Ladies and gentlemen, welcome and thank you for joining the webcast on our full year and Q4 2024 preliminary financial figures. Thank you for being with us today. Throughout today's recorded call, until the question-and-answer session, all participants will be in a listen-only mode. In the room with me are Oliver Kaltner, CEO; Dr. Udo Streller, COO; and Volker Christ, Executive Vice President, Global Finance and IT. I am Nicole Schillinger, Head of Investor Relations. Before we start, let me briefly run you through today's agenda. Oliver will kick off with an overview of the fourth quarter, our new organizational structure, and the transformation the company has gone through since the IPO. He will then hand over to Volker, who is going to run you through Q4 and financial year 2024 group and the divisional figures. Udo is going to share with you the divisional updates.
Oliver will conclude with an outlook before we come to the Q&A session. Now, over to you, Oliver.
Thanks, Nicole. Good afternoon, everyone. Thank you for participating in this conference call. Today, we would like to give you a detailed insight into our preliminary 2024 landing figures and the measures we have taken for reshaping our business. We will go into detail about the actions we have already taken and those that will follow in order to achieve a sustained change of course. On February 11th, 2025, we reported preliminary and as yet unaudited figures for the 2024 financial year with a consolidated revenue of around EUR 110 million, which is below the forecast of around EUR 120 million, and an adjusted group EBITDA margin as expected to be minus 2%. The forecast was around plus 3%.
The main reasons for the results are based on subdued trends in the Americas and increasing competitive disadvantages in the switch business, which lead to an increasing lack of competitiveness in the switch volume business, which is dominated preliminarily by China. The digital health and solutions segment achieved its budgeted target for the year and reported significant year-on-year sales growth. There is one highlight, too. Good working capital management led to strong FCF momentum in the fourth quarter. On November 14th, 2024, Cherry SE announced its new organizational structure alongside a fundamentally revised partner program for 2025. The key messages from that news are some significant changes starting on January 1st, this calendar year.
First, a complete reorganization of the company within Europe means: A, centralization of product management, sales, and marketing for components and peripherals. B, integration of components with a new centralized product management and development unit under the leadership of our COO, Udo Streller. C, a realignment of our distribution network across Europe with a distribution and fulfillment strategy. D, digital health and solutions segment will remain a separate business segment. Second, office, gaming, hygiene, and security finished goods are now all in Cherry Peripherals. Third, launch of a new partner program for preferred partners and distributors based on new allocation, pricing, and margin model. From February 1st, 2025, Alexander Hecker, ex-Sonos, ex-Microsoft, ex-Sony, became Senior Vice President for Global Sales and Marketing Peripherals. In the following weeks and months, we shared more detail on some specific actions with interested parties at investor conferences and in investor relations VCs.
These actions are: first, development of a new partner program 2025 for peripherals in Europe. Second, fulfillment of the contracts valid until December 31st, 2024, taking into account the medium-term strategic targets. Third, negotiations with our partners for the new contracts valid from 2025. Fourth, targeted measures to try out the gray market in the DACH region, Germany, Austria, and Switzerland. Fifth, active movement of goods using stock rotations with our partners to support sell-through and sell-out measures. Sixth, development of a product allocation by partner model for peripherals. We have deliberately decided to use Black Week and the Chinese Christmas season in Q4 to give these measures more speed and strength. As a result, we did not implement the usual sell-in activities in Q4, nor the sell-in quotas for the main season, to quickly try out the gray market.
The street prices on the effective products are mostly over 50%, 5%-0% higher than before. Moving the company from a high-cost switch producer to an integrated peripherals player with a strong medical sector business is a massive and fundamental transformation of the Cherry Group since the IPO in 2021. Indeed, last two years, we spent extra efforts in restructuring the components business by transferring the MX switch assembly to China, putting new pricing and margin model in place for our peripherals business, and preparing the digital health segments for a cloud service era in which our healthcare terminals are a substantial part of the ecosystem, and streamlining our structures and processes with cost-saving measures at the same time. Having said that, we depend strongly on the measures taken by the new German government. German SMEs, in particular, are in crisis mode due to the macroeconomic and geopolitical conditions.
