Good afternoon and welcome on behalf of Montega to today's earnings call of the MBB SE. In today's call, we will delve into the numbers of the financial year 2023. Warm welcome to CEO Dr. Constantin Mang, who will start with the presentation shortly. After the presentation, we will move forward to the Q&A session. With this, let's start. Dr. Constantin Mang, the stage is yours.
Thank you, and good afternoon from Berlin. My name is Constantin Mang, I'm CEO of MBB, and I'm looking forward to presenting our 2023 figures to you, but also our forecast for 2024. Before we do that, I would like to start with a quick recap on what makes MBB special. As you know, MBB offers long-term succession solutions to sustainable Mittelstand companies. The way we do that is pretty unique because we are a family business ourselves, and that means we share the same DNA with the businesses that we want to acquire. We are also fans of the capital markets. That's why I'm here today, and that's why three of our subsidiaries are also stock-listed. We have a long-term focus.
That means when we buy a company, we don't have the intention to sell it, but we really want to develop and grow the company in the long term. W e have a focus on sustainability because we believe that the opportunities that lie in the sustainable transition of our economy are large and that we can benefit from that. At this point, I would usually start to talk about our 2023 figures. T oday, I'm honest with you, I'm too excited about our forecast for 2024, and that's why I want to get it out there and then talk about our 2023 figures afterwards.
Why am I excited about the forecast 2024? Well, for the first time, MBB expects to surpass the EUR 1 billion in revenue mark. N ot only that, we want to do that with a 10% EBITDA margin, which means an increase from the previous year.
That corresponds to EUR 100 million in EBITDA. That's our aim for 2024, and we are very excited about that. Since we are so excited, we also used the last year up until today to invest in shares of our own group, of the MBB Group. We did that with more than EUR 100 million. These EUR 100 million flew into MBB stock. That's EUR 45 million, including the EUR 38 million that came through the public buyback offer in 2024. We bought back EUR 37 million worth of Vorwerk stock, bringing MBB to about 50% ownership in Vorwerk. We bought Aumann stock for EUR 20 million, of which EUR 12 million were bought back by Aumann through their own share buyback program. The reason why we did that is that we believe that 2023 was a transitional year. I think looking at the numbers, you can actually see that.
We were able to grow the revenues by 6% to EUR 955 million, but at the same time, we saw a temporary decrease in profitability from 10% to 8.4% EBITDA margin. Although we clearly met the forecast, the revenue forecast we actually surpassed by 9%, and the revised EBITDA forecast we also reached with our 8.4% EBITDA margin, we believe that 2024 will be a much better year for the MBB Group since all of the MBB companies expect increases in both revenues and margin. When we look a little bit at the segments of our group and how they developed in the last year, we see that the picture was pretty heterogeneous. In the service and infrastructure segment, we saw pretty stable revenues, although you have to take into account that the revenue growth in the previous year, in 2023 and 2022, was pretty large.
Some say maybe it was a bit too large, and therefore we are quite happy that these revenues consolidated on this high level. Nevertheless, we saw a decline in EBITDA from EUR 67 million to EUR 47 million, and we're going to cover this decline a bit more in detail when we talk about each and every of our companies. In the technological applications segment, on the other hand, we saw a strong increase both in revenues but also in EBITDA. Revenues grew by 20%, but also the EBITDA grew from EUR 16 million to EUR 28 million. So here you see quite a counterbalance to the service and infrastructure segments. And then we have the consumer goods segment that had a lot of headwinds in 2023, and therefore saw both a decline in revenues and also in EBITDA. So what you see here is the value of diversification.
When some companies in our group have headwinds, maybe others have tailwinds. You see the technological application segment increasing its EBITDA significantly while we saw decreases in the other two segments. When we look into the Q4 of 2023 and compare the EBITDA margins with the previous year, the picture is a bit different. What we see then is actually that all three segments were able to increase their EBITDA margin. In the service and infrastructure segment, we saw an increase from 8% in the previous year to 12% EBITDA margin in 2023. In the technological application segment, we saw an increase from 8% to 9%. And in the consumer goods segment, we saw quite a big increase, which was, to be honest, partly due to one-off effects, but nevertheless, we saw a significant increase.
