Ladies and gentlemen, welcome to the R. STAHL Investors and Analysts Conference Call for Fiscal Year 2024. I'm Moritz, the call's co-operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Judith Schäuble. Please go ahead.
Thank you, Moritz. Ladies and gentlemen, welcome also from my side, and thank you for joining our today's conference call. Our prepared slides are available under the Investor Relations section of our website, www.r-stahl.com. Shortly after we will have finished this call, a replay of the entire conference will be provided for download at the same place. Please be aware of our disclaimer statement, which you find at the beginning of the slide deck. Now I will pass on to Dr. Mathias Hallmann, our group's CEO, who will walk you through our presentation.
Yeah, good morning, ladies and gentlemen. Warm welcome to our 2024 Analysts and Investors Conference Call. Let me start with a quick summary. We had good sales, but we also saw slowing demand in the H2 of the year and slightly lower profitability than in fiscal year 2023. The order intake came down to EUR 327.6 million. Prior year, we had EUR 342.5 million. You will see later that this all happened in the H2 of the year, where we were clearly suffering from a weak economy and political uncertainties. Our sales nevertheless increased by 4.1% to an all-time high of EUR 344.1 million, and that was primarily supported by a high order backlog we had at the beginning of the year from orders in 2023. EBITDA pre-decreased to EUR 34.4 million from EUR 38.6 million.
That was mainly because of one-off effects due to our Accelerate Program, which we implemented last year, and some higher personnel expenses from huge salary inflation. Free cash flow significantly increased to EUR 40.4 million or by EUR 40.4 million to 14.7 million due to a reduction of working capital. We had the situation during the corona crisis that we had to order lots of materials in order to stay in business and also in the consecutive phase with all these supply chain issues. Now we came to the point that in the H2 of the year, we dramatically could reduce the working capital and started bringing it down to a normal level. Net profit overall climbed to EUR 5.8 million from EUR 0.2 million the previous year, but the previous year figure was very much negatively influenced by the impairment of our Russian participation in Goreltex.
That all resulted in an earnings per share of EUR 0.90, where in prior year we had EUR 0.03. If we look into the development over the years from order intake and sales, we see that we came from a long phase where sales could not catch up with orders, which then changed in the H2 of 2023. It did not affect us too much because we had huge order backlog. We moved in a similar situation in 2024, where we all again started with very good order intake, good sales, and then our order intake dropped dramatically to EUR 74 million and EUR 72 million per quarter, which is roughly 15% to 20% below the levels we had in the first half of the year. That affected already our numbers in the H2 of 2024, but this is also an accumulator to this.
When we talk about the outlook for 2025, this is also affecting the start into 2025. If we look in the regions, we had somewhat stable development in Germany, good development with good growth in the Central Region, good growth in the Americas, and some problems in Asia-Pacific. Overall, the sales developed well to this record level of EUR 344 million. What we see here is what we discussed several times before, that we still make 2/3 or a little bit more than 2/3 of our sales in Europe, while probably 2/3 of the world market is outside Europe. This is also what will drive a certain focus in our strategy, what we also will discuss at a later stage in this presentation.
When we look at the key data of our income statement, we see that we have a very good cost of material ratio, which declined to 33.3% from 34.1%. That indicates that we have a good sales structure, that we were able to transfer inflationary effects to the market, to our customers, and that we have an overall healthy sales structure. Personnel cost ratio slightly increased to 40.1% from 39.5% the prior year. That was mainly driven by the weakness in the H2 of the year, where we were expecting even stronger development on the top line, and it came very strongly from inflation in the labor tariffs. Operating expenses increased by EUR 3.3 million. That was mainly driven by the Accelerate Program, and in consequence, then we have a slightly lower EBITDA, which came down to 10% from 11.7% the year before.
What we also see is the financial result heavily influenced by the write-off of Zavod Goreltex the year before, and that all drives then an improved net profit of EUR 5.8 million versus EUR 0.2 million. Free cash flow, what we again see on the depreciation and amortization part is that write-off of Zavod Goreltex , which happened in fiscal year 2023. That came significantly down, while net profit came up, driven by the same effect. That resulted in a slightly lower cash flow, which then, but then the main effect on the free cash flow we see is that change in working capital, where we had a build-up of EUR 19 million the year before, and we could reduce it this year. That all then resulted in a free cash flow of this EUR 14.7 million versus the EUR 0.3 million.
