Hello and good morning. Very warm welcome to the presentation of the first half year results of 2024. I think most of you know the format by now, which we're doing digitally. Dr. Schmidt, CEO, and Rudolf Weichert, CFO, will illustrate the results and talk about the strategy. In the end, you'll be able to ask questions. You can do this via Zoom. Either you raise your hand and I unmute your microphone, or you can type in a message into the chat.
Just wait a minute.
Basically, after you typed in the message into the chat, we read it out one after one. The presentation we are showing is on our website, and you can download it, but we altered the slides a bit for the fluency of the presentation. Now I think I hand over to Dr. Schmidt, who will start with the intro.
Good morning, ladies and gentlemen. It's our pleasure to host you for our earnings call for the first half year of 2024. Rudolf Weichert and myself will lead you through our presentation. We are happy to answer questions later on. Before we jump into the presentation, just let me make a few remarks to set the stage, so to say. When we look back on the second quarter, first of all, I remember our annual shareholders meeting in May. The meeting decided on a dividend per share of EUR 1.20. If we add this up together with the share buyback program that we executed also in the second quarter, we already distributed a total of EUR 56 million to our shareholders.
When we look on the performance of our portfolio companies in H1 2024, if I put it in a nutshell, I wanna say that the development is in line with the expectations in the whole. I mean, this also shows when you compare the actual figures that we published today, with the consensus that is on our website also. I think what we see, we see a significant impact on segment Engineering from the general reluctance to invest in the industry. We see a good performance of segment Infrastructure, despite the persistently weak conditions in the construction industry. We see a segment Materials that is weaker due to, increased price pressure and reduced volumes.
Nevertheless, when we look on the EBIT margin, we see an increase as compared to the first quarter of 2024, but also as compared to the third and fourth quarter of 2023. When we look on earnings per share, we are at EUR 1.21 per share, which is well above last year's value of EUR 0.8. We have a strong free cash flow, which we'll comment on later. This gives us the freedom to execute the acquisitions that we have planned for the year 2024.
Obviously, we'll get to that as well, we had to revise our guidance because the assumed positive trends that were built into the budget for 2024 did not materialize, now the portfolio companies look on the second half of 2024 that appears to be weaker than originally expected. Having said all that, let's jump into the presentation since all of you, I think, are very familiar with the business model of INDUS, I'll jump that section I will directly give you a short update about PARKOUR perform. Update PARKOUR perform. I think everybody knows PARKOUR perform. You know about the four initiatives that we have. I will only highlight a little bit the strengthening portfolio structure part striving for sustainability. Here we go.
As you well remember from, I think, our earnings presentation for the full year 2023, we have set ourselves an ambitious goal. We plan to invest EUR 70 million in M&A acquisitions. We have a well-filled M&A pipeline, and we have attractive targets, and we are also about, I think, to conclude a few transactions in the, yeah, I would even say in the next weeks and definitely in the next months. When we look on what has happened already, we have already executed three acquisitions. We acquire Gestalt Automation for segment Engineering on the first level. This is this young company in Berlin that is focused on AI-based automation solutions for industrial applications. We are working on this acquisition.
We are refocusing the business model, and I think it's in a really attractive market niche and I think it's gonna work out. We had two acquisitions on the second level. Hauff-Technik acquired the remaining 50% of GRIDCOM. GRIDCOM is a manufacturer of passive components for fiber optic networks. That business is running very well, I think, and contributes also to the segment Infrastructure for the first time within the segment. In June, we closed the acquisition of Colson X-Cel. This was acquired by PCL, which is part of HORNGROUP. The consolidation, I think, is as per June 1st. You do not really see any effect either in turnover nor in profit in the first half of 2024.
The transaction is closed and everything went as planned. Finally, we put that on this chart. It's not really an acquisition because it was just the final acquisition of the remaining 15%. If you look on the balance sheet, I think it's just a payback of a financial liability. Nevertheless, TECALEMIT Inc., which is also part of HORNGROUP, now belongs 100% to the INDUS group. The other element which we see and which is very important for us is really internationalization, as we explained it already also in March during the earnings call for 2023. We really have a strong focus on internationalization of our portfolio companies.
We're using the existing networks that we have of portfolio companies that are already in another company in another country, and we support other portfolio companies that wanna go to this country with the portfolio companies that are there already. This is just happening, for example, with FSBF, a manufacturer of ceiling materials who is setting up a manufacturing location in North America and is strongly supported by Aurora North America that is already a well-established manufacturing location in North America. We have a support from the holding with training courses, marketing for marketing and sales functions, which is also pretty important for the small companies that we have to broaden their perspective and to help them to tap the attractive markets that we see in foreign countries.
