hGears (HGEA) H2 2024 earnings summary

Executive summary

• 2024 was marked by persistent economic weakness, ongoing destocking in the e-Bike and e-Mobility industries, and structural issues in automotive, leading to lower sales and earnings, though countermeasures proved effective.

• Sales slightly exceeded or aligned with guidance, while Adjusted EBITDA and free cash flow were within guided ranges despite challenging market conditions.

• Cost-cutting measures included workforce reductions in China, short-time work in Italy and Germany, and a 35-hour workweek in Germany.

• Stabilization was seen in the e-Tools segment at low levels in the second half of 2024.

• Continued focus on cash preservation, structural optimization, and maintaining a stable balance sheet to enhance resilience.

Financial highlights

• Total revenue for 2024 was EUR 95.7 million, down 14.9% year-over-year; another source reports EUR 95.2 million, a 14.8% decrease.

• Adjusted EBITDA was EUR 0.5 million, down from EUR 5.6 million in 2023.

• Adjusted gross profit margin declined by 450 basis points to 45.5%.

• Net debt at year-end was EUR 9.4 million, with a cash position of EUR 17.1 million and an equity ratio of 49.4%.

• Working capital reduced by 22.1% to EUR 7.2 million, representing 7.5% of revenue.

Outlook and guidance

• 2025 guidance: group revenues of EUR 80–90 million, Adjusted EBITDA of EUR -4 million to EUR -1 million, and free cash flow between EUR -6 million and EUR -2 million.

• No steep recovery anticipated in 2025; cautious approach maintained due to volatile economic and political environment.

• Medium-term recovery expected in e-Bike production, with potential for significant upside once destocking is complete.