Drägerwerk (DRW3) Q2 2024 earnings summary

Executive summary

• Net sales for H1 2024 were €1,520.5 million, slightly below the prior year, mainly due to lower demand in APAC, while EBIT and net profit improved year-over-year, supported by strong Safety Division growth and one-off gains.

• Order intake remained high, with growth in Germany and the Americas offsetting significant declines in APAC, particularly China.

• Strategic focus on profitability led to divestment of non-core businesses, including the fire alarm systems business in the Netherlands and discontinuation of the fossil fuel flue gas analysis business.

• Continued emphasis on innovation, sustainability, and quality, with new product launches and strengthened management for group-wide sustainability.

• Executive Board expanded with the appointment of Stefanie Hirsch for Sustainability and Quality.

Financial highlights

• Net sales for H1 2024 were €1,520.5 million (down 0.8% year-over-year); order intake: €1,604.3 million (up 0.5%).

• EBIT increased to €55.8 million (up 16.9%), with an EBIT margin of 3.7% (up 0.6 pp); net profit: €34.1 million (up 19.3%).

• Gross profit margin rose to 44.8%, supported by a higher sales share from the safety division and effective price enforcement.

• One-off effects from asset sales contributed around €20 million to EBIT.

• Free cash flow improved but remained negative at €-16.2 million after six months.

Outlook and guidance

• Full-year 2024 guidance confirmed: net sales growth of 1%-5% (currency adjusted), with expectations now at the lower half of the range.

• EBIT margin and DVA expected in the upper half of the forecasted range (2.5%-5.5%).

• Gross margin forecasted at 43.0–45.0% for FY 2024.

• Cautious outlook for China, anticipating a double-digit decline in medical business due to ongoing healthcare reforms and anti-corruption campaign.