Obviously, we can support our companies also with legal and other support functions when they go to foreign countries. What's very important, and you just saw that with Colson, we can also help our companies to grow with add-on acquisitions abroad. This has happened in the past already. I just mentioned TECALEMIT Inc. in the U.S. as well, and this will happen in the future. Couple of the hot acquisition projects that we have right now are also in this area of add-on acquisitions in other countries. The package shall really help our companies to broaden their international network, to broaden their international presence in markets that are faster growing than the home markets for the time being. I think I can skip this one.
If we come to the fourth initiative, which is driving sustainability, I just wanted to give the information for those of you who are using ISS ESG ratings. I think by now, for the ninth time in a row, we got the C+ rating from ISS ESG. That means we are in the so-called Prime sector of the ISS ESG rating. We continue to show the performance that is required for that, and it's always also a prerequisite for our ESG-linked financing with promissory notes.
Promissory notes.
Promissory notes.
Promissory notes.
Right. Another remark I wanna make is for those of you who wanna see more, in July. We published our, by now it's our fourth sustainability magazine. We call it INDUS Sustain. This one is has a strong focus on social responsibility or social sustainability. This is the S in the CSRD, and this is something that's also becoming more and more important also from the reporting point of view. I think this is something that will reporting in accordance with CSRD will for the first time happen for fiscal year 2024. We are setting up for that, and we are getting ready. Having said all that, I think I'll hand over to my colleague, Rudolf Weichert, and he'll lead you through the numbers now.
Okay. Let's jump into the numbers. What happened in the first half of 2024? As you all know, INDUS is comprised of three segments. I think we should have a brief look at the segments before putting it together for INDUS as a whole. Let's start with the Engineering segment. I think, first remark, is there any change in the composition of the segment? Yes, it is. Johannes already mentioned we have two smaller acquisitions or one pretty small acquisition. The Gestalt Automation closed in March. The other acquisition is Colson X-Cel as a subsidiary of the HORNGROUP, which has closed in June.
As Colson has closed in June, it has no real impact on the first half figures as well as Gestalt Automation , which is currently in a stage of further development and its slightly negative numbers. The impact of the change in the composition of the segment is not notable in the first half of 2024, I would say. If we take a look at the industry trend for the segment, and according to the, let's say, The Association of Mechanical and Plant Engineering Industry, they already also always publish numbers for the whole industry, then it's a kind of a subdued mood, and Germany is not in a good mood as currently.
We have decline in orders of 12% year-on-year at the end of May, according to the association. We have a drop in production year-on-year in the first five months of 7.2%. It's really not a favorable environment. If we put this industry trend and if we look at what happened at INDUS in the first half of 2024, we see the following. You can probably argue it's a little bit better than the industry trend. We only dropped sales of 5.2%. You will also see that there is an over proportional decline in EBIT from 25.9%-13.9%, and there's a drop in EBIT margin in the first half of 2024.
This is mainly due to a different mix and composition of orders and products which have been delivered in the first half. As you can see, the price quality was not so good than in the comparable first half of 2023, so a slightly negative price mix. The other thing is if you have a declining sales number, but specifically in engineering, you have to really keep your skilled and trained workers. The impact, if you have declining sales and you really are focused on keeping the staff and your skilled workers on board, because you think it's temporarily, then this is what we basically see in the first half of 2024.
You can notice that we have a margin of 5.2%, which is not very favorable. If you look at the guidance we've already published for the full year, you will recognize that the margin will improve in the next two quarters. Not as much as we originally expected, we will still see an improvement in the next two quarters. This is the sales and the earnings situation in the first half of Engineering. If we look at the order situation, incoming orders and orders backlog in Engineering, you can see there's a slight improvement compared to the first half of 2023. There's +2.2% in incoming orders, the order backlog increased also slightly by 4.8%. There's another metric you can also know acknowledge.
We have EUR 403.9 million in order backlog. If we go back to the sales slide, you see that we have EUR 266 million sales in a half year or first half year. If you compare that to the order backlog of EUR 403 million, you can do the math and see that it's more than the half year of coverage in the order backlog. It's well into the first half of 2025. The visibility of this order backlog is pretty good. Price quality will improve so that we expect an improved margin. This is kind of Engineering segment in brief for the first half of 2024.