In 2024 alone, 10,000 small and medium-sized companies had to file for bankruptcy. In this context, we at Cherry have focused on: first, cost reduction; second, inventory reduction; third, liquidity management. The elections to the German Bundestag on February 23rd led to the result that the CDU/CSU and SPD might build the next German coalition again. The coalition talks under the to-be-expected next Chancellor Friedrich Merz have been initiated. Regardless of the outcome of this process, Germany needs a massive political change to stimulate the economy, the investment market, promote digitalization, and significantly optimize the consumer climate. In 2024, we have not yet succeeded in reducing our business and sales dependence on the German market. Germany has been in recession for two years in a row. The current Federal Minister of Economics is forecasting economic growth of plus 3% for 2025.
However, this growth is disputed by economic experts who expect a third year of recession in a row. While we implemented a restructuring program in 2023 and further adjustment measures in 2024, we were able to set the course for growth in 2025. We will continue to work on optimizing our structures, processes, and the associated costs. At the same time, we know that the management measures over the last two years have significantly improved our position. With these strategic innovations and the organization's clear focus on its core business areas, Cherry is well-equipped to offer more efficient solutions and attractive collaboration opportunities for partners and customers alike. For 2025, Cherry SE expects its own internal realignment in conjunction with strict cost management to ensure the company's sustainable and long-term success. Kindly, ask Volker, please explain the key financial data for 2024.
Thank you, Oliver. Ladies and gentlemen, let me also thank you for your interest in Cherry SE's preliminary financials for the fourth quarter and the full fiscal year 2024 based on the preliminary results, which will not yet include any potential impairments on the current or fixed assets. I'll start with the development of our group revenue. Our sales totaled EUR 110 million for the whole year of 2024 and close to EUR 26 million for the fourth quarter, which are clearly below our revised target of EUR 120 million and the respective implied figure for the last quarter. Quarter four 2024 showed a year-on-year decline of 32%, i.e., a minus EUR 12 million compared to the quarter 2023. The decline comes from the weak sales in components as well as in Americas. On top of this, we have rejected certain peripheral businesses, which would have diluted the street prices.
Due to the magnitude of the revenue miss, there was a significant fixed cost under absorption that turned our adjusted EBITDA and the related margin into the red. Despite the gross profit miss of EUR 6.4 million in the fourth quarter, the miss on the adjusted EBITDA line was only EUR 5.8 million due to our strong cost control. The adjusted EBITDA for the quarter four came in at only minus EUR 1.5 million, dragging the full year result down to minus EUR 2.2 million. This results in an adjusted EBITDA margin of minus 2% for the year. This is clearly below our targeted margin of around plus 3%. Let me provide you with the revenue and profit development by business unit for the full year and the fourth quarter, respectively.
Gaming and office peripherals delivered only EUR 15.8 million net sales in the fourth quarter this year versus EUR 27.3 million in quarter four last year. For the full year, gaming and office peripherals achieved more than EUR 72 million of revenues, which is also below last year's figure of close to EUR 93 million. Profit performance shrank from EUR 0.6 million to minus EUR 2.4 million in the fourth quarter and from EUR 14.1 million to EUR 1.4 million for 2024 as a full year. Fixed cost coverage evaporated in light of the sales decline and could not be fully offset by the cost-cutting measures which we did initiate. Revenues in the components business unit were also below our forecast as orders from customers lagged behind expectations as we are losing competitiveness, especially in the Chinese market.
Despite having brought costs and thus prices down by moving the MX2 assembly to partner products to China, it's an extremely tough market. Hence, revenues of EUR 2.2 million in quarter four 2024 were roughly on the same level as in the restructuring quarter of last year, which made EUR 2.3 million. For the full year 2024, components achieved net sales of EUR 7.4 million versus EUR 10.9 million in the comparable period of the year before. Last but definitely not least, digital health and solutions achieved sales of EUR 7.8 million in quarter four 2024.
This compares with EUR 8.2 million in the same period of the prior year where we experienced a run on our e-health terminals in anticipation of the e-prescription. For the full year, digital health and solutions achieved more than EUR 30 million in revenue, which is well above last year's sales of EUR 23 million.
