Norma Group Ag Name Akt

Yeah, hello. From my side, a warm welcome to all the participants here. I'm here in Maintal together with Annette Stiebel, CFO to Norma Group, and we'll take you, as usual, through the slides. Also, as usual, answering of questions will be pushed to the back end of the presentation. Let me start with a few general remarks. I guess it's obvious to everybody that Norma is a company in a period of change. Our decision to sell the water business has been the first very decisive step to free up resources and enable future growth and at the same time crystallize value inherent in that water business. But that alone is not enough. There still is a lot of homework to be done in the company, in the remaining company, to ensure that the margins, the business setup, the cash flow of that remaining business meets our expectations. Above all, this means putting structure of our company to the test. This morning we announced to our employees that we are starting a transformation. We will further elaborate on this one, the details for you as shareholders towards the back end of the presentation. But let's first start with the Q1 numbers and take it by walking through the various slides. First overview. With the slides, with the key figures, here is net sales totalled to 284.2 million. That's obviously a decrease against previous year, mainly driven by unfavourable market conditions. The adjusted EBIT came down to 10.3 million and reached a margin of 3.6% for the first three months of 2025. One-off effects had a major impact on those figures, combined with our inability to reduce the fixed costs to live with the lower revenue amounts. CO2 emissions is one of the points where we are on track. It's looking good. We measure those at a rolling 12-month basis for actions we've taken to reduce CO2 emissions. The next slide takes us from 37 down to 34 million, which is 3 million less. The following slide shows the regional development. Here in this, we are sticking to the standard sequence of our slides. This is a little bit tricky now as we reallocated certain volume between industry, automotive, and water business. Keep that one in mind. It's more obvious once we go to the following slide where we actually look at the business by industrial area. Nevertheless, as I said, we are sticking to the previous slide sequence. Let me talk about the Americas region first. Overall, I already mentioned down by 4 million. We have seen the industrial business slightly down. Then the water business, in fact, is about 3 million down. New mobility energy has seen a decrease of about 5 million, down to 131 million euro revenue. The next block takes us to EMEA, where we see overall a reduction from 137 down to 120 million. Key factor there, as previously mentioned, is in the area of new mobility and new energy. APEC, on the other hand, has seen a smaller downward movement by 3 million from 37 down to 34 million. Key area there was again mobility, new energy, car production in general. We have to note that on a global scale is very soft, has been soft, and the uncertainty is causing further difficulties for the industry as a whole. Now we turn to a slide that shows everything by business unit. This is also important to see. what the impact of the sale of the water business will be to our numbers. We are starting with the industry applications on the left-hand side. Sales there increased by 6.4%. Reallocation of business that previously was with M&E that we moved over. This was sales from construction, agricultural machinery, as well as energy storage. we are now showing in industry that has a positive effect. Why did we relocate those segments? In terms of their business style, in terms of their order behavior, and also in terms of their production volume they are ordering from us, they behave more like industry customers. They behave more like the typical industrial demands, i.e., smaller volumes. a little bit different fluctuation of the business. Therefore, those customers are simply better allocated to industry because it gives us a chance to service those customers with resources from the sales as well engineering side that are simply better trained to deal with their demand. In the middle of the slide, you see the water management business. Their sales came down by 2.3% and the reallocations moved 1.6 million of business into that business. The very far right-hand side shows with 1.7 million the impact of the Tico acquisition in the first quarter. Next is New Energy, our biggest segment in terms of sales, with 180.6 million back in Q1 2024. There we've seen a reallocation of 11.3 million in order to focus the sales team more on the really key automotive customers. Volume and mix down by 1.6 million. Currency a little bit helpful with 1.2 As mentioned before, automotive industry has been hit very hard in the first quarter of the year. We also expect that the second quarter for automotive business will remain more tricky and later on will actually allude to the fact that we see the second half of the business year doing better than the first half. With this, I hand over to Annette Stiever, who will take you through the financials of Q1 2025. Many thanks, Mark.

