Hello, ladies and gentlemen, and welcome to the call regarding the RENK Group AG Preliminary Full Year 2024 results. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, CEO Susanne Wiegand.
Hello and welcome, everybody. Susanne Wiegand speaking. Thanks for the intro. I'm pleased to welcome you to our announcement call to give you a heads-up, a trading update on Q4 last year, as well as fiscal year-end first KPIs, which we are happy to disclose. So we welcome the opportunity to inform you on our key highlights for the fourth quarter last year and also, as I just said, the full year, certainly. And as you are aware, all figures are preliminary and unaudited. However, we are very pleased with the performance of Q4, especially last year, which significantly contributed to the year-end results.
All is in line with what we consistently communicated to the market so far and is meeting our guidance and projections. I'm also happy to report that all three segments developed very well in 2024 and contributed to the strong results. Our data set is based on robust, but, as said, still preliminary and unaudited figures. Nevertheless, we are convinced that they are relevant to your assessment and analysis of RENK Group AG's performance and since what we have communicated to you officially in our call in November last year.
Key messages are that we remain on track for both fiscal year 2024 guidance, as well as our medium-term targets. We will, of course, be discussing those figures in greater detail when we report the full year results on the 26th of March. But let's have a look now at a little more detail into order intake, revenue, and Adjusted EBIT. Order intake increased considerably by 13% in 2024 to EUR 1.4 billion, compared to the EUR 1.3 billion which we achieved in 2023. So 13% growth from 2023 to 2024, which is, again, an all-time high for RENK in order intake.
Q4 2024, we saw a very strong contribution to that development with an increase of 16% in order intake, especially driven by our segment VMS and in line with our expectations communicated in the Q3 2024 call back in November and the various meetings and discussions we had with most of you during our recent conferences and roadshows. Book-to-bill on a year-over-year basis was at 1.3 times, so considerably beyond 1.0, so what you see here is that this especially means that we are building up order backlog, that we keep the pace, not just on what we perform in output, but that we grab on the market quite a large number, which is supported by continuously strong tailwinds from the market and, obviously, owed to the fact to our superb market position. With respect to revenue, year-over-year revenue growth amounts to 23%.
So we came back in 2023 from EURO 0.9 billion and have achieved last year a little bit more than EURO 1.1 billion in 2024. Again, Q4 last year contributed with almost EURO 400 million to that significant increase. This is a plus of 33% compared to the last quarter in 2023 revenue. All three segments showed a strong performance with two-digit growth rates. But again, our largest segment, VMS, was particularly strong with 40% revenue growth in Q4, thanks to the level of efficiency achieved in Augsburg. Having now a look on the adjusted EBIT, adjusted EBIT is at EURO 189 million.
This represents an increase of 26% compared to fiscal year 2023 numbers, where we ended up with a total of EURO 150 million. So 26% increase in adjusted EBIT. This substantial growth in adjusted EBIT is higher than our revenue growth, so reflecting, hence, operating leverage on a group basis. So good news here that we see first-time operating positive leverage dropping down to the bottom line. The adjusted EBIT in Q4 last year strongly contributed to that development. You are all aware that we were rather back-end loaded last year, and this contributed with EUR 77 million compared to EUR 46 million in Q4 in 2023. So strong adjusted EBIT growth last year.
Therewith, we achieved an adjusted EBIT margin of more than 21% in the last quarter, 2024, with a very strong performance of VMS again in Q4 2024. The segment showed an adjusted EBIT growth of 84% in comparison to last quarter back in 2023, at a margin of north of 26%, but we are similarly proud that our segment, Marine and Industry, has achieved an adjusted EBIT margin above 10% for the full year, and the Slide Bearings segment has delivered an adjusted EBIT margin above group level.
All three segments performed very well. In total, for the full year, Adjusted EBIT margin came in at 16.6% after 16.2% in fiscal year 2023. In addition to growth and profitability, we would like to shed a light and a look into net working capital and net leverage. Net working capital, as you are all aware, is one of our homework areas. We decreased net working capital as envisaged to about 25% of total sales compared to almost 27% at the end of 2023 and close to 29% at the end of Q3 in 2024. The decrease down to about 25% here also achieved. The net leverage is, by the end of last year, below 1.9 times and compared to 2.4 times at the end of 2023.
