As expected, the machine factory Berthold HERMLE AG was affected by the uncertain economic conditions in 2024. According to the annual financial statement published today, the Swabian specialist for machine tools and automation still benefited in the first half of the year from a high order backlog from the previous year and a less severe decline in demand than forecasted. The robust demand for automated complete solutions was particularly supportive. However, in the second half of the year, the cautious industry economy became clearly noticeable. Overall, HERMLE's order intake decreased by 7.8% to 456.2 million euros (previous year 494.8 million euros). Domestic new orders fell by 9.3% to 165.1 million euros (previous year 182.0 million euros) and abroad by 6.9% to 291.1 million euros (previous year 312.8 million euros). The order backlog at the end of 2024 amounted to 98.7 million euros compared to 130.5 million euros on the previous year's reporting date.
Due to the weakening demand, HERMLE's group revenue decreased by 8.3% to 487.9 million euros (previous year 532.3 million euros) in the past financial year. The decline was significantly lower abroad at 6.2% to 308.5 million euros (previous year 329.0 million euros) than in the domestic market with 11.8% to 179.4 million euros (previous year 203.3 million euros), resulting in an increase in the export ratio from 61.8% to 63.2% compared to the previous year. This confirms HERMLE's successful internationalization strategy: In the past six years alone, the company has established new subsidiaries and branches in Mexico, Thailand, China, the USA, France, and Romania, and intensified activities in other foreign markets as well. Stabilizing in 2024 was particularly the non-European business, while the situation in Europe, especially in Germany, was characterized by economic weakness and the structural crisis in the automotive industry. HERMLE's globally growing service revenues were also positively noticeable, driven by the increasing share of already installed automation solutions at customer sites.
Image: Hermle
The melting of the order buffer led to a gradually reduced capacity utilization at HERMLE throughout 2024, resulting in a significantly disproportionate decline in earnings as expected. Additionally, higher personnel costs arose, resulting from both the expansion of the workforce due to collective wage increases, a persistently high rate of absenteeism, and increasing bureaucratic efforts due to more legal regulations leading to correspondingly unproductive overtime.
The operating result (earnings before interest and taxes, EBIT) of the HERMLE Group decreased in the past financial year to 85.3 million euros (previous year 115.8 million euros). The pre-tax result amounted to 89.0 million euros (previous year 118.4 million euros). This results in a reduced but still solid gross revenue margin of 18.2% (previous year 22.2%). The group net profit was 65.9 million euros (previous year 87.6 million euros). Based on this and considering the exceptionally uncertain outlook for 2025, the management board and supervisory board have decided after intensive discussions to propose to the annual general meeting to distribute an unchanged base dividend of 0.80 euros per ordinary share and 0.85 euros per preferred share, as well as a bonus of 10.20 euros (previous year 14.20 euros) per share.
Despite the declining business development, HERMLE's financial and asset situation remained very solid in 2024: The operating cash flow amounted to 80.7 million euros (previous year 99.1 million euros), and at the end of the year, liquid funds of 107.4 million euros (previous year 111.0 million euros) and an equity ratio of 74.1% (previous year 72.5%) were reported. This allows HERMLE to continue the initiated projects for future security independently of the currently uncertain surrounding situation. As part of a multi-year investment program, significant investments were made during the reporting period at the location in Zimmern ob Rottweil in new buildings and facilities for large part manufacturing as well as additional assembly and storage areas. Other focal points included a state-of-the-art spindle assembly and preparations for a new application center at the company's headquarters in Gosheim, with construction starting in early 2025. Furthermore, HERMLE acquired the former supplier and specialist for high-precision grinding parts Gebr. Grieswald, thereby strengthening its core competence in spindle technology. Overall, investments in tangible assets and intangible assets amounted to 51.3 million euros (previous year 33.2 million euros) in 2024.
Through the Grieswald acquisition and targeted new hires in domestic and foreign service as well as in areas dealing with automation, the HERMLE team grew during the reporting period – compared to the reporting date, by a total of 92 people to 1,603 employees (previous year 1,511), including 126 trainees and dual students (previous year 111). As in previous years, young professionals who successfully completed their training were also taken on and the vacancies were filled. With a long-term personnel policy, HERMLE is counteracting the shortage of skilled workers and contributing to retaining highly qualified and experienced personnel in the company. At the same time, HERMLE can flexibly respond to demand fluctuations with its company-specific concept of a flexible workforce through flexible working time accounts.
In the fourth quarter of 2024, production-free days were already scheduled, and short-time work was proactively requested for certain areas. Given the persistently weak and highly uncertain outlook for the entire machine tool industry, the company is increasingly reducing flexible working time accounts and utilizing the instrument of short-time work in the first half of 2025. For the entire year 2025, the company expects, as already published in March, a significant decline in revenue in a range from the upper single-digit percentage to 25% and a disproportionately high decline in earnings of 40% to 90%. The unclear future global economic development and especially the erratic tariff policy of the USA with high threatened tariffs against European manufacturers not only in the automotive industry is accounted for with its likely impacts, but is difficult to quantify reliably.
Regardless of the currently difficult industry situation, HERMLE expects a persistently high demand for extremely powerful machine tools and automated systems in the medium term. The company is well prepared for this with its flexible, individually configurable machining centers and highly automated production solutions. Currently, HERMLE is gradually transitioning its entire machine offering to the next generation (GEN2). The focus is on electrical design and state-of-the-art interfaces to keep the models of generation 2 future-proof, service-friendly, open, and flexible. Following the initial presentation of various GEN2 machines at last year's HERMLE in-house exhibition, the next variants and automation components of GEN2 will now be showcased at this year's in-house fair of the company, which will take place from May 13 to 16, 2025, at the company's headquarters in Gosheim.
Contact:
www.hermle.de
