TAKKT AG: TAKKT increases gross profit margin and free cash flow in challenging quarter

EQS-News: TAKKT AG / Key word(s): 9 Month figures
TAKKT AG: TAKKT increases gross profit margin and free cash flow in challenging quarter
25.10.2023 / 07:00 CET/CEST
The issuer is solely responsible for the content of this announcement.

TAKKT increases gross profit margin and free cash flow in challenging quarter

  • Organic sales development in the third quarter at -7.1 percent  
  • Gross profit margin improved to 39.9 percent
  • EBITDA margin almost in double digits at 9.7 percent  
  • Free TAKKT cash flow increased by EUR 3.7 million to EUR 29.0 million

Stuttgart, Germany, October 25, 2023. Expectations of a pickup in demand in the second half of the year were not confirmed in the course of the third quarter. “We had the best month of the year in terms of order intake in July, with slightly positive growth. From mid-August, however, the order situation deteriorated significantly due to the worsening environment,” says CEO Maria Zesch. The recession in the important home market of Germany weighed on business in the European Industrial & Packaging division. Orders for office equipment from companies and, above all, from public entities in the American Office Furniture & Displays division also fell significantly short of expectations. In addition to the economic headwind, geopolitical uncertainty and the discussion about a US shutdown also played a role. Business in the FoodService division continued to develop above average and was almost stable after adjusting for currency effects.

In the third quarter, TAKKT’s sales volume was EUR 313.4 (350.5) million, 10.6 percent lower than in the previous year. Organic growth was minus 7.1 percent, below the growth rates of the first half of the year. “Due to the lack of growth, we have again intensified our cost and cash management in recent weeks and continued to focus strongly on gross profit margin. As a result, we were able to improve the gross profit margin to 39.9 (39.2) percent despite the challenging situation in the third quarter and increase the free TAKKT cash flow to EUR 29.0 (25.3) million,” says CFO Lars Bolscho. EBITDA reached EUR 30.2 (37.9) million, the EBITDA margin was almost in double digits at 9.7 (10.8) percent despite the very weak sales development. In the previous year, one-time expenses impacted earnings by almost two million euros.

In the first nine months of 2023, TAKKT generated sales of EUR 954.5 (1,007.6) million, 5.3 percent less than in the previous year. Organically, sales were down by 4.1 percent. Despite clearly negative structural effects from the higher share of the FoodService business, TAKKT was able to keep its gross profit margin stable at 39.7 (39.7) percent. Against the background of weaker demand, TAKKT significantly reduced marketing costs. Personnel costs and other costs were affected by inflation and the further implementation of the transformation and were slightly higher than in the previous year despite intensive cost management. EBITDA amounted to EUR 87.3 (105.2) million in the reporting period, with the EBITDA margin reaching 9.1 (10.4) percent. One-time expenses impacted earnings by just under three million euros, compared with around four million euros in the previous year. Through targeted cash management and the reduction of inventories, the Group increased the free TAKKT cash flow to EUR 60.4 (24.0) million in the first nine months.

Expectations for the final quarter remain subdued. “In addition to the strong economic volatility, geopolitical uncertainty is currently increasing. Due to these general conditions, we expect a challenging final quarter,” says CEO Maria Zesch. For the current fiscal year, TAKKT now anticipates an organic decline in sales in the mid-single-digit percentage range. “Due to the lack of growth, we are intensifying our cost management and continue to focus strongly on improving the gross profit margin. Assuming that general conditions do not deteriorate further and weigh on the order situation, we expect EBITDA of between EUR 20 and 30 million in the final quarter,” says CFO Lars Bolscho. In 2023, EBITDA should thus reach a value of EUR 107 to 117 million. Despite the difficult general conditions, TAKKT will generate a significantly higher free cash flow in the current year than in the previous year through focused cash management. The adjustment of the outlook for the current fiscal year and the economic and geopolitical uncertainty have an impact on the Group’s medium-term planning. Together with a change in relevant valuation parameters, this could lead to an increased risk of impairments in the annual impairment tests.

The Group continues to work on the implementation of the strategy with the three pillars Growth, OneTAKKT and Caring. In the first nine months, TAKKT generated over ten million euros in additional sales through the cross-selling initiatives in the two divisions Industrial & Packaging and FoodService. The significant reduction of EUR 26 million in inventories was only possible thanks to central coordination and management throughout the Group and was thus a success resulting from the more compact organizational structure under OneTAKKT. In addition to a stronger focus on growth and an improvement in profitability, the strategy also aims to achieve even more sustainable management with regard to the environment, society and employees. For its efforts and successes to date in this area, TAKKT has been nominated as one of three finalists for the German Sustainability Award in the category of Wholesale Capital Goods. The announcement of the winners is on October 31.

Earnings call: October 25, 2023 at 2:00 p.m. (CEST).
Please register in advance to participate in the Earnings Call. You can find the registration link at: www.takkt.de/event

IFRS figures for the TAKKT Group for the first nine months of 2023
(in EUR million)

  Q3/2022 Q3/2023 in % 9M/2022 9M/2023 in %
TAKKT Group sales 350.5 313.4 -10.6 1,007.6 954.5 -5.3
Organic growth     -7.1     -4.1
   Industrial & Packaging 173.4 159.8 -7.8 541.6 510.2 -5.8
   Organic growth     -7.5     -5.3
   Office Furniture & Displays 92.7 75.5 -18.5 248.5 220.2 -11.4
   Organic growth     -12.2     -9.7
   FoodService 84.4 78.1 -7.5 217.5 224.1 3.1
   Organic growth     -0.6     5.2
Gross profit margin (%) 39.2 39.9   39.7 39.7  
EBITDA 37.9 30.2 -20.2 105.2 87.3 -17.0
EBITDA margin (%) 10.8 9.7   10.4 9.1  
EBIT 28.0 22.4 -20.1 63.7 60.9 -4.4
EBIT margin (%) 8.0 7.1   6.3 6.4  
Earnings per share in EUR 0.31 0.23 -24.8 0.71 0.64 -11.1
TAKKT cash flow  32.5 22.5 -30.8 91.4 67.5 -26.1
TAKKT cash flow margin (%) 9.3 7.2   9.1 7.1  
Free TAKKT cash flow 25.3 29.0 14.6 24.0 60.4 151.7

TAKKT AG is the leading omnichannel distributor for business equipment in Europe and North America. The Group is represented in more than 25 countries with its Industrial & Packaging, Office Furniture & Displays and FoodService divisions. The product range of the subsidiaries comprises more than 700,000 products for the areas of plant and warehouse equipment, office furniture, transport packaging, display articles and equipment for the food service industry, hotel market and retailers.


Benjamin Bühler    phone +49 711 3465-8223
Email: investor@takkt.de

25.10.2023 CET/CEST Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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