Also here, a good development thanks to the strong performance and also thanks and supported by our strong cash generation and cash collection by the end of last year. I would like to flip the page. Thank you, Christophe, for that. Having met our fiscal year 2024 target and guidance with respect to EUR 1.1 billion on the revenue line and with a EUR 189 million Adjusted EBIT, landing at the very upper end of the narrowed guidance, which we narrowed mid of last year from the original EUR 160 million to EUR 190 million to the upper end, sorry, EUR 175 million to EUR 190 million. With our preliminary Adjusted EBIT result of 189, landing at the upper end of that narrowed guidance, we are very satisfied and pleased with the overall results. With respect to the midterm targets, they have not changed so far.
We confirm them here with again. We see for the midterm an average CAGR on the top line of 15%, which you are already familiarized with, and for the midterm, which is a horizon of about three years, an absolute adjusted EBIT of EUR 300 million. Having said all of this, maybe some closing remarks from my side before we open up Q&A. We are also pleased, and you might have heard or read that, that we could conclude on a smaller M&A transaction by the end of last year. We signed an asset purchase agreement with the owners of Cincinnati Gears in the U.S. to strengthen and localize our Navy business in the North American market. The acquisition is value accretive. The acquisition in size and magnitude is in the area of our last acquisition, General Kinetics.
We will pay the purchase price for the assets out of our cash, and we expect closing within the next 6-10 weeks, so by the end of March about, we should see closing coming sooner. Post-merger integration processes have started. The team is up and running. Strategically, we were able to close our gap with respect to Navy localization in the U.S. and following what we have done three years ago in 2021 on the land side with the acquisition of the CPS assets from L3Harris back in 2021. With respect to an outlook, the management team will give, when we report on the full year figures by the end of March, also the guidance for the year 2025, but I think here, sitting with my colleagues, we can confirm that we continue to implement our strategy. We will deliver further profitable growth.
We will focus on the post-merger integration of Cincinnati Gears. We will further work on net working capital and the remaining piece of final sustainable stabilization of processes and the operating model within RENK America is an issue of the first weeks of this year. However, we consider the issues and problems we had and challenges we had in 2024 solved. So having said all of this, happy to receive your questions. And I would hand back to the operator. Thank you very much for listening and hope you have lots of questions for us.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press 9 followed by the star key on your telephone keypad. Has your question been answered in the meantime, please press 9 followed by the star key again to cancel your question. Please press 9 star now to state your question. The first question comes from Sven Sauer Kepler Cheuvreux. Your mic is open.
Yes, hello. Good afternoon. Thank you for taking my question. I was wondering if you could speak a little bit on what contributed to the strong order intake in Q4 in terms of maybe platforms or aftermarket. Yeah, maybe you could provide some color on that. Thank you.
Sure. Hi, Sven. Thanks for the question. Happy to give some color on the specific strong order intake we could secure in Q4. There are basically three big order intakes to mention. All fall into the VMS segment. One is a larger package of Leopard transmissions for various end customers, which we concluded with KNDS, so the prime contractor for the Leopard 2 tank. Various end customers include Sweden, Germany, and others.
So this is securing also deliverability on the KNDS side for Leopard programs for the midterm. The second larger order intake, and if we talk here in RENK, larger order intake, this is something which is north of EUR 100 million. We have secured with the government of Israel, securing and supplying the next batches of Merkava tanks. And Namer platform as well is running on our transmissions. The third larger order above EUR 100 million is the second batch for the K2 main battle tank, which the Koreans supply into the end customer Poland, where we are delivering at the moment on the first batch, all well known, I think, to the market. So those three bigger orders obviously contributed to the strong order intake, which we have realized in Q4 last year.
Great. Thank you. Thank you very much. So meanwhile, we have no more questions. So it's a good time for you, if you have further questions, to press 9 star.
We have received two questions from George at Berenberg, which we are happy to answer here and to handle with. His first question is, does RENK plan on making further acquisitions in the marine segment following the acquisition of Cincinnati Gearing Systems announced in December, or does this acquisition largely achieve the U.S. presence and scale you were looking for in this market? Our answer to this is, yes, indeed, this acquisition is largely achieving our U.S. presence and scale in the market. We are not intending to make further big acquisitions in Navy if we find something suitable in the global market space, which makes sense for us region-wise or platform-wise, not so much technology-wise, since we are leading anyhow technology-wise.