Digital health and solutions contributed to an adjusted EBITDA of nearly EUR 3.4 million in the fourth quarter and of around about EUR 12 million in the full year, which is two and a half times higher than in the year 2023. The cost development in the corporate area, which includes investments into our brand marketing as well as cost and corporate functions, improved by EUR 3.1 million in the last quarter of 2024, primarily driven by achieving all of our targeted cost savings of roughly EUR 3.5 million in the last quarter. In a year-over-year comparison, we successfully reduced operating expenses by nearly 6%. For the sake of an apples-to-apples comparison, the 2023 figure is presented excluding impairments as the 2024 impairment test is still being finalized. We will continue to focus on essential projects when it comes to operating expenses while simultaneously working on streamlining and improving processes.
As part of the organizational restructuring, we have also become more selective in filling vacant positions. Next to our rigid cost management, we also focused on cash and liquidity. We have taken measures to reduce inventories, optimize our accounts receivable and accounts payable in accordance with our customers and suppliers. By these activities, we did reduce our trade working capital by EUR 24 million versus a peak in quarter two 2023 and by roughly EUR 20 million versus December 2023, and thus delivered a positive free cash flow of roughly EUR 8 million in the last quarter of 2024. With this, over to Udo.
Ladies and gentlemen, also from my side, warm welcome to today's conference. Please allow me to present an overview of our three divisions in more detail over the next few minutes. Let's start with our components unit. The year 2024 sales figures were disappointing and below our own expectation. For the adjusted EBITDA, only a break-even was achieved. The business environment continues to be very competitive, with the volume market being dominated by Chinese competitors running business with even shorter product lifecycles. The momentum for our ultra-low-profile mechanical switch was influenced by the lackluster development of notebook end market leading into order push-out towards 2025. Our newly set up volume manufacturing in China is successfully in place and runs smoothly. All measures for organizational adjustments were successfully finished without any interruption versus customers and according to the targeted cost and timeline.
The product portfolio is under a continuous and accelerated refresh. The third generation of MX is in preparation and will be launched soon. The community switch field was successfully re-entered with the MX Purple and the MX Northern Light, and the MX Blossom will follow soon. Within 2025, Cherry will enrich the switch portfolio also by self-developed innovative analog switches. As already mentioned by Oliver, with Peripherals, our biggest unit, we combine now all peripheral products for gaming, office, hygiene, industry, and security under one umbrella with an integrated sales and marketing approach. Parallel for the now integrated product portfolio, we started a consequent simplification and reduction of products, SKUs, targeting a typical reduction of 50%. The quarter four activities around our new partner model have already led to an increase in the street pricing for our products, as mentioned by Oliver already.
Cherry also displays now by 1st February 2025 in 170 MediaMarkt outlets and the Cherry XTRAFY gaming products also listed now at the MediaMarkt online. For e-commerce, we achieved a 20% year-on-year growth for Amazon in total. Also, December 2024 shows a strong sell. On top of this, we also obtained certification by Alibaba. Regionally, we stayed strong in APEC. With 2024 targets achieved, the distribution got diversified as planned there. We welcomed our customers into our new office in Shanghai, and we are anticipating recent development in the AI area, artificial intelligence area, with fast integration of DeepSeek into our upcoming AI MICE. For the U.S., we are focusing on establishing an adequate partner network to ensure regaining momentum for this region. First indications are encouraging with 30% year-on-year growth in January 2025 in place.
Let me finish with digital health and solutions, the unit that clearly showed the strongest growth and highest probability. For 2024, a 30% year-on-year growth was achieved with strong momentum and a predicted market share of around 80% for the e-health terminals in Germany and a pleasing development for hygiene and security in total. Also with a good momentum based on the strong hygiene requirements in Europe and the U.S. from the customer side. For the service and applications, we are progressing as targeted with our terminal management system in place now. For SmartLink, the certification will be targeted by end of quarter one 2025, and the first transactional sales in first half 2025 are expected. Last but not least, the TIM Messenger will be certified by quarter one 2025 too and will be launched firstly in the model region Würzburg, which is in Bavaria.
Having said that, I am at the end of my divisional update and hand over to you back, Oliver.