In my opinion, this foreshadows a little bit what we are expecting to see in 2024. But the diversification in the MBB Group is only one of the many secrets that we have. Another secret is definitely our focus on the sustainable trends. And among these trends is the energy transition that is very important for Friedrich Vorwerk, who benefits massively from it. We have the trend towards e-mobility that is important for Aumann. We have the IT security trend, which benefits DTS. And we have the trend towards more ecological products in industries like the automotive industry, which benefits Delignit. And then a third secret is definitely our strong balance sheet. With EUR 475 million in cash at the year-end and an equity ratio of 67%, we are in the very comfortable position that when interest rates rise, it's actually a good thing for us. Our financial results improve.
While other companies that use a lot of leverage, of course, see headwinds when the interest rates rise as they did in the last one or two years. With that, I would like to dive deeper into our MBB companies. I would like to start with the two companies in our service and infrastructure segment. That is Vorwerk and DTS. As you know, Vorwerk focuses on energy infrastructure. They build the large electricity highways that are needed to transport renewable energy from the north of Germany to the south of Germany where it's desperately needed. With these kinds of orders, Vorwerk was able to achieve a record order intake in 2023. It surpassed the EUR 1 billion in order intake, also thanks to a large project which is called A-Nord.
This is the first, but to be honest, actually the smallest of the electricity highways that will be built in Germany over the next years and decades. At the same time, Vorwerk consolidated its high revenue in 2023 after a year of a lot of growth in 2022. We used the year 2023 to basically adapt capacities at Vorwerk to these new high levels. From this base, we believe Friedrich Vorwerk will be able to grow in the years to come. Vorwerk also expects a significant margin uplift in 2024, namely an EBITDA margin of 11%-13%, which was already foreshadowed by a 12% EBITDA margin in Q4 of 2023. Therefore, we are quite optimistic with the growth prospects of the company, and we believe that the best is still to come. On the right-hand side, you see DTS. DTS focuses on IT security solutions.
So we are talking about products and software, but also on services that DTS offers in order to protect medium-sized businesses from the threats that have actually increased, also due to the geopolitical instability that we are seeing in the last years. We also saw at DTS that the revenue level consolidated after a very strong increase in 2023 and 2022. So in a way, DTS had a similar situation as Vorwerk. They had a strong increase and now needed to adapt capacities. For DTS specifically, there were also a few one-off effects which made the 2022 figures a bit stronger than they actually were. So the comparables were pretty tough here. But nevertheless, DTS defended these high levels and is now, I think, ready to grow further from this high level. We also anticipate further growth in the year 2024.
The growth path was, again, already foreshadowed in a way by the Q4 in 2023 with more than 18% year-over-year growth. With that, let me come to the technological application segment, which includes Aumann and Delignit. Let me start with Aumann that is here on the left side. Aumann saw very strong revenue growth in 2023. We are talking about 35%. The revenues grew to EUR 290 million. That was mainly due to the high demand in solutions for automation equipment that is needed to manufacture batteries. Aumann also managed to more than double its EBITDA in 2023 with EUR 21 million after EUR 9 million in the previous year. Aumann expects to grow its EBITDA margin further. They were at 7% in 2023 and then now expect 9%-11% EBITDA margin for 2024. On the right-hand side, you see Delignit.
Delignit offers sustainable wood-based solutions for the automotive, but also the caravan or the rail industries. Delignit experienced revenue growth. The revenues grew by 14% to EUR 86 million in 2023. Towards the end of last year, we already realized that the demand in the automotive sector is cooling down a little. So the forecast and outlook for 2024 of Delignit is also a bit more cautious. Nevertheless, we see lots of new market opportunities for the company, and that's why the company is also looking into capacity expansions in the next years in order to seize these additional market opportunities. Last but not least, let's talk about the two companies in our consumer goods segments.
