TKH Group (TWEKA) H1 2024 earnings summary

Executive summary

• EBITDA rose 32% sequentially in Q2, with a 6.6% organic increase over Q1 and 1.1% year-over-year growth, driven by Smart Manufacturing systems, though H1 results were below estimates due to destocking and weak demand in some segments.

• Strategic progress and portfolio reshaping continued, including two divestments, three acquisitions, and completion of a €200 million investment program, positioning the company well for H2 and beyond.

• Efficiency improvements and a €15 million annual cost-saving program are underway, especially in segments facing weaker demand or destocking effects.

• Order book increased 8.5% to €1,052.8 million since December 2023, with notable growth in Smart Connectivity and Subsea (offshore wind) systems.

• Divestments and acquisitions have reshaped the portfolio, focusing on higher value-added activities and strategic growth areas.

Financial highlights

• H1 2024 revenue was €867.2 million, a 1.6% like-for-like decline, with added value up to 51.8%.

• H1 2024 EBITDA was €95.6 million (11% margin), down 20% year-over-year; EBITA fell 11.3% organically to €95.8 million.

• Adjusted net profit for H1 2024 dropped 32.9% to €45.4 million; EPS was €1.25, down 47.9% year-over-year.

• Working capital rose to €345 million (19.5% of sales), with inventories at €400 million, expected to improve in H2.

• Net debt increased by €105.7 million to €574.9 million since year-end 2023, mainly due to dividends, acquisitions, and CapEx.

Outlook and guidance

• Organic growth in turnover and EBITDA/EBITA is expected for the full year, with H2 2024 EBITDA/EBITA guidance of €210–220 million (2023: €222 million, adjusted for divestments).

• H2 profitability is expected to improve, with Smart Vision and Smart Connectivity segments forecasted to grow, driven by large secured orders and reduced ramp-up costs.

• Smart Manufacturing is expected to see lower H2 turnover and EBITDA/EBITA as catch-up effects subside, but full-year organic growth remains positive.

• Strategic investment program completed; further strategy update expected in Q1 2025.

• €15 million annual cost-saving program to be implemented in H2 2024, with benefits from 2025.