INDUS on an upward trend as uncertain conditions continue

• First nine months marked by the coronavirus pandemic
• Clearly positive trend in Q3: operating income almost at previous year's level
• Forecast for the 2020 financial year confirmed

Bergisch Gladbach, 12 November 2020 - While the INDUS Group continues to be affected by the effects of the coronavirus pandemic, the trend in the third quarter has been clearly positive. At EUR 22.6 million, the Q3 operating income (EBIT) was almost on a par with the previous year's figure (Q3 previous year: EUR 24.2 million).

At the bottom line, the key figures for the first nine months of 2020 are influenced by the coronavirus pandemic. The INDUS portfolio companies generated sales of EUR 1,164.1 million (9M previous year: EUR 1,312.8 million). Earnings before interest and taxes (EBIT) amounted to EUR 4.3 million (9M previous year: EUR 90.6 million).

At EUR 98.2 million, operating cash flow remains at a high level in spite of COVID-19 (9M previous year: EUR 106.5 million). Working capital has been reduced by EUR 14.3 million since the beginning of the year. Net debt amounted to EUR 550.4 million (31 December 2019: EUR 546.2 million). Liquidity remains at a controlled high level of EUR 196.1 million to enable the Group to cushion potential further effects of the pandemic.

In the first nine months of 2020, the INDUS Group companies employed 10,693 people on average (previous year: 10,818). At the end of September, about 1,250 employees were on short-time working. As against June 30, 2020, the number of people working short time was halved.

Earnings in Construction/Infrastructure remain very good; Automotive Technology beginning to stabilize

The portfolio companies in the Construction/Infrastructure segment were able to clearly improve their operating income in spite of the coronavirus pandemic. Sales stayed at a high level of EUR 295.6 million (9M previous year: EUR 294.9 million). Earnings before interest and taxes rose by a disproportionate 13.0 % to EUR 53.1 million (9M previous year: EUR 47.0 million). The EBIT margin reached 18.0 % (9M previous year: 15.9 %). The INDUS Board of Management projects a seasonal slowdown for the remaining three months.

The Automotive Technology segment continues to be adversely affected by the structural crisis in the automotive market and the massive consequences of the coronavirus crisis. Segment sales fell to EUR 198.2 million (9M previous year: EUR 267.8 million). Earnings before interest and taxes (EBIT) before impairment amounted to EUR -41.1 million (9M previous year: EUR -10.1 million), while earnings before interest and taxes (EBIT) stood at EUR -74.9 million (9M previous year: EUR -22.6 million). September was the first month to see some segment companies generate sales that were back at the previous year's level. At this stage, however, the effects of the second lockdown are not yet foreseeable.

In the Engineering segment, companies from the machine tool and automotive-related automation technology sectors are particularly affected by the economic consequences of the pandemic. Sales declined to EUR 260.5 million (9M previous year: EUR 318.0 million), while the operating income stood at EUR 14.3 million (9M previous year: EUR 36.0 million). This includes goodwill impairments of EUR 2.3 million. Signs of stabilization in the sector became visible in the third quarter. The INDUS portfolio companies achieved an EBIT margin of 10.8 % in these three months. The order backlog in the segment remains at a low level, though.

The Medical Engineering/Life Science segment showed an upward trend in Q3, with sales picking up again. Sales for the full nine-month period totaled EUR 106.7 million (9M previous year: EUR 121.0 million). Earnings before interest and taxes (EBIT) amounted to EUR 7.8 million (9M previous year: EUR 14.0 million). The EBIT margin was 7.3 %. The Board of Management cannot rule out renewed negative effects from the potential impact of the second lockdown, in particular the postponement of elective surgeries.

The Metals Technology segment also recorded a slight recovery in the third quarter. At EUR 109.3 million, quarterly sales were almost back at the level of the previous year (Q3 previous year: EUR 110.8 million). Sales for the first nine months totaled EUR 303.3 million (9M previous year: EUR 311.3 million). The segment earnings include charges from the shutdown of a Swiss portfolio company that has been decided in the meantime. Earnings before interest and taxes (EBIT) before impairment amounted to EUR 14.9 million (9M previous year: EUR 23.4 million), while earnings before interest and taxes (EBIT) stood at EUR 10.2 million (9M previous year: EUR 23.4 million). Compared with the previous quarters, the EBIT margin before impairment picked up in the third quarter and reached 6.3 %.

Portfolio optimization implemented according to plan

The portfolio optimization measures adopted as part of the PARKOUR strategy program were pushed ahead in the first nine months of the year. In individual cases, this set of measures also includes the sale to a new owner, provided that the latter offers better long-term development opportunities for the company and its employees. In July 2020, a portfolio company of the Automotive Technology segment was sold. Furthermore, another sub-subsidiary in the Automotive Technology segment was sold to a strategic investor with effect from October 2020. The latter will retain the site and keep a large number of the jobs, which means that the originally decided shutdown was prevented. The operations of the Swiss company in the Metals Technology segment will be discontinued in 2021.

At the same time, the INDUS Group continues to consider potential company acquisitions with a view to securing its future growth in attractive growth industries. "Even in times of COVID-19, we are looking for further selective acquisitions in our defined growth industries," says Dr. Johannes Schmidt, Chairman of the Board of Management of the INDUS Group. "Our financial muscle and high degree of liquidity give us the scope we need to act quickly when promising projects arise."

Forecast confirmed although external factors remain uncertain

The economic consequences of the coronavirus pandemic and the Europe-wide second lockdown remain difficult to predict. "Drawing up reliable projections against the background of the extremely uncertain environment is a real challenge," says Dr. Johannes Schmidt. "Nevertheless, our portfolio companies and the holding company are well positioned for the future. We assume that the INDUS companies can and will operate largely undisturbed in the fourth quarter."

INDUS has confirmed its forecast for the full year, which provides for sales of between EUR 1.45 billion and EUR 1.6 billion and earnings before interest and taxes (EBIT) of between EUR 0 million and EUR 20 million. This presupposes that the anti-COVID-19 measures are not tightened further and that the portfolio companies will be able to continue operating.

"Developments in the third quarter have shown that our SMEs are able to respond very flexibly to the constantly changing challenges of the crisis," says Dr. Johannes Schmidt. "That is a major strength. We also owe a high degree of stability to our very diversified portfolio."

The full quarterly report is available on the INDUS website.

Contact:
Nina Wolf & Dafne Sanac
Public Relations & Investor Relations

INDUS Holding AG
Kölner Straße 32
51429 Bergisch Gladbach
Germany

Tel +49 (0) 022 04 / 40 00-73
Tel +49 (0) 022 04 / 40 00-32
E-mail [email protected]
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www.indus.de