These companies had a rather difficult 2023 because they were probably most affected of all groups of all companies in the MBB SE by the lower, softer demand. We saw for both companies revenue declines, actually. Hanke Tissue declined by 8% and CT Formpolster by 7%. And also these two companies probably saw the largest cost pressures due to rising energy costs, but also raw material costs. In the Q4 of 2023, we, however, saw already quite a margin uplift. And we also believe that this margin uplift will be sustainable throughout 2024. So we are quite confident that both companies will have a much better 2024 than what we saw in 2023. Our balance sheet, as you know, is one that is dominated by strong cash and strong equity positions.
At the end of last year, we saw a cash position of EUR 530 million in the whole group, out of which EUR 475 million were net cash. Out of these EUR 311 million were net cash in the holding MBB SE. These high cash figures, which correspond actually to an increase over the last year, are already after more than EUR 50 million that we invested into our own group's shares. So we have this strong equity and this strong cash positions even after increasing the MBB's participation in the major MBB companies, Friedrich Vorwerk, Aumann, and Delignit. Sorry, Friedrich Vorwerk and Aumann and MBB itself. But the aim at the end is, of course, not only to invest this money into our own stocks, but to invest it into new group companies through M&A transactions.
In this area, we saw last year that after a long time with rising valuations, the valuations in the M&A market actually declined a little bit. That's mainly due to the increasing interest rates, which affect especially financial investors, which use a lot of leverage. We, as MBB, are less affected by that because we invest into new companies mostly with equity and with very little leverage, if at all. Therefore, our willingness to pay is not as much affected by the availability of debt, basically, than it is the case for financial investors. That's why we believe that the competitive position of MBB has actually become better over the last 12 months. That's why we also think that the opportunities that we are going to see in the next months are actually becoming more interesting.
With that, also the likelihood that MBB will acquire a new company, maybe in a completely new field, but also add-on acquisitions for our existing companies will increase. After a year in which we believe the most attractive investment were actually into ourselves, into MBB companies, maybe 2024 will be the year in which the investments into other private companies are the most attractive investment decisions. That's what we are here for. We want to allocate the capital where we believe returns are highest. Last but not least, let's have a look at the value of the bits and pieces of MBB. As you know, a large part of MBB's value is quite transparent because you can take our participation in the stock-listed companies, Vorwerk, Aumann, and Delignit. That amounts to a bit shy of EUR 300 million.
You add the holding cash, which was at EUR 311 at the end of last year. Then you're already above our current market capitalization. That is not taking into account any of our private companies. We still believe that the valuation of MBB is pretty attractive at the moment. With that, I would like to open the floor for your questions and happy to receive questions and to start a little bit the discussions about our figures, but also about our forecast.
Yes. Thank you so much, Constantin Mang, for this insightful presentation. Let's start with the Q&A session. To keep the conversation engaging, we would kindly like to ask you if you could pose your question via the audio line. To do so, you simply click the raise your hands button. If you dialed in via phone, you can use the key combination star 9 followed by star 6, or you can also use the chat to pose your question. We received a first question from the chat. Thank you so much for the question. How do you see the M&A market developing? With reference to the presentation, you mentioned a usual high EBITDA margin. Can you quantify on this, please?
So first of all, the M&A market, I already gave a few of my thoughts on it. I think it's becoming more interesting because valuations are becoming more interesting. What we saw last year was actually that the valuations in the M&A market were not at the same level or at the comparable level as small-cap companies that are stock-listed were valued. Therefore, we believe that actually investing into stock-listed companies was the better choice. Of course, we've been looking also on stock-listed companies that we don't know as well. The most obvious is actually to invest in the stock-listed companies that we do know very well. That's Friedrich Vorwerk and Aumann. That's why we prefer to invest in that class, basically. Right now, I think that the opportunities for new private businesses are getting more interesting because price expectations are getting lower.
We also have quite an attractive deal flow at the moment. There are interesting companies that will be sold by their owners in the coming months. Therefore, I'm quite optimistic on it. With the usual EBITDA margin you were referring to, I'm not exactly sure when and where I use the usual EBITDA margin. I guess probably in the context of DTS because DTS is probably the company with the most stable EBITDA margin in our group. This is usually in the range of around 15%. Last year, it was 14%, but 15% EBITDA margin is clearly the aim for DTS. That's what I'm also expecting for the year 2024.