Hello, everyone, and a warm welcome also from my side. Let's start with an overview on the development of our PNN. Our material cost ratio improved by 180 basic points due to cost reductions in purchasing and also lower purchase prices. Our gross profit ratio was up by 30 bps, mainly resulting from lower material costs and a reduction in inventories of finished goods and work in progress of 1.5 million. In Q1-24, we had an inventory increase by 3.2 million. On the other hand, personal expense ratio was up by 420 bps. This includes expenses in connection with the premature departure of our former CEO. The other expenses decreased in total. These costs include temporary workforces, consulting, and marketing, as well as IT and telecommunication expenses. In Q1, we had additional one-off costs for the rollout of a new ERP system in Germany, mainly for temp workforces, special trades, and IT consultancies. The system is now up and running. The good news is, however, that even with these additional costs, the expense ratio remains stable and in relation to sales. Adjusted EBITDA as well as adjusted EBIT were primarily impacted by the decline in sales, an increase in personal expenses, and the one-off costs in the first quarter. Let's have a look to our adjusted EBIT margin per region. In EMEA, adjusted EBIT margin came to minus 1%. The negative development was caused not only by the decline in sales due to the market environment, but also by temporary additional expenses. These additional expenses originated in the already mentioned rollout of an ERP system here in Mai Tai at the beginning of the year. They mainly comprise cost for special freight and extra shifts as well as for IT and consulting services. The EBIT margin was also negatively impacted by the inflexibility in personnel cost due to lower sales. As a result, personnel cost could not be fully adjusted to the revenue level in the first quarter of 25. The adjusted EBIT margin in the Americas region was at 9.6%. It was negatively impacted by temporary inefficiencies in personnel structures, meaning that personnel expenses increased disproportionately compared to the week sales. In contrast, slightly lower costs for regular freight supported the margin in the Americas. The good news here is that after the week start in January and February, March is already looking more frankly in terms of sales and margins. Adjusted EBIT margin in APEC amounted to 5.5%. The main reason for the decrease was increased personnel costs due to existing inflexibilities in personal structures in connection with lower sales. At the next slide, we show our operational adjustment in the P&M. This year, they are expected to include around 15 million from PPA effects. In addition, we assume around 20 million associated transaction costs in connection with the sale of the water management business. On top, additional adjustments from one of four transformation costs are to be expected. One important remark from my side, we have not adjusted for any further one-off costs in Q1, for example, severances or something like this. Let's have a look on our EPS on the next slide. Adjusted earnings per share, adjusted earnings in the current period were negative and amounted to minus 0.3 million. This development is due to the following circumstances. On the one hand, they were caused by the significantly lower adjusted EBIT as a result of lower sales in the first quarter of the year. On the other hand, it resulted from a high tax rate in the current quarter, which is due to a noticeably lower adjusted pre-tax profit in relation to the actual tax expense. All in all, the main reason for that is the non-recognition of deferred tax assets in the EMEA region. This resulted in a negative adjusted earning per share of minus one Eurocent for the first quarter. Let's move over to the balance sheet figures. Our net debt slightly increased by 2.6% against the end of 24. Levels were stable at 2.4 times adjusted EBITDA compared to 2.4 times into 1.24 and up from 2.1 times the end of the full year 24. The total equity levels at 698 million. Equity ratio further increased by 230 basis points to 49.3% against 47% at the end of March last year. On our next slide, we will discuss our net operating cash flow. Overall, our net operating cash flow has turned from negative to positive compared to the first quarter of 24. And on top, our net operating cash flow significantly improved compared to previous year, mainly due to an increase improved trade working capital. The positive trade working capital effect is based primarily on measures from our SEPA program. In addition, prudent investment behavior at the beginning of the year slightly supported the net operating cash flow development in Q125. With this positive news, please let me over you again to Martin.

Yeah, thanks a lot, Annette. For those extra insights on the numbers, it's obvious the first quarter was not satisfying for us as a group. There are many explanations in terms of external effects, also one of internality, which at the end of the day are stories to explain what has happened, but not a reason to continue in that level going forward. For the time being, we as an executive board of the company stick to the full year forecast we announced back in March, 7th of May. Our data shows quite clearly that the second half of the year will be better than the first half of the year. NOMA will focus on maintaining and expanding the profitability going forward. All businesses have to be strategically aligned accordingly. And amongst other things, we have to ensure that we increase the operational efficiency measures, for example, through the growth and efficiency program step-up, as well as other measures we'll be talking about as we move on. This will mean for us as a group continuously improving the overall setup, being very careful with spending to ensure that we actually come out with better results as we move forward. On the remaining slides, I will give you an overview of the step-up program as well as our transformational measures we are taking going forward. Let's first look at some interesting improvements within the overall setup of the company. Here, an example from our plant in Michigan, Sinclair, which produces quick connectors. Interesting projects the team has developed there by analyzing the standard work in the molding process, opportunities to reduce waste were identified by the team. The team designed and implemented an automation solution within the production cell that replaces all of the operator tasks, including like part handling, patch paging, counting, granular work, as well as label printing. As a result, the teamwork could save six operators for those jobs, provide them to new jobs, and deploy them clearly in what I would call higher qualified positions than pecking and the like. This is a great example of how we can, with constant work, improve the daily setup of the company. Another example, more from the sales side, growth initiatives there, the sales team went out and saw, consulted various new customers, an interesting one as mentioned here is this one, coffee machine for large industrial use, i.e. not the small machine one has at home, but this is really a more commercial machine with an interesting story. This customer, a maker of coffee machines located in the UK, had an issue with leakage problem in his machine. We developed a very customized normal V-band connection to help him there. This product of ours totally took care of any leakage