We would look at that, but our strategic priority has been solved, so to say, with that acquisition last year, specifically for the North American market. The asset is in very good condition and doesn't even require any immediate CapEx or something like this, so it's an up and running, well-performing operation with a long-term contract already for the U.S. Navy with a significant backlog, which we have also, positively speaking, inherited and bought with the assets, and this is allowing us, on that basis, in the future, to supply and deliver to the U.S. Navy, to the U.S. Coast Guard, and potential export customers out of the U.S. market any naval gear solution which we have as RENK in the portfolio. The second question which we got from George is, how many transmissions did you deliver in 2024, and what do you expect to deliver in 2025?
What level could you achieve in the midterm, 2027 to 2028? Generally speaking, we are not disclosing precise numbers of produced units. The midterm projection is in line with our average CAGR, which we have also guided, so at least 15%. We delivered more than 1,000 transmissions in the last year in combination of the Augsburg plant and RENK America. The vast majority of those transmissions is new transmissions since in the US, the entirety of the amount is all new.
In Augsburg, it's a mixture, as you are aware. And this has been complemented by a large package of spare parts, which we produced also specifically in the last month, last year here out of Augsburg. And if you take all of this together, so the entire produced volume of new transmissions in that mixture of overhaul and spare part packages contributed also to this superior margin quality which we have seen in Q4.
Okay. We have two more questions. So the first question comes from Marie-Therese Gruebner, Hauck Aufhäuser Lampe. The floor is open.
Yes. Good afternoon. Thanks for taking my question. I just want to come back to the margin in VMS in the fourth quarter. As you pointed out, you had a large sort of spare parts package coming through in the last month. So the question is, is this margin you were able to achieve in Q4 for VMS something we could see again in Q4 2025, or was it very much skewed toward aftermarket in an abnormal way? Let's put it this way.
Hi, Marita. Nice to talk to you. Thanks for your question. The margin generally, which we achieved in Q4, is a result of a mixture of a positive leverage on the volume. We were able to produce specifically in Augsburg and the aftermarket piece, which is in. So we cannot assume that we see this superior margin continuously quarter by quarter now. And I would say it has nothing to do with the seasonal pattern of last quarter year-end. So that's why I would assume that we see in a margin mixture in 2025, let's say, a similar mixture, but on that high level of, let's say, positive effects of margin mix together with the spare parts and this volume coming down with the positive leverage is not, let's say, the level for a full year.
So what we can expect for 2025 for the full year is obviously an improved margin to 2024 because 2024 still suffered significantly by the first six months of bad performance in RENK America, which we were able to compensate. However, we don't expect to get that problem again, not at all for 2025. So we will see definitely improvement of the overall full year margin. But to take, so to say, Q4 as one selected dedicated quarter, I think it's not the way to think about quarter by quarter continuously on that level. So it was a positive mixture of product mixes.
Okay. Thank you very much for the clarification. Maybe one more question. Can you give us an overview of the potential sources of large orders in 2025 in VMS in terms of various programs where you are more or less involved?
Happy to do that. I think Alexander takes over the question.
Hi, Marie-Therese. It's good to hear you. Just to continue what Susanne said, I think we had a very good order intake before Christmas, I mean, just explained by Susanne, and if you look in 2025, there are key programs coming from the Italian customer out of this cooperation with Leonardo and Rheinmetall. We are looking, of course, on additional opportunities in Europe. If you talk, for example, about main battle tanks, IFVs for the remaining customers. We also see on the U.S. side incoming orders by the continuation of the SOR contract, where we do expect significant orders, and I think these are, for the time being, the major what we have, but as we have seen in the last year, we do not only have on the big bucks or the big order intakes. We have plenty of smaller order intakes.
And that's the same as what we see here clearly. But it's also fair to say that we continue our acquisition and project work on key programs looking a little bit further in the future. If you take, for example, the M1 Abrams, where we are starting to supply some prototypes. Yeah, I think that's it.
Thank you very much.
Pleasure. Pleasure.
More questions? Yes. One more question. Christophe Menard from Deutsche Bank.
Yes. Good afternoon. Thank you for taking my question. I have three questions. The first one is actually on the acquisition. I may have missed it, but could you give us the sales and EBIT range that we should consider? What is the typical margin that this business is doing, whether it's compared to your own standards? Second question on VMS. In Q4, can you tell us what was the size of the repricing of the U.S. contracts in the strong performance in sales? And the last question is more kind of general interest. There are many talks of efficiencies in the U.S. Are you seeing any impact on your U.S. operations or any potential impact on future contracts? Thank you.
