In the first nine months, the group revenue of the Swabian automation and machine tool specialist decreased by 4.5% to 363.8 million euros compared to the comparable previous year's figure (previous year: 380.9 million euros). Thus, HERMLE proved to be more robust than the entire German machine tool industry, which, according to the industry association VDW, recorded a revenue decline of 8% in the same period. HERMLE's business volume decreased domestically by 3.7% to 135.0 million euros (previous year: 140.2 million euros) and abroad by 4.9% to 228.8 million euros (previous year: 240.7 million euros). This results in an export ratio of 62.9% (previous year: 63.2%). The solid performance was based on the good order backlog of the company, which continued to be processed in the third quarter and amounted to 103.8 million euros at the end of September (31.12.2023: 130.5 million euros; 30.9.2023: 161.1 million euros).
Against the backdrop of growing geopolitical uncertainties and state interventions, the weak economy, especially in Germany and other European countries, as well as structural changes, particularly in the automotive industry, the industry's investment restraint has intensified since mid-year. HERMLE is increasingly affected by this: Order intake decreased group-wide by 9.9% to 337.1 million euros in the first three quarters of 2024 (previous year: 374.1 million euros). Of this, 118.8 million euros were attributable to the domestic market (previous year: 132.0 million euros) and 218.3 million euros to foreign markets (previous year: 242.1 million euros). In the entire German machine tool industry, new orders decreased by 23% during the reporting period according to VDW data. HERMLE attributes its better performance to its strong position in the automation sector and the associated growing service activities, as well as the increasing internationalization outside of Europe. For example, the development of demand in North America had a stabilizing effect.
The earnings, financial, and asset situation of HERMLE remained solid in the first nine months of 2024, even though the result decreased significantly more than revenue, primarily due to lower utilization, as expected. As of the end of September, the company still had high liquid assets and an equity ratio of 72.4% (31.12.2023: 72.5%; 30.9.2023: 70.0%).
This gives HERMLE a good foundation to implement the future projects started, independent of the current economic situation. This includes, for example, the multi-year investment program for site expansion, through which investments in tangible assets and intangible assets increased from 19.9 million euros to 32.9 million euros during the reporting period. The focus was on expanding the production site in Zimmern ob Rottweil. There, the company commissioned further production of automation components and additional storage areas in the third quarter. Other focal points included the acquisition of Gebr. Grieswald GmbH & Co. KG, Burladingen, which specializes in high-precision grinding parts, as well as the new spindle assembly and measurement technology at the company headquarters in Gosheim. Additionally, the demolition of old building parts for the construction of a new application center with an attached canteen for employees has begun. HERMLE is also continuously investing in cybersecurity.
Another important future project, which is currently being advanced with focus, is the transition of the entire product portfolio to 'Generation 2'. This allows the company to redesign the complete electrical architecture of its machining centers and bring all interfaces up to the latest technological standards. Additionally, HERMLE continues its R&D activities at a high level to expand and continuously optimize its product range.
The company also remains committed to its long-term personnel policy, with a particular emphasis on promoting young talent. As of September 30, 2024, HERMLE was able to increase the number of apprentices and dual students to 132 (previous year: 116), thus counteracting a future shortage of skilled workers. Furthermore, the workforce increased in various foreign subsidiaries as well as in the company divisions dealing with automation solutions and through the acquisition of the former supplier Grieswald in April. Overall, the HERMLE Group employed 1,600 employees worldwide as of the reporting date (31.12.2023: 1,511; 30.9.2023: 1,506).
In the coming months, HERMLE expects the decline in demand to continue or even accelerate. Various global political tensions, such as the wars in Ukraine and the Middle East, as well as the increasingly interventionist trade and industrial policy with the associated tariff conflicts between the EU and China or the USA, pose high risks. Additionally, there is a crippling overregulation in Europe, the government crisis in Germany, which delays important decisions, and uncertainty about the future political direction of the USA. Due to the multifaceted overlapping burdens, HERMLE anticipates a prolonged demand weakness. As a precaution, the company is already planning non-production days in the fourth quarter of 2024 and is applying for short-time work for certain departments. In the first quarter of 2025, short-time work is planned for most production areas and an increased reduction of flexitime accounts in indirect areas to flexibly adapt to the declining demand.
The forecast for the entire year 2024 remains largely unchanged: HERMLE expects that group revenue will decrease by at least the upper single-digit percentage range or slightly more than 10% compared to the previous year. The result will decrease significantly disproportionately. In addition to the significantly weaker utilization in the fourth quarter, the already increased personnel costs during the current year will have an impact, which are due to the expansion of the workforce, collective wage increases, persistently high sick leave rates, and the increased workload due to growing bureaucratization and overregulation. There is also increasing competitive intensity and rising fixed costs due to the expansion of the Zimmern site.
Regardless of the currently difficult overall economic situation, HERMLE is fundamentally well positioned for the coming years and is capable of enduring a longer economic drought as well as responding quickly to the next upturn. Future projects such as 'Generation 2' or the construction of the new application center can be implemented even in economically weak times thanks to the very solid financial situation. Moreover, the company benefits from its strong position in the automation sector, which continues to offer significant growth opportunities, high product and service quality, increasing internationalization, and its competent and highly motivated team.
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