Hermle automation solutions enjoyed growth in 2022

Hermle automation solutions enjoyed growth in 2022
Group turnover increased by 26% to €474 m
Operating result rose by 33% to almost €100 m
Dividend set to rise to €11.05 per preferred share
Further increase in turnover and profits possible in 2023 under a favourable scenario

Maschinenfabrik Berthold Hermle AG saw a double-figure upturn in the number of orders received, turnover and profits in 2022: The southern German machine tool and automation specialist was able to successfully consolidate its position as a technological leader in 5-axis machining centres, while also expanding its market share in the field of automation solutions.

The incoming orders of the Hermle Group increased by 21.6% to €534.1 m in 2022 (previous year €439.1 m), thereby surpassing the previous highest level achieved in 2018. Domestically, new orders increased by 22.2% to €200.2 m (previous year €163.8 m) and internationally by 21.3% to €333.9 m (previous year €275.3 million). Integrated automation solutions equipped with Hermle digitalisation modules were in particular demand. Notwithstanding the high level of supply chain uncertainty worldwide, the company was able to deliver its orders on time almost without exception. Without the supply chain disruptions, however, even more machines could have been supplied. Therefore, the backlog of orders at the end of 2022, compared to the figure recorded on the same reporting date in the previous year, rose by 55.7% to €168.0 m (previous year €107.9 million).

In terms of its Group turnover, Hermle also recorded a new record high in 2022: Revenues within the Group rose by 26.1% to €474.1 m (previous year €376.0 m) with both business in new machines and sales of service and spare parts witnessing good rates of growth. Following strong increases in the first half of the year, development initially levelled off in the third quarter. Although higher rates did re-emerge in the final weeks of the year. Hermle experienced improved capacity utilisation as a result of both easing supply chain pressure and a reduction in the high sickness absence rate seen in the preceding months. Further, due to the high level of demand, a number of demonstration machines were sold, especially by the U.S. customer centre. Domestic turnover rose by 23.2% to €171.5 m (previous year €139.2 m). International turnover saw an increase of 27.8% to €302.6 m (previous year €236.8 m), meaning the export quota improved moderately from 63.0% to 63.8%.

Thanks to the significant increase in capacity utilisation, the results of operations at Hermle also improved considerably. The EBIT increased Group-wide by 33.5% to €99.6 m (previous year €74.6 m) and the result before taxes was €99.7 m (previous year €74.4 m). This resulted in the gross margin on turnover increasing from 19.5% to 21.0%. The Group annual surplus rose from €54.9 m to €71.8 m.

As of 31 December 2022, the Hermle Group employed 1,383 people throughout the Group, 63 more than on the same date in 2021. New employees were hired primarily in areas related to automation as well as in sales and service, especially at Hermle’s overseas companies. In recent years, the company has undergone notable expansion, particularly outside Europe. After opening two new subsidiaries in Mexico and Thailand, a separate company was established in China during the reporting period.

Investments in property, plant and equipment and intangible assets by the Hermle Group increased in 2022 from €7.6 m to €10.4 m. In addition to the areas of production, quality assurance, service and information technology, focus was increasingly placed on the acquisition of new land at the site in Zimmern, where extensive construction works are set to commence in 2023. Further, the company invested in yet another MPA 42 machining centre in order to expand its additive manufacturing capabilities.

Hermle’s financial and asset position remained very sound. Operative cashflow increased in 2022 by 32.4% to €87.8 m (previous year €66.3 m) and the equity ratio at the end of the year was 71.6% (previous year 73.5%).

Against the backdrop of the very satisfactory business development and the extremely stable financial situation, the Management Board and the Supervisory Board are set to propose a dividend increase to the Annual General Meeting, which returns as a face-to-face event in 2023 after three virtual AGMs. It is intended for the shareholders to receive the same basic dividend of €0.80 per ordinary share and €0.85 per preference share, plus a bonus per share of €10.20 instead of the previous €8.20. This results in an increased payout of €11.05 instead of €9.05 per preference share, which corresponds to a dividend yield of 5.5% measured against the 2022 year-end closing price.

Hermle is cautiously optimistic about the 2023 business year, underpinned by a robust backlog of orders and sustained high demand since the start of the year. Nevertheless, there are still significant risks resulting from the war in Ukraine and other geopolitical tensions, notably the strained relations between China and the United States, coupled with the mounting instability witnessed across financial markets. Macroeconomic uncertainty coupled with further price hikes and supply chain disruptions could dampen the industry’s willingness to invest. Providing definite statements regarding a full-year forecast is somewhat of a challenge due to the considerable level of uncertainty that remains. Hermle anticipates that Group sales for 2023 will at least be on par with the favourable level achieved in 2022, with the possibility of a potential 10% upturn in the absence of any external disturbances. The operating result is expected to remain relatively stable, subject to fluctuations in material and energy prices and the possibility of any price hikes being transferred to customers. However, a favourable scenario could also enable increases in the result.

In the long term, Hermle continues to envisage a global increase in demand for machine tools and automation solutions, not least due to the growing shortage of skilled workers in many developed economies. As part of a comprehensive, multi-year investment plan, valued at approximately €60 m, the company is set to commence expanding its capacities at its facilities in Gosheim and Zimmern in 2023. The plans includes a new production facility for large parts in Zimmern, to expand the existing mineral casting production facility and to generate supplementary storage capacity. Additionally, the acquisition of additional land is proposed for this objective.

The complete annual account is available on the Hermle website www.hermle.de.

Press contact: Redaktionsbüro tik GmbH, Gabriele Rechinger,
T 0911 988 170 72, E-Mail: info@tik-online.de  

Image material: Maschinenfabrik Berthold Hermle AG, Udo Hipp,
T 07426 95 6238, E-Mail: udo.hipp@hermle.de 

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