Aalberts Indus Nv Ord

Good morning, ladies and gentlemen. Thank you for joining us today. It's my pleasure to welcome you with Albert's first half 2024 presentation. My name is Rutger Roker, Director, Investor Relations. This morning, we published our interim results. We delivered a 15% EBITDA margin in challenging markets. Together with our CEO, Stefan Simonetta, and our CFO, Arno Monings, We will look back to the first half of 2024, and we will look forward to the second half 2024. Stefan will kick off the presentation with some key highlights. This will be followed by Arno, who will give a financial update. Stefan will then share our strategic priorities and outlook. After the presentation, We will give you the opportunity to engage directly with us in the Q&A session. Your questions and feedback are very important to us, and we encourage you to participate. Later today, we will make both the presentation and the recording of this webcast available on our website. Please welcome Stefan Simonetta to begin our presentation.

Thank you, Rutger. Good morning, everyone. So the first six months of the year have been challenging as we saw lower activity at our customer, especially Edwin in building technology. But we have improved thanks to the work of our teams to improve our added value margins and we improve our profitability in our industrial technology segments. As a whole, we are delivering 15% EBITDA margin, thanks to our cost-saving and robust price level. And as you see on this slide, that are the key highlights about our first-half performance, with an organic growth at minus 3.9%, with an EBITDA at 15% of 242 million, and an added value at 63.8, which has improved, as Arnaud will explain later, in both actually our segment compared to last year. As we always do, we are adjusting our costs, especially fixed costs, thanks to our structural cost saving. And you can imagine that most of the cost saving are on our building technology segment. And we are deploying and executing our inventory reduction plan to be back on track at the end of the year. Despite the short-term challenges, we continue to invest for the long term, and that's why our CAPEX is in plan with last year. We deliver an EPS at 1.61, and we continue to deploy our full strategic actions. I'll give you more color later on. So overall, we continue to execute our strategy. We have delivered 15% EBITDA and we are well positioned for the rebound of the activity. When you look at the operational development, let me give you a bit of color for each of our end markets. And starting with building technology or eco-friendly buildings, this is where we see lower activity in Europe, especially in Germany. But despite all these challenges, our added value margin have improved in our eco-friendly building thanks to our robust pricing, our sales initiative, and our purchasing actions. We continue to see a decreasing lower end-user demand in new build and softer demand in innovation. As expected, the stock level at our wholesaler were still low, but we continue to see better activity in America, in Asia, and in some product line, we are actually doing better than the market. As an example, our groove technologies, our water treatment offering, our pressurization and storage tank, our safety and efficiency valve are actually doing better than the market, which means we we are winning some share compared to the market trends. In the U.S., we are still working to improve our service level, and this is where we are expecting a better second half on our commercial valve. And we see the positive trend on some new vertical, especially the data center, where we are also working on offering an innovative solution for our customers. But despite this, short-term volatile demand, long-term it remain a growth agenda because the energy, the resource efficiency in both residential and commercial buildings, they remain long-term growth driver. But as you have seen, this is mostly in this vertical that we see the biggest challenge. Because on the other hand, everything linked to our industrial technology is actually doing much better, and semiconductor efficiency continue to grow despite some short-term volatile demand. We are improving our service, and our order book remain on a high level. And we continue to see very strong demand on our advanced mechatronic module with more and more system integration, especially, as you all know, for lithography and inspection application. We see more and more, which is good news for sustainability agenda needs for refurbishments from our customer. And this is a growth enabler on top of the technology trend. And we are continuing to invest for the long term, right? Because we need more capacity to serve and deliver the growth from our customers. So very confident, and we expect a much stronger 25 in this industry because there is positive technology trend like AI technology that will bring additional demand. In sustainable transportation, we have, once again, this just show our resilience, a very solid performance because also here we see a mixed demand. with a lower in automotive, but continued growth in aerospace. So we are, I think, delivering as usual and flexing our cost to sustain some solid margins. And that's why we are able to follow the trend, especially in automotive. And we continue to see high growth for the high precision manufacturing parts, especially also some good opportunity on surface technology because there is more and more need for lightweight material. And we are also continuing here to support the e-mobility agenda, sustainability, and all the reshoring continue to be growth driver in this and the market. Industrial niche, a bit more challenge because of course here it's following the overall economy and we see a Some lower demand, especially in West Europe. Once again, also Germany is more challenging with the overall industrial need going down. Also U.S., and we continue to see growth in Asia. So we are adjusting our costs. But the order in tech continues to be very strong on the other hand in the U.S., for an industrial valve, and that's why we expect also a second half to be better. And we still see growth opportunity. That's what we are working on to capture a growth and win share in North America on our industrial valve. So in a nutshell, that's where we have been doing on the first half with very strong picture on industrial, where we are able to continue the growth on Semicon more stability on sustainable transportation and more challenging on industry. And then we are taking all the measure to secure our margins on eco-friendly buildings. Let me now hand it over to Arnaud.