Thanks, Christophe. I start to take the first one. We are not in the position now to disclose detailed figures on the acquisition of Cincinnati Gearing Systems since it is still under NDA with the seller. However, I think I gave a hint when I said, "Think about the size of our General Kinetics acquisition." So this is more or less in that range that you can think in revenue or purchase price. Margin-wise, Cincinnati Gearing Systems is on the upper end of the margin potential in the M&I business mix segment. So you are aware that the M&I margin is consisting of Navy defense business enjoying a little bit higher margins as well as the aftermarket piece with an M&I margin deterioration is in the OE business of the industrial business.
And the hint I can give now is that the acquisition, the assets perform at the upper end of the margin mix within M&I. So that's why we're equating it to the segment and the acquisition. And I think to quote Alexander, Alexander is convinced that this acquisition will be the benchmark for the M&I segment going forward. And I think so you can assume on a low two-digit margin profile. With respect to VMS and the Q4 questions, honestly, I did not get that acoustically and my colleagues as well. I don't know whether you can briefly repeat what you said, and then we would follow your order of questions.
Yeah. The question is, did you get any positive impact from the repricing of U.S. contracts?
Repricing. No. Good question. So thanks for that. We concluded indeed last year with the U.S. customer a small improvement on the pricing. Small is a low two-digit figure in million U.S. dollars. The Q4 has a small, very small piece in that, which is more or less not considerable. It's a low one-digit figure, which is included in Q4. The majority of this positive price negotiation will come to the EBIT effect as the execution of the program is progressing according to POC accounting principles and will be distributed to a large extent over the four quarters in this year, 2025. Remains and then in 2026 only. But the Q4 performance is not at all materially impacted by such positive effects. Only a very small one-digit figure.
Christophe, Alexander, maybe it would be good to get the third question. My understanding was about the efficiency improvement measures of the U.S. operation. Could you just confirm before we elaborate?
Yeah. Yeah. It was to see or to understand whether you were seeing any impact at this stage or you were in your budget, you had taken any of this in consideration. I mean, there have been some news today which are targeting some U.S. Army contracts, but I understand it is temporary. But I just wanted to have your feel on the impact of U.S. efficiency measures on your U.S. business.
I mean, that's a good question. I mean, as you know, we had in 2024, we had a challenge as elaborated by Susanne just before. And to sum it up, the mission for 2024 was to stabilize. So the entire, I mean, we had massive problems on the supply chain during the first half year. We fixed it. We increased the daily output on the transmission side. And this was the reason for this good recovery and contribution to the second half and Q4.
For 2025, the mission is clearly to improve. And this means improve in regards to really to further work on the production, on the operations, to start realizing efficiency measures similar to what we did in 2024 and realized in the Augsburg plant. And the second element, if we talk about improving, is start working. And we did already start working in Q3, Q4, 2024 on the supply chain in order to claw back some material prices by strategic initiatives going to our suppliers, diversification. All of this is more or less considerable, should be considered of having impact on the margin, of course.
Okay. Thank you. And no impact from the DOGE or whatever, the new stuff in Washington?
You mean the impact from the governmental change? Yeah. We do not see because, to be honest, we are very proud to be considered from the U.S. customer as a 100% U.S.-based company. And also on the midterm, we do not see major impacts which would currently impact our business planning or our backlog planning, whatever.
Okay. Thank you very much.
There we go.
So meanwhile, we have no more questions. So I would say we close the Q&A and back to Susanne Wiegand.
Yeah. Thank you very much for attending. It's time for me to say thank you again to all of you and to say bye-bye. I'm in my last days here at RENK. The handover process to Alexander has been taking place, so we are running here in full redundancy. I'm happy that, let's say, I could report and that we could jointly conclude another successful quarter. The company is in very, very good shape, and I'm super proud to be able to hand over, let's say, to Alexander, good starting point.
I hope that you will continue to support RENK and believe in us as you have done that in the last quarters and even before IPO, so with that first year listed, I think we have delivered and met what we told you and what we promised and started to build up a positive kind of track record, which I'm sure the new management will continue to do so. Alexander and Anja will execute on the strategy and speak to you latest by the end of March with the disclosure and communication of the figures in detail. So thank you very much from my side. And take care and all the best for all of you.