If we skip to the Infrastructure segment, the first question is: Is there any change in the composition? Yes, there is. Johannes mentioned it already. We have acquired the non-controlling interest of 50% of GRIDCOM. GRIDCOM was an at equity investment. It's now a fully consolidated subsidiary of Hauff and will have an impact on sales and earnings for the second half of 2024. It has a minor impact already in the Q2 numbers, it is, it's fully consolidated beginning of March, so the impact is minor for the first half of 2024. It will be a little bit more in the second half.
That's the change in composition in the segment and also their infrastructure. The industry trend is kind of also not very favorable. There's a slight differentiation in the industry trends. We see commercial construction slightly picking up, but there's still very little momentum in the residential and public construction. It's a little bit mixed, but residential and public construction's numbers are really down. You can see the price-adjusted incoming orders for the first five months is - 4.4% compared to previous year and current certain negative development in residential construction, -4% and a little bit offset by civil engineering and commercial construction. There's a little bit of a mix, but also not very favorable conditions.
Having said that, let's take a look at the numbers in Infrastructure. You see - 5% in sales. That's basically aligned with the industry trend, but you also recognize that we have an increase in earnings from EUR 25.1 million- EUR 29.7 million, also an increase in the EBIT margin. What happened there is that the companies had time to adjust and have cost very much under control and really worked hard to adjust to this expected lower revenues, and they did that in a very favorable manner so that we really see good cost control in the segment and very favorable numbers.
If you have read already the published half year report, you will recognize that there is one positive impact mentioned, which is the sale of a non-controlling interest of 30% roughly in a Polish subsidiary, which has a positive impact of a one-off positive impact of EUR 2.6 million. This one-off positive impact is also slightly offset by a, let's say insolvency of bankruptcy proceedings by a customer in the Netherlands for a subsidiary. This has a negative impact of roughly slightly above EUR 1 million. We have a one-off positive impact of EUR 2.6 million and a one-off negative impact of a little bit above EUR 1 million, and that's also included.
If you take that out, it's still an increase in earnings and an increase, a significant increase in margins. Very favorable development there. Overall sales trend more or less in line with the industry. Order situation, incoming orders slightly increased by 4% and order backlog also slight increase. We can also say more or less the same, which gives also good visibility for the next couple of months, not that far out as the within the Engineering segment, but still for the reminder of the year, pretty good visibility there. Last but not least, Materials. No changes in the composition of the segment there. No acquisition, so it's like for like.
Industry trend in Materials, it's even worse than like in Infrastructure and in Engineering. There's a really deteriorating order situation in the industry. We have 7% less new orders from January to May. The industry has a slump in turnover in sales revenue from January to May, nominally below 4.2%. In real volumes, 5.9% lower, so also really not a favorable environment. What happened in our segment, we had -10% in sales, which maybe slightly higher than expected, and also slightly decrease in margin. Not as much as we might have expected, but it's down from 11.5%-9.4%.
It's still close to 10%, the adjustment made on the cost structure was in line with our expectations, but was falling a little bit below 10%. The EBIT declined from 38% to EUR 70 million .
EUR 20 million-EUR 27.9 million. We mentioned that in previous calls. We had a really favorable first half 2023 in the Materials segment with high price quality of orders and sales high price quality, and there's now price pressure from the customer side and a decline in material prices, which really impacted the EBIT situation there, but still a margin of 9.4%. If we look at the order situation, incoming orders, -9%. It's not that favorable than in the other segments, and the order backlog also declined by 8%.
Still, that gives us a pretty weak outlook for the reminder of the year, and that's what Johannes also mentioned that we cannot expect a very positive outlook. Giving the whole situation. We budgeted a slightly better second half, and now we see that specifically also in the Materials segment, the second half of the year we're more or less stable where we are. Yeah.
Yeah, Johannes just mentioned that, or I should mention, if you've read already the half year report, we added a couple of elements which should make it more transparent and gives you better insights because we, for the first time, we included incoming orders and order backlog for a rolling 24 months period in our report and added some highlights pages and a key metrics page in front as the first page. We did some changes to our report, which gives you more insights into the order situation for each segment, and probably that helps in making your judgment. Okay.
Having said that, the development of the three segments, if you put everything together, you see that in comparison, sales numbers for the segments which I've just mentioned, -5.2% in Engineering, -5% in Infrastructure, -10% in Materials. It's more or less aligned with industry trends, we are not much different there. Definitely, within the segments, different developments of EBIT. Engineering, as just mentioned, with declining sales. We try to keep the high-skilled workforce there because we think it's really temporarily, great cost control in Infrastructure and also only a slight decline in Materials. That's the EBIT situation of differentiate different between the segments. Yes, that's only EBITDA, there's no further impact there.