Thank you so much for the answers. We have another question from the chat. Which of your holdings currently ranks furthest below its potential, and what improvement measures are on the way?
That's a good question. I mean, if you are maybe looking at this slide, you see that both in the service and infrastructure segment and in the consumer goods segment, we saw a significant margin uplift in Q4 2023. And as I said, I think that's quite representative of what we are expecting for 2024 as well. So the biggest uplift is probably to be seen in Friedrich Vorwerk and in the consumer goods segment. Friedrich Vorwerk, as I've mentioned before, had an EBITDA margin, here you see it, of 9% in 2023. The reason why this margin was lower was especially because Friedrich Vorwerk had a few older projects that were won in the year 2020 and 2021. And they basically led to an overall margin decrease in the Vorwerk Group.
Now, these projects are all more or less finished or were already more or less finished by the end of the last year. So I don't see any risk from these projects anymore. And in the Q4 2023, you basically already saw that the company without these projects runs more at a 12% EBITDA margin level already. So I think here we really see a margin increase by 3 percentage points, something like that. And in the same way, when I look at the consumer goods segment, they were and here, the 15% are not even representative overall. The margin was much lower in 2023. The consumer goods segment was clearly behind its potential in 2023. And we do expect quite an uplift in 2024.
What we can do well, of course, in all of our companies, we are helping wherever we can in order to improve the margin, in order to seize growth opportunities. But in most cases, the management itself is well-equipped to act upon the temporary and what we are seeing in the consumer goods segment is clearly a temporary decrease in margin. And therefore, our role as MBB is to help the management basically doing that. But mostly, the management in the companies knows best what needs to be done. And we think that a lot of positive developments are underway. And that's why we are quite confident when we look to the margin uplift in 2024.
Thank you so much for the answer, Mr. Mang. We have another question through the audio line. Michael Gielkens, you should be able to speak now.
Thank you. Hi, Constantin. First of all, congrats on the annual figures. I think going well towards normalization in Vorwerk profitability. My question is on the M&A component. I was wondering, in the annual report, on the board report, it states that in the area of M&A, advice was provided on several investment opportunities and due diligence results. Yet this hasn't materialized apart from the strategic acquisition for Aumann. To what extent has the board maybe stopped a deal from going through? And what's maybe the interplay between the board and management? And is the board or maybe Ms. Nesemeier a bit strict on the price that you are allowed to pay for a company? The general question, maybe.
First of all, thank you very much, Michael, for the question. I'm glad you're joining this call. Well, it is part of our business, whether we think the overall price level is attractive or not, to look at attractive M&A opportunities. We did that also last year, even though we had the general impression that maybe, especially in the first half of 2023, prices are not where we would like them to be. We were looking at lots of opportunities because that's the only way to realize which price level you actually discover, right, and what the expectations of the business sellers are in the end. Because often, it is quite clear from the beginning, but also some of the business sellers are pretty shy.
So these are sometimes sellers that are not advised by a big investment bank, and they maybe don't know exactly what the company is worth and so on. So it's a discovery process. So for that reason, we always look at opportunities, and we always do due diligences. And the year 2023 was no exception. So within this process, of course, there are certain gateways, I would say, right, that need to pass requirements, requirements that are set by the board, that are set by ourselves. And it's usually a pretty open, but always a pretty intense discussion about each and every potential acquisition. What are the pros and cons? What is the price? And what is the fair valuation of a company? And sometimes, there are good reasons to not follow up on an opportunity for price reasons.
But sometimes, it's also other reasons, findings in the due diligence and so on, which make us cautious. In your question, you were kind of asking me whether it was specifically the board that kind of stopped the deals, and the management team would have done it. That's not the case. Usually, this is a very intense process, but a process that we conduct as a team, as a whole. And we have these discussions with our board, with our major shareholders. And usually, our opinions are not that far apart. And yeah, that was a very long answer. But that's how these processes usually are, pretty long, pretty intense. And we always do them in order to see opportunities. And I'm sure that's the only way to do it. That's the only way to eventually find a good opportunity.
