over-year, mainly due to EMEA weakness from a sharp decline in heat pumps and tough prior-year comparables from backlog recovery.

• EBITDA margin was 18.3%, down from 22% in H1 2023, reflecting negative operating leverage, though gross profit improved due to lower raw material costs and favorable mix.

• Net profit was €27.8 million, a 30.9% decrease year-over-year, with a tax rate of approximately 23%.

• North America showed strong growth, especially in data centers, variable-speed compressors, and sustainable refrigeration, while EMEA and APAC faced declines.

• R&D spending returned to above 5% of sales, supporting innovation and technology leadership.

Financial highlights

• Organic revenues declined by €52 million, partially offset by €13.4 million from perimeter changes, mainly Kiona, which saw 15% recurring revenue growth.

• EBITDA was €53.2 million, down 26.7% year-over-year.

• CapEx reached €13 million, up 64.6% year-over-year, mainly for R&D and plant expansion.

• Net financial position at period end was negative €101.6 million, including M&A, CapEx, working capital, and dividends; NFP/EBITDA below 1, or 0.6 excluding IFRS 16.

• Earnings per share was €0.25, down from €0.40 in H1 2023.

Outlook and guidance

• Gradual improvement expected in H2, with Q3 revenues projected close to Q2 and full-year revenues near €600 million.

• No significant recovery in heat pumps expected before year-end; other verticals' stock levels near normalization.

• Medium-term outlook remains positive, especially for North America, variable-speed compressor technology, and natural refrigerants.

• Profitability for the full year is expected to remain around current levels, with Q4 typically weaker but top line stronger than usual.