in the machine. And we will now ship like 20,000 clamps a year to him for that specific purpose. All in all, not a very strong revenue story, but typical example of how normal engineers, normal application engineers and sales team help customers to design, to produce a better product. This door opener will allow us to sell more products to that customer and therefore underline that if one provides a great product, it's easier to sell a second product to that customer. This slide reinforces the measures that further growth and efficiency is needed in order to improve normal groups' midterm margin. And those will take us as we move forward to the lower double-digit level. In order to achieve that, a number of actions are required. Here we have the interim slide on the transformation. And it's important to recognize it is a move forward to improve the economic setup of the company. What is a quick assessment of the current situation? Since like 2020, the overall economic and geopolitical environment changed. A couple of root causes there. Coronavirus, Russian war in the Ukraine, global overall crisis. Customs conflicts with tariff and non-tariff burdens. Hiccups being built up left and right, making it harder to do international business. Sluggish market ramp up for electric vehicles, specifically in Europe and the US. China, slightly different. Electric vehicles do their much better. In fact, in Shanghai, we recently noticed that like one out of So six out of ten vehicles are electric vehicles in the city of Shanghai. In Europe, in the U.S., we are still far away from that one. To adopt to this new normal and for the company to come out stronger, we need to organize us more efficiently, more effectively, in order to remain competitive and grow positively again. Only if we are financially strong strong, we will be able to seize opportunities that the market offers, have the funds to invest in innovation and to successfully transform the country. To achieve our target vision of becoming an industrial powerhouse in the area of our products, we need to identify duplicate structures in our organization. We need to take out waste in the overall administration and handling of the companies and also cut our cost structures to today's reality, which is a sharper business mindset of the overall business life we are living in and a more volatile business we need to be prepared for. Let's move a slide forward to the Norma's group Target vision, I'm talking to the right-hand side of this slide. The target vision is we are pursuing actions, measures necessary to create normers, to transform normer into a focused supplier of connection technology for industrial as well as mobility customers, or as we like to call it, industrial powerhouse. We will differentiate us as an innovative, high-quality driven solution provider, one that customers like to come back to and give us their business in the years to come. In the new setup, we will see a lean organization under two sales segments, industry applications and mobility new energy. As a result of our transformation, the group should be able to to return to lower double digit adjusted EBIT margins. The entire transformation is to be expected, fully implemented in 2028. Let me now share with you a couple of the elements of this transformation. We are currently developing a comprehensive transformation list of actions that will consist of three building blocks. First footprint, we will optimize our global manufacturing footprint over the coming years. Over the past decade, we have seen NOMA expanding its manufacturing locations by several acquisitions, often with very small plants that are clearly below 50 employees and alike. This is not very efficient. This has led to a footprint which is rather fragmented, and not streamlined according to the current market needs. We will thus optimize our footprint by integrating smaller production facilities into larger locations and thereby taking advantage of economics of scale in many aspects of the plant P&L. I will give you a first example how we proceed at the next slide. The second building block in this transformation is administration. We will have to increase the efficiency of our organization in the administrative area. As part of this measure, we will eliminate double functions in the new setup manufacturing site, in the now fully loaded manufacturing site, streamline the organization under the two sales segments, but also shifting parts of the admin capacities of the admin work into shared service centers in best-cost countries. This overall should help us to get to a situation of an economically more affordable overhead structure at Norma. In terms of OPEC, we will work to optimize our spending in those areas which is A, helped by less plants, but B, also helped by having fewer focused employees working on various matters. This OPEC saving will affect spendings in all areas, like consulting, marketing, IT, professional service, office supplies as well as insurance. Insurance, by the way, will also be helped by reducing the number of sites and also disposing of the water business. We are fully aware that you require far more information than this in order to fully evaluate the impact. And of course, we will provide this information as time moves on. However, for the time being, we need to stick to the communication links that force us to also talk to the social partners, to the employees, in order to communicate the plans to them as well. Against this background, we will finalize the analysis and report more details with the Q2 numbers or H1 numbers on August 12th. To close this off with the first step of change that is happening at NORMA, we are reducing the number of plants in China. Currently, we have four plants in China. We will be relocating the work of the smaller plant Wuxi that has come to us through an M&A transaction. and relocated to a nearby larger site in Gangsu. It will allow us to save on management capacities, IT capacities, local close, annual close capacities, etc. One-off cost of about 1.7 million will hit us for that relocation. But going forward, this will provide a payback within about three years. Also note that the current building in Wuxi is in fact owned by us and the depreciation will for the time being remain in our books. This project can be seen as a blueprint for what we are doing with the manufacturing setup. It is not about closing a plant but more about merging a smaller plant into a larger plant and therefore benefiting from economics of scale in manufacturing, but also in local administration and related expense. Concluding, let me please give you an overview of the next step of our transformation in the last slide of this presentation. Here are three blocks. It starts off at the bottom with the finalization of the analysis. that is key to, in fact, do the next planning steps. In parallel, we have started to work on the transformation details in terms of employee efficiency, in terms of employee reallocation, reallocation of work, and also reallocation between the locations. Costs and benefits from these measures to be decided upon will be duly calculated in the weeks to come in order to ensure it is only said, but we can document that the numbers are right and to create confidence amongst our shareholders that those actions will happen. As mentioned before, we will communicate the details with our August 12 call around the H1 number. With this, I close the overall session and reopen the lines for questions.