Yeah. Thank you so much for the answer. We have another question from Mr. Arif Marinoni. You should speak now.
Oh, yes. Dr. Mang, can you hear me?
Yes.
Oh, thank you. Some question from my side. How did MBB start into the current business year? Does it reflect the full-year sales guidance of roughly 5%, or is this guidance more or less back-and-loaded?
So we had a very positive start into the year, which was, I would say, more or less how the last year ended, which means we saw good margins, higher margins than we saw in the previous year. And also, we saw some revenue growth. And therefore, we decided to give the forecast that we are giving because the year started in a way that makes us confident that we will reach all these forecasts.
Okay. That sounds good. Another question regarding your A-Nord Electricity Highway project totaling EUR 600 million. Over which time period will sales be realized for Vorwerk?
This is going to be realized over the next few years. So we had a little bit of revenue already falling into the last years, but a relatively tiny part. Now, in 2024, this is going to start really contributing significantly to the revenues of Friedrich Vorwerk. And then over the next two to three years, we're going to continue to see revenues coming from this project. So this is quite a large project with a large time span.
Okay. Thank you.
Thank you so much for the question, and thank you so much for the answer. We have another question in the chat from Mr. Lida regarding M&A. What is the deal size for M&A, and what would you feel comfortable about? In the absence of larger M&A investment opportunities and given the still attractive valuation of MBB SE, could shareholders expect further buybacks? And then, given the recently strong performance of large-cap U.S. stocks, have you do or did a new plan, like an update of your strategy when it comes to public equity investments?
So I'll start at the back. Our strategy has not really changed regarding the management of our liquidity. We do have around a third of our liquidity of the holding invested into stocks. And these are the majorities also still invested in blue-chip stocks with a U.S. overweight. So that hasn't changed, really. Regarding what M&A transactions we feel comfortable with, we would definitely not feel comfortable investing all of our liquidity in the holding into, let's say, two acquisitions only. However, we would feel comfortable making substantial investments, let's say, north of EUR 15 million per company. So yeah, that's the range I would like to give. The appetite always comes with the opportunity also, of course. So it depends a little bit on how interesting the opportunity is. If we are really convinced, I think we are also ready to make larger commitments to new M&A targets.
Did I miss anything from the question?
No, I think that was all the questions.
Perfect.
I think we had another question from Michael Gielkens. You should be able to speak now. You can unmute yourself. Thank you.
Yeah. Here we are again. Constantin, maybe some questions on Vorwerk. Obviously, the whole LNG budget overrun and larger projects than anticipated have kind of, yeah, hit the profitability in there. To what extent are you talking with the other parties to maybe get some compensation for this? Because, of course, there was a lot of pressure to finalize these LNG projects, and you had to, yeah, get some people away from other projects and hire outside people at a higher cost. So just in terms of if there are any discussions going on to get compensated for that. And then I have two more follow-ups.
All right. Hello?
Yeah, that was. Oh, I can ask him as well if you want.
No, no, no, no, no. I just had a noise. Did you hear the noise as well, or was it?
Yeah, but we can hear you clearly now.
Okay. Okay. Perfect.
Thank you so much.
Yeah. It's a very good question, Michael. It's not only the L&G projects, but there were a few, not many, but a few projects last year which had these cost overruns. And I mentioned before that I don't expect any further downside coming from these projects. That doesn't mean that there's no potential upside. So, of course, Vorwerk is in discussion with some of the customers whether there is some potential compensation for some of the overruns that were not caused by Vorwerk. And these are ongoing discussions.
Okay. Follow-up maybe on the structure. 2023 was clearly a transition year for Vorwerk due to these matters and also, of course, the cybersecurity problems that were had at the end of 2022. Are you confident now that Vorwerk's structure is able to handle the, let's say, larger projects? And maybe my immediate follow-up to that is, how is the hiring of people now? Is it still a bottleneck, or is the situation improving to be able to capitalize on the growth opportunities? Thank you.
