Fiscal year 2023: High sales revenues with declining order intake
Schopfloch, February 27, 2024. The HOMAG Group was able to achieve high figures for sales and earnings before extraordinary effects in the 2023 fiscal year. However, the significant decline in order intake reflects the weak demand that has persisted since the third quarter of 2022.
According to preliminary figures, the HOMAG Group was again able to slightly increase its sales revenue to EUR 1,625 million (previous year: EUR 1,602 million) compared to the very high previous year’s figure. “We benefited from our high order backlog at the beginning of the year, which we have gradually worked through. There was also growth in the service business,” explains CEO Dr. Daniel Schmitt. Accordingly, the order backlog decreased to EUR 841 million as of December 31, 2023 (December 31, 2022: EUR 1,102 million).
The slight increase in sales is also reflected in earnings before extraordinary effects, which rose by around four percent to EUR 129.7 million (previous year: EUR 124.8 million). The HOMAG Group attributes this increase, among other things, to the efficiency improvements achieved in previous years and cost reductions in response to the market downturn.
Despite a major order from China at the end of the year, the order intake in 2023 declined significantly by around 18% to EUR 1,395 million (previous year: EUR 1,706 million) compared to the previous year, which was still characterized by the special economic situation in the furniture industry due to the pandemic. “We are dealing with a pronounced cyclical market weakness, which has resulted in a sharp decline in orders,” explains Dr. Daniel Schmitt. “We were expecting a slowdown in the furniture sector, but we were hoping for a better trend in the timber house sector. The sharp rise in interest rates has led to a crisis in the construction industry, which has significantly slowed down investment in production technology for timber construction elements.”
The HOMAG Group responded to this weak order intake in November 2023 with a package of measures to adjust capacity in order to avoid losses in the current year. The key element is the reduction of around 600 jobs worldwide in order to reduce fixed costs by EUR 25 million initially and by a total of EUR 50 million per year from 2025. The extraordinary expenses for this amounted to a just over EUR 50 million and were largely booked in the fourth quarter of 2023. As a result, EBIT after extraordinary effects decreased to EUR 71.1 million (previous year: EUR 107.5 million).
“We do not anticipate a general market recovery before the end of 2024 and, from today’s perspective, expect order intake in the current fiscal year to be at most on par with the previous year’s level,” says Dr. Daniel Schmitt. “As a result of the continuing weakness in orders, we expect a sharp decline in sales and earnings. Our capacity adjustment measures are designed to sustainably increase our flexibility so that future market fluctuations will have less of an impact on earnings,” Schmitt continued.
Company Background
The HOMAG Group is the world's leading provider of integrated solutions for production in the woodworking industry and woodworking shops. Its 14 specialized production sites, about 20 Group-owned sales and service companies and approximately 60 exclusive sales partners worldwide make the company a unique system provider. Backed by a workforce of over 7,000 employees the HOMAG Group offers its customers solutions for digitized production, based on digital data continuity from point of sale through the entire production process, combined with a comprehensive software suite. In addition, the open ecosystem "tapio" (open Internet-of-Things platform) maps the data flow along the entire value chain of the timber industry. The HOMAG Group has been majority-owned by the Dürr Group since October 2014.
Disclaimer
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