Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cenit AG (FRA:CSH, Financial) reported a 13% increase in revenues, reaching close to EUR100 million for the first half of 2024.
- The company achieved a 5% organic growth, with discussions now focusing on the potential for 8% to 10% organic growth.
- Order backlog increased by more than 20% compared to last year, indicating strong future revenue potential.
- Free cash flow improved by EUR2 million, reaching EUR9.4 million, signaling strong cash management.
- Proprietary software sales increased by 21.7%, highlighting growth in high-margin areas.
Negative Points
- EBITDA only increased by 0.9%, with significant M&A-related costs impacting profitability.
- EPS took a major hit, declining by 92% due to higher financial expenses and tax costs.
- The EBIT dropped by 23.4%, partly due to the deconsolidation of Senator Japan and increased M&A costs.
- The company's major customers, such as Volkswagen and Airbus, are under pressure, which could impact future revenues.
- The acquisition in the US is not expected to contribute to EBIT this year due to PPA and M&A-related costs.
Q & A Highlights
Q: Can you provide details on the M&A related costs for the new US acquisition and its impact on EBIT?
A: The M&A related costs are approximately EUR600,000. The acquisition will not contribute to EBIT this year due to these costs and the purchase price allocation (PPA) effects. We expect the net impact to be neutral, with no significant EBIT contribution this year. - Peter Schneck, CEO
Q: How does the organic growth of 5% reconcile with the contributions from acquisitions like CCE?
A: The 5% organic growth figure excludes contributions from recent acquisitions such as CCE. These acquisitions are considered inorganic growth and are not included in the organic growth calculations until they have been part of our figures for a full year. - Peter Schneck, CEO
Q: Why did the cost of materials increase despite the growth in proprietary software sales?
A: The increase in material costs is related to specific projects, particularly in ISR and 3DS, rather than our proprietary software. There have been no special developments or team increases in our proprietary software segment. - Peter Schneck, CEO
Q: With the current focus on M&A, is there a shift towards prioritizing organic growth and integration?
A: While M&A remains a strategic focus, we are also concentrating on organic growth and integrating acquired companies. Our organization is now more adept at handling M&A, and we aim to achieve 8% to 10% real EBIT by 2025. We will continue acquisitions but with a balanced approach. - Peter Schneck, CEO
Q: What underpins your optimism regarding the guidance for improved margins in H2?
A: We expect a better mix in H2, with increased software sales and contributions from organizational optimizations. Additionally, subsidies and a traditional second-half sales boost (hockey stick effect) will support margin improvements. - Peter Schneck, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