Arnaud? Yeah, thank you, Stéphane. Good morning, everybody, also from my side. I would like to take you through the financial development of hours over the first half 2024. Starting with the revenue, where you see the decline of 3.9% organically over the first six months versus last year, and where we see the headwind in building, as Stefan also explained, ending up in 6.7% organic decline for building technology. And then industrial, a reasonably flat situation, minus 0.4%, which is actually, given the market circumstances, also an industrial decline. and quite a strong performance. In total, it's minus 3.9. And the EBIT A margin, there, we sustained a good added value. We even improved our added value as Stefan said with 1.5%, which is a great result and a great performance of the teams. And that is clearly always our strategy that we really protect our added value margin because there it all begins with the earnings, of course. So there we are still with 63.8% at a very good level, and that is also one of the reasons that we could at least keep our profitability to the level of 50.0%, although it's a decline of 0.4, but still 50.0% in challenging market situations. The earnings per share before amortization, let's say that the net profit before amortization ended up at 178 million. And also there we see that the net finance costs were clearly lower than last year, but that is also a positive thing. And that also helps to at least have one Euro 61 per share as an EPS versus the 171 last year. Then the cash flow from operations, where we decreased from 221 million in the first half of 23 to 182 million in the first half of 24. And we have also put here the two main reasons for that. First of all, of course, a lower EBITDA level, 60 million effect to this operational cashflow. And the other one is the network capital move of, let's say, which was 27 million lower than the move last year. And that clearly has to do with the normal seasonality trend that you build up stock in the first half year and you reduce your stocks in the second half year. Yeah, also because of the seasonality and where we had the situation in the first half of 23, as we came from a very high stock level in 22 at the end of 22 due to all the supply chain issues, as you may remember. So that was clearly let's say, a positive situation for the cash flow in the first half of 2023. But this gives more or less the normal seasonality. And the revenue per end market, where we see eco-friendly bills with 51%, actually quite stable. Semicolon efficiency continued to increase in the share of the total towards 50%. Sustainable transportation also slight increase to 70%. And here we see the industrial niches are really reducing towards the 70% coming from 19, full year 23. The revenue per region, I must say quite stable. Actually, there's not a lot of change. The only thing is that APEC Middle East Africa is 1% lower than full year 23. And Western Europe is 1% higher than full year 23. The revenue bridge, coming from the first half of 23, 1.717 billion euros. Then we have no effect from acquisitions in the first half of 24. The net effect of the disposals, the divestments, versus 2023 was 37.3 million euros that we lost of revenues that had to do, of course, with the divestment of this tech. Currency effect. the small plus 3.8 million, mainly impacted by Great British Pound and Polish Zloty. And then it results in the organic revenue decline of 64.8 million euros. Again, the 3.9%, as explained earlier, and that is totalizing towards the 1.618 billion euros we realized over the first half of 24. The same for the EBIT average, where we started from 264.2 million euros over the first half of 23. No effects from acquisitions. We lost 4.9 million euros versus last year due to the divestment of this deck we did in 23. And then we had a slight positive translation impact, mainly, again, Great British Pounds and Polish Sloty of 0.4 million euros. And that results in the organic EBIT A decline of 70.5 million euros of EBIT A lost. And that is, as said earlier, mainly realized in building technology driven by lower volume, where we saw the margin going down from 14.0 to 30.0%. I will explain in the next slides also, and where we still see that industrial technology improved the EBIT A margin, but also come back to that in the next slide. The building technology segment revenue came down from 932 million to the 873 million in the first half, which was the 6.7% organic decline versus the minus 1.5% decline we faced in the first half of 23. The added value Improved thanks to robust pricing, also mentioned by Stefan, sales initiatives and purchasing actions. And we believe that our teams also in this difficult market circumstances did a great job to protect their added value. And that, at the end, helped a lot to sustain the EBITDA margin to the 30.0% that we reported versus the 40.0% last year. And let's say also here, we see that the capital expenditure, we continue to invest despite difficult market circumstances. So that's also, yeah, we are still investing for the long-term, of course, because we believe that the long-term perspective also for building is still positive. Last but not least, America and APEC, we saw better activity than in Europe. Then the industrial technology segments. Also, a slight decrease of revenues from 785 to 746, which organically was, let's say, only minus 0.4% because also here, of course, we faced the disposal of this tech. And don't forget that last year, the first half of 23, we really had a very strong organic growth performance in industrial technology of plus 60%. Then the EBIT A margin, despite the lower volume, we managed to improve our EBIT A margin, and there the teams really did a great job to flex their costs also with slightly lower volumes to even be able to improve EBIT A margin to this good performance of 70.8% in the first half. Also here, we continue to invest, although the CAPEX is slightly lower, That is related to the timing, because also in industrial technology segment, we will continue to invest for the long term. And again, continued growth in semi-con efficiency, a stable activity in sustainable transportation, and a lower activity in the industrial niches. That is the takeaway from the three end markets. Then the two segments divided geographically from their revenues. We see 54% Western Europe in building technology, which is a little bit higher in the total than the full year. And for the rest, I would say there's not so much change. Also in the industrial technology segment, it's only slight changes Eastern Europe, but for the rest, Eastern Europe is a little bit lower than last year. For the rest, it's more or less the same. Stefan, back to you.