Thank you, Udo. Good progress indeed. What do we expect from the current year 2025? Let me place last year's results as well as the current overall conditions in a macroeconomic context, not as an excuse, but as an explanation. Germany is continuously falling behind compared to other economic nations. It is expected to close 2025 with the third year of recession in a row. This negative spiral speaks for itself, leading to a massive slump in consumption that is confirmed by all trade and distribution partners. Labor costs are steadily rising with increased contributions. The political demand from the SPD for a minimum wage of EUR 15 per hour and tax increases has been recently articulated. German consumer confidence continues to be negative with no sustainable uptake over the last 10 months.
This slump in consumption is further underscored by an unusually high saving rate and an accelerated level of uncertainty in Europe, but even more so in Germany, which seems to have decoupled from Europe. Unemployment, which had remained low for many, many years, experienced a strong increase in the second half of last year, bringing the total to 2.09 million people. Additionally, the citizens' income is depriving the mid-sized sector of valuable labor. Cherry is internationally positioned, but Germany remains our important home market. We are also a representative of the German mid-sized sector. Therefore, we want to bring attention to the ruling authorities and demand immediate reductions in bureaucracy and comprehensive deregulation. We can no longer bear any further burdens such as the Supply Chain Act or reporting obligations. This is essential for ensuring security and location planning. Consumers in Germany need direction, perspective, and finally, renewed confidence.
As a relic of the first Trump administration, we were already imposed with a 25% tariff on MICE that we ship from our Chinese facilities to Cherry Americas. Under the new U.S. administration, an additional 10 percentage points have to be added, thus making 35% in tariffs for MICE and 10% for keyboards. Based on our current assumptions, the burden of the new tariffs could lead to a P&L hit of around $1 billion. This might be mitigated by price increases. With today's announcement, the Trump administration has also announced tariffs of 25% on goods from the EU. We will also manage this challenge accordingly. We have sufficient inventory in the United States not impacted by the new tariffs. Our priorities for the business remain unchanged. Peripherals is a planning and execution game. In this context, we will benefit from new product launches.
Digital health and solutions is supposed to get even more digital by adding services such as TIM to our portfolio. Key to further growth is winning more collaboration partners. In components, we are on the last mile to have a full assortment ready beginning of the second half of the year, while we remain being cautious on the right and relevant deals in a very dynamic market, as I said before, dominated by China. Let me share some good news from our team, China. Our next generation AI-powered mouse, which we launched in China last week, comes equipped with a high-sensitivity microphone for seamless voice input, real-time voice translation, and even support for Chinese regional dialects, helping you work smarter, not harder. That is just the beginning. The Cherry AI Hub brings a wide range of intelligent tools like an AI-powered writing assistant or image-to-text translation.
AI is part of our mission being a hardware, software, and services company. At CES, one of the world's largest consumer electronics trade shows taking place in Las Vegas in January, we presented our latest innovations in the gaming and office segments. Just to give you one example, our CES key highlights from Cherry XTRAFY include ultra-fast keyboards and headsets. I have talked to you through the main top-line drivers coming to the cost side. We made a big effort with our cost cutting, and with EUR 3.6 million, we achieved a bit more than the targeted EUR 3.5 million at the end of the year. With regards to the high level of uncertainty and considering the fact that it is still early in the year, we will not yet come up with a quantitative guidance for 2025 today.
We're currently working on a full year forecast, but there are still a few aspects to which we cannot yet attribute sufficient confidence. Let me, however, highlight what we today consider the main drivers. On the positive side, there is the pricing uplift in peripherals, the first signs of which we have already observed following the depletion of the gray market. This is occupied by the positive margin impact stemming from our new partners and our new partner program. In digital Health and Solutions , there will be an additional demand push from new professions as well as replacement need kicking in. We continue to hope for improved corporate conditions in the light of a new German government. On top of this, we are confident that our strategic measures for the American continent will lead to renewed revenue momentum.
Finally, our cost and cash control measures remain in place, helping to safeguard the margin. On the negative side, the implications of political decisions remain the primary concern. In Germany, consumers' reluctance to spend persists, while in the U.S., we are compelled to manage higher costs through the additional tariffs imposed by the new Trump administration. The excessive documentation requirements for finally obtaining our SmartLink provider approval are also presenting significant challenges for us. Despite our numerous growth initiatives, our capital allocation must be managed with strict discipline. Nevertheless, with a clear focus on our cost structure and our path back to profitability, we aim for EBIT to become positive in 2025.