Ringmetall expands earnings margins in the first quarter against the background of declining steel prices

Ringmetall expands earnings margins in the first quarter against the background of declining steel prices

Munich, 7 May 2024 - Ringmetall SE (ISIN: DE000A3E5E55), a leading international specialist supplier in the packaging industry, successfully stabilized its business development overall in the first quarter of 2024. However, declining steel prices combined with an almost unchanged organic revenue development resulted in a noticeable expansion of earnings margins.

At EUR 45.6 million, Group revenue was -4.5 percent below the adjusted prior-year level (Q1 2023, adjusted for HSM's contribution: EUR 47.8 million). "In order to be able to better classify our current business development, we refer in this presentation to the previous year's figures for revenue and EBITDA on an adjusted basis, meaning without the respective contribution of our former Group subsidiary HSM, which was sold on 30 June 2023," explains Christoph Petri, Spokesman of the Management Board of Ringmetall SE. "For the sake of order, however, we are also presenting the previous year's figures reported in accordance with IFRS in tabular form." While Group revenue was almost unchanged from the previous year in purely organic terms, the negative effects on revenue from falling steel prices were much more pronounced than the positive effects on revenue from company acquisitions.

At EUR 6.3 million, earnings before interest, taxes, depreciation and amortization (EBITDA) were 1.7 percent higher than the adjusted prior-year level (Q1 2023, adjusted for the HSM contribution: EUR 6.1 million). The EBITDA margin in relation to total output increased to 13.9 percent (Q1 2023, adjusted for the HSM contribution: 12.6 percent), mainly due to the steel price-related decline in Group revenue.

The key figures for business development in the reporting period are as follows:

IFRS, in EUR '000 Q1 2024 Q1 2023* ∆ [abs.] ∆ [%] Group revenue                 45,626                51,738 -6,112 -11.8% Total output (TO)                45,154                 52,747 -7,593 -14.4% Gross profit                23,449                24,434 -985 -4.0% Gross profit margin (on TO) 51.9% 46.3% 5.6%   EBITDA                  6,255                  6,318 -63 -1.0% EBITDA margin (on TO) 13.9% 12.0% 1.9%   EBIT                  4,232                  4,405 -173 -3.9% EBIT margin (on TO) 9.4% 8.4% 1.0%  

*The comparative figures for the previous year include the contribution of the former subsidiary HSM, which was sold as per 30 June 2023.

In the Closure Systems product area, in which the company produces clamping rings, drum lids and other accessories for industrial drums, revenue increased slightly compared to the previous year from a purely organic perspective. However, this was offset by a noticeable decline in steel prices compared to the first quarter of 2023, resulting in an overall decline of revenue in the product area. Almost all sales markets in both Europe and North America were robust, with sales volumes remaining largely unchanged. Exceptions to this were the weak development of demand in the UK and the noticeable increase in demand in the core market of Germany. The latter was mainly due to the recovery in demand from the chemical industry, although this was still well below pre-pandemic levels.

The Liners product area, in which Ringmetall produces liners for industrial drums and other packaging units as well as packaging solutions for the beverage industry (e.g. bag-in-box systems), increased its revenue in the first quarter of 2024. The revenue growth was purely inorganic in nature and was related to the acquisitions of Liner Factory in June 2023 and IDF in November 2023. While raw material prices declined only slightly, organic revenue growth was noticeably below the previous year. However, the comparative decline in demand should be seen in the context of above-average demand in the previous year’s quarter. At the same time, however, the product area is still facing weak demand from a sub-segment of specialty chemicals. From a regional perspective, the sales development was largely homogeneous.

"After the upheavals of recent years caused by the pandemic, the outbreak of war, energy price hikes and significantly higher interest and inflation levels, we have been in much calmer waters again for several months," says Christoph Petri, Spokesman of the Management Board of Ringmetall SE, describing the environment. "The course of business is much more calmed down again, even though revenue levels have not yet reached pre-crisis levels. If the economic environment remains as it is for the rest of the year, we are confident of a further recovery."

In light of the company's current performance in the first quarter, the Management Board confirms its outlook for business development in 2024 as a whole. Accordingly, the company expects Group revenue of between EUR 170 million and EUR 195 million with earnings before interest, taxes, depreciation and amortization (EBITDA) of between EUR 20 million and EUR 27 million. The Management Board intends to specify the outlook in more detail as the year progresses. The outlook is based on unchanged raw material prices and exchange rates compared to the end of 2023. It also does not include the effects of acquisitions planned for 2024, including the resulting transaction costs.

The Head of Investor Relations will discuss details of business development in the first quarter of 2024 in a conference call for analysts, institutional investors and journalists at 9:00 a.m. CET today. You can register for this by e-mail via Ms. Angela Weiß (weiss@ringmetall.de).

Further information on the Ringmetall Group and its subsidiaries can be found at www.ringmetall.de.

Contact:
Ingo Middelmenne
Investor Relations
Ringmetall SE
Phone: +49 (0 )89 45 220 98 12
Mobile: +49 (0 )174 90 911 90
Email: middelmenne@ringmetall.de
 

About the Ringmetall Group

Ringmetall is a leading international specialist supplier of industrial packaging. The company produces high-security closure systems and inner liners for industrial drums for the chemical, pharmaceutical and food processing industries. Ringmetall also offers innovative packaging solutions for the beverage industry. With products that are highly recyclable, the company contributes to strengthening the circular economy and the sustainability of its end customers. In addition to its headquarters in Munich, the Group is represented by global production and sales offices in Germany, France, the UK, Spain, Italy, Turkey, the Netherlands, China and the USA. In 2023, Ringmetall generated Group revenue of EUR 181.6 million with 867 employees.