Annual financial statements: HERMLE challenged by an uncertain en-vironment in 2024

Annual financial statements: HERMLE challenged by an uncertain environment in 2024 
Decline in orders received, turnover and earnings
Internationalisation, automation and service have a stabilising effect
Investment programme has continued regardless of the economic situation
Significant drop in turnover and earnings forecast for 2025
Sustained high demand for automation solutions expected in the medium term
 

Maschinenfabrik Berthold HERMLE AG was, as expected, affected by the uncertain economic conditions in 2024. As shown in the annual financial statements released today, the southern German machine tool and automation specialist benefited in the first half of 2024 from a strong order backlog from the previous year and a milder-than-expected decline in demand. Strong demand for automated complete solutions was particularly supportive. However, the cautious mood in the industry’s economic landscape became increasingly evident in the second half of the year. Overall, the number of orders received by the HERMLE Group fell by 7.8% to €456.2 million in 2024 (previous year: €494.8 million). New domestic orders decreased by 9.3% to €165.1 million (previous year: €182.0 million) and new orders from overseas by 6.9% to €291.1 million (previous year: €312.8 million). The order backlog at the end of 2024 totalled €98.7 million compared to €130.5 million on the same date in the previous year.

Due to the downturn in demand, the HERMLE Group turnover dropped by 8.3% to €487.9 million in the past business year (previous year: €532.3 million). The decline was notably less abroad, down 6.2% to €308.5 million (previous year: €329.0 million), compared to an 11.8% drop in the domestic market to €179.4 million (previous year: €203.3 million). As a result, the export ratio rose from 61.8% to 63.2% year over year. This confirms HERMLE’s successful internationalisation strategy: In the past six years alone, HERMLE has established new subsidiaries and branches in Mexico, Thailand, China, the USA, France and Romania, while also expanding its activities in other international markets. In 2024, non-European markets had a particularly stabilising effect, while Europe, especially Germany, was largely influenced by weak economic performance and the structural crisis within the automotive industry. HERMLE’s globally rising service revenues also had a positive impact, driven by the growing number of installed automation solutions at customer sites.

The gradual depletion of the order backlog ultimately led to reduced capacity utilisation at HERMLE throughout 2024, resulting in a significantly disproportionate decline in earnings, as expected. Moreover, higher staff costs were incurred due to the expansion of the workforce, collectively agreed wage increases, persistently high sickness absence rates and an increasing amount of red tape imposed by new legal regulations, thus leading to an increase in unproductive overtime. The operating result (EBIT) of the HERMLE Group decreased to €85.3 million in the past business year (previous year: €115.8 million). The result before taxes amounted to €89.0 million (previous year: €118.4 million). This resulted in a reduced but still very solid gross margin on turnover of 18.2% (previous year: 22.2%). The Group annual surplus was roughly €65.9 million (previous year: €87.6 million). In light of these factors and considering the exceptionally uncertain outlook for 2025, the Management Board and the Supervisory Board have decided, following intensive discussions, to propose to the shareholders’ meeting an unchanged basic dividend of €0.80 per ordinary share and €0.85 per preference share for the business year 2024, as well as a bonus of €10.20 per share (previous year: €14.20). 

HERMLE’s financial and asset position during 2024 remained very solid despite the poor business development: The operating cash flow across the Group was €80.7 million (previous year: €99.1 million), and, at the end of 2024, liquid funds totalling €107.4 million (previous year: €111.0 million) and an equity ratio of 74.1% (previous year: 72.5%) were reported. This enabled HERMLE to advance projects to secure its long-term future independently of the current uncertainty. As part of a multi-year investment programme, substantial investments were made during the period under review at the Zimmern ob Rottweil installation location in new buildings and production facilities for large components, along with expanded assembly and storage areas. Additional priorities included the development of a cutting-edge spindle assembly facility and preparations for a new application centre at the company headquarters in Gosheim, with construction commencing in early 2025. Furthermore, HERMLE acquired the former supplier and specialist for high-precision ground parts Gebr. Grieswald, thus further strengthening its core expertise in spindle technology. Overall, investments in fixed assets and in intangible assets across the Group in 2024 totalled €51.3 million (previous year: €33.2 million). 

During the period under review and compared to the same reporting date, HERMLE expanded its team by 92 people, bringing the total to 1,603 employees (previous year: 1,511), including 126 apprentices and cooperative university students (previous year: 111). This was driven by the acquisition of Grieswald and the targeted hiring of staff for both domestic and international customer service, as well as in automation-related areas. As in previous years, junior staff who successfully completed their training were offered permanent roles, and the vacancies they left behind were filled. HERMLE’s long-term human resources strategy helps combat the shortage of skilled workers and supports the retention of highly qualified and experienced personnel within the company. At the same time, HERMLE’s specific concept of a breathing company enables its rapid response to fluctuations in demand through flexible working-time accounts.