If you put everything together for INDUS as a whole, then you've just seen -5% or with two segments and -10%, so gives a total of -7.2% for INDUS as a whole. Our EBIT declined from 84.9%- 64.1% in total, which is over proportional, but as explained, mostly coming from the Engineering segment and a little bit from the Materials segment. Going to some key metrics on the balance sheet, I think working capital is well under control. It's an increase of 5.8% that is completely in line with expectations.
We have weak situation of revenues in the first half of 2024, the increase of working capital is not that high than originally budgeted, but it's well in our expectation and gives a favorable impact on cash flow. We see that later. Investments also completely in line to our budget, EUR 17.4 million property, plant, and equipment, EUR 18.2 billion in the first half of 2023, we are completely aligned there. M&A acquisitions gives EUR 18.5. This is GRIDCOM, the 50% of GRIDCOM, and it's Colson basically, and a little bit of Gestalt Automation there. In 2023, it was the acquisition of QUICK Bauprodukte, if you remember. Completely in line, no surprises there. Very favorable free cash flow in the first half with EUR 41.2 million.
It was EUR 35.2 million in the last in 2023. As you may remember, we had a one-off item in 2023. In January, we sold an office, a building which was no longer needed for production. We had a positive impact of EUR 14.5 million included in the EUR 35.2 million. If we take that one-off item in 2023 into account, we have a really good increase in free cash flow. The main driver is the working capital development but come to that later. Net debt also favorable development. You see an increase from EUR 506 million- EUR 565 million. We were able to do a share buyback program.
We paid the dividend, we decreased significantly our debt, and we financed the working capital. This is also completely in line with our budget. Equity ratio slightly improved to 38%. You have to keep in mind that we have a share buyback program of EUR 25 million, which accounts against the equity ratio, and we paid out the dividend already. In the second half, with no dividends to come and with no share buyback program to come, this number will go up again and we will expect it's going up to 39% at the year end, so that we'll coming close to the target ratio of 40%. Also favorable development there. Okay.
Having said that, I think overall, we have very favorable balance sheet, or balance sheet KPIs in the first half, net debt, equity ratio, free cash flow, working capital, all completely in line. Investments are in line. From an operational perspective, we would have expected it a little bit better the first half. It came in as it is, and we have some favorable developments in Infrastructure, but we will think that the second half will not as favorable as we originally thought, but it will be better than the first half. Having said that, we'll come a little bit to the outlook of the INDUS group as a whole. I will not go deeply into it.
I think you read on a daily basis the development of the global economy and the German economy, the European economy. Currently, Germany is not in a good position due to various reasons. It's kind of behind Europe, and it's kind of way behind the development in the world, and that's why we focus on internationalization way more. We have increasing geopolitical tensions, and we don't know what happened there. The overall situation is not very favorable and especially not for Germany. Having said that, we have closely looked into the numbers for the second half. We did our forecast, and basically, we had to adjust the sales.
For each segment, for Engineering, Infrastructure, and Materials, we will have slightly decreasing or decreasing sales and EBIT impact accordingly. We adjusted the margin slightly in Engineering. Previously, we had 9.5%, or last year we had 9.5%. We now adjusted the margin, the margin expectation from 6.5%-8.5%. We keep the margin expectation for Infrastructure from 10%-12%, very favorable, and we kept the margin range for Materials from 7%-9%. Basically, because of the weak economy, what we originally thought in our budgeting process that the second half of 2024 will pick up way more. I think this is delayed and we are in.
We will be better than the first half, but in a kind of slower mode, basically. Mm-hmm. Yeah. That leads us to the INDUS numbers overall, where we adjusted our sales, as already I already said, the EBIT number accordingly, the margin slightly from 7%-8%. We kept the free cash flow number. The reason for this is because we will have lower operational earnings, but we will also have a lower cash impact, negative cash impact from the increase of working capital. We will have a positive working capital impact. We also have a positive impact from lower investments in property, plant, and equipment.
These both impacts will offset the decrease in operational earnings so that we believe that we will still can go with the target of above EUR 110 million free cash flow, which is also at least a favorable favorable KPI for us. Yeah. Having said that, I will hand it back to Johannes and Dafne.
Yes.
We're happy to receive your questions. Master of ceremonies.
Thank you, Sir Weichert, and thank you, Dr. Schmidt, for the presentation and the information just been given.
Yes. Now we go back to work to make things happen. Thank you.
Thank you.
Bye-bye.
Thank you.