Also, very good question. So the Vorwerk management has done a lot in the last 12 months or so. I think a lot of processes have been improved. We really made progress on many fronts. But this is nothing that ever ends, in my opinion, right? So the growth that Vorwerk has achieved in the last years and will achieve in the coming years will require a constant adaptation of the capacities, but also processes that the company has. And since this is a very dynamic development and also a lot of dynamic opportunities, which, by the way, become larger and larger every time we talk to one of these major clients building new cable lines, we also need to continue adapting the company. I would say we've made lots of progress. Vorwerk management has made a lot of progress in 2023, but this is an ongoing adaptation.
In terms of capacity, we were able to hire new people at Friedrich Vorwerk, especially in the so important cable business sector of Friedrich Vorwerk. That doesn't mean that now we've got enough people and all is good. We need to continue improving, and we need to continue hiring.
Thank you so much. We have another question regarding the buybacks that we haven't answered before. In the absence of larger M&A investment opportunities and given the still attractive valuation of MBB SE, could shareholders expect further buybacks?
Exactly. I think we've had this question before. I skipped that one. Well, I think we bought back a lot of MBB shares. So I don't really expect us to now launch another buyback program. On the other hand, it all depends on the growth prospects that we see and the valuation of the company. So I also don't want to exclude that we increase our share in Vorwerk, for example, further since we do believe the company has a lot of growth and potential ahead of it.
Thank you so much. We have a couple of more questions in the chat, but with view of the time, Dr. Constantin Mang, shall we answer the questions now? Is that fine with you, or shall we?
Yeah, I'm fine to answer a few more questions, of course.
Okay. Wonderful. The other question that we have is, are you publishing a new guidance maybe to the year 2030? With regards to the last guidance from 2020 that is still being reached?
At the moment, we don't have the intention to publish a new guidance for 2030. It's not that we have a lack of vision, but the problem with these long-term guidances for us are always they depend a lot on the opportunities that we see in the M&A market. So I think we would be happy to do a midterm forecast for the organic development of our MBB companies. But then it is pretty difficult to forecast what company exactly we are going to buy this year, next year, I don't know, and how much that will contribute to the revenues. And therefore, at the moment, I don't have the intention to publish such a forecast.
Thank you so much. The other question, any update on DTS progress in the software part of the business? How do you see the possibility to bolt on M&A at DTS?
Yeah. The own software of DTS is actually doing quite well. They launched a few new products last year and sold it pretty well. The demand for their products is pretty high, especially for a product that they call the Security Cockpit. That's something that's doing pretty well. But there are also a few other software products which really see a lot of demand from medium-sized businesses. Nevertheless, this is something that does not yet contribute a lot of revenues to the group. However, we are talking about recurring revenues that have very high margins. So even if the absolute revenue figure is not high, I think it's revenues with a very high value. And therefore, we are quite excited about the potentials of these software products.
Thank you so much. And then we have a question that might have been answered previously. However, in the event of new acquisition, can you please explain how you would ideally like to pay for the acquisition? All cash, part cash, part in-out, part cash, part equity in MBB SE, etc.?
I mean, for add-on acquisitions, especially for our subsidiaries, Aumann, but also Friedrich Vorwerk, we are in the comfortable situation that our subsidiaries have a very strong balance sheet themselves. So, for example, if Aumann does an acquisition, they would probably happily pay with the cash that they have on their own balance sheet. And the same is true for MBB. At the moment, we have a lot of cash on our balance sheet, and we would be happy to invest it. We never choose debt as an instrument to sort of tune the potential returns of an acquisition at the beginning. We prefer to buy companies with equity mostly and then see afterwards what kind of leverage is matching the business model, the company structure, the assets of the company.
We think about leverage more from the perspective of the company and not so much from the perspective of the acquisition and the returns of the M&A deal.
Thank you so much, Dr. Constantin Mang, for all the insights. As no further questions have come in, we're drawing this earnings call now to a close. Should you have any questions in the future, you can always contact Dr. Constantin Mang or us. I'm wishing you now, on behalf of Montega, a beautiful Easter holiday, and I hope to see you in another earnings call. Thank you so much for your time.
Thank you very much.