Clearly, that free cash flow is driven by this change in working capital. When we now look into our strategy, we saw two things in this presentation already. The one piece is that slowdown in the H2 of the year of 2024. The second thing we discussed is that still we do 70% of our sales in Europe, while the market is the opposite. 2/3 of it is outside Europe. When we look in our overall strategy, which in the last years was mainly driven by focus of efficiency, technology, development of growth areas like the LNG business or the pharmaceutical business, and the development of a sustainability structure, we now focus additionally on two more or additional pieces. The one is internationalization, that we really managed to develop our business outside Europe.
The other thing is digitalization, which has several elements: digital processes inside the organization, digital products, but also digital services, which then would also lead to a more consistent and stable order intake line when we finally manage to go to move a little bit more into the service pieces of our business. What you see on the next slide is quickly where we are. The dark blue pieces are the parts of the world where we have our subsidiaries. The light blue pieces are where we have partners, and the gray ones are where we are not really in the market. Clearly, also we have this huge concentration of revenue in Europe. You see from this that we have a fairly well global presence.
When it comes to internationalization, one of the elements we are focusing on now is that we are in the process of building a new production facility in Chennai, India. You see the picture. It will most likely look like this. The first step of our investment will allow us to triple our capacity. It will also allow us to create space for central services like IT, like shared financial services, like Global Engineering Center, which helps us to serve the subsidiaries all over the world. That will overall drive basically two dimensions of our business.
It will build a base for further growth in Asia-Pacific, but it will also help us to find resources, which are sometimes hardly available in the European or in the American market, like IT specialists or engineering specialists, and at much lower tariffs as we have them in Europe and in the Americas, and therefore also help supporting the growth in those areas. In parallel, we focus on a realignment of our sales forces in Asia-Pacific. We will have much more concentration of central services also for our sales forces in Asia, in India, and we will address new markets in the coming years where we are not present at this point of time. In the next phase, we will strengthen our presence in the Americas.
We are right now in the process of rebuilding our management team there, and we will also see very good, hopefully good development in the Americas in the coming years driven from that. Looking at digitalization, I already mentioned it. We are focusing on three dimensions. The first is the digitalization of internal processes. Then it is the development of digital products and features for our customers, meaning we help our customers digitalizing their processes. The third one is the development of digital business models. I will quickly give some details on two and three. What would it mean to develop or to deliver digital products to our customers? When we look in our automation business, our interface technology, which is part of the automation business, connects the plant control center with the hazardous areas in production.
In these hazardous areas in production, you have sensors, actors, and all kinds of pieces which have to be controlled and monitored. What the industry does today typically is that you have an analog signal from those sensors, which is then converted into another analog signal via isolators, and then they are transported to the central control center. What you can already imagine here is when you have hundreds of signals, you also have hundreds of cables connecting the production area with the control center. What we did in the first step, we started to digitalize those signals, meaning we collect the analog signals from the production area, somewhat process them, control them in our Remote I/O in the hazardous area, and then bring it via one digital bus system into the control center.
We are also already the leading player with this kind of product, and now we started to do the next step, where we developed devices for a complete digital infrastructure where we collect analog signals in the production area, process them, and then provide full communication with the control center of the plant via full digital communication. What you immediately see is, for example, when those areas are maybe 100 meters away from each other, which can easily happen, and you have some hundred signals, you do not have kilometers of cable anymore. You have exactly one cable, which helps you dramatically in the whole design and installation process. What this digital infrastructure also provides is speed and reliability in the processing of signals, and therefore gives you much better control over your overall production. We started with that. We already have high interest in the market.
We already got very nice orders from the pharmaceutical industry, from the chemical industry, and via this, we will more and more replace the analog world in those areas with a combination of remote IO and Ethernet APL, and that will drive our growth in the automation business in hazardous areas. Our first step in potential service businesses was, or is still, the development of our digital twin platform. Digital twin platform, the easiest way to think about is that we provide a full digital copy of our product. That digital copy would not also include, for example, shapes. It would include all kinds of lifetime information of the behavior of a component, of maintenance information, virtually everything which would be connected or is connected to the real-world product. A customer benefit in the first step is pretty simple product selection, is simplified maintenance processes, for example.
It is also that they easily have access to product updates, software updates, any kind of information which relates to the critical components. Benefits for us are that we are closer to the customer, that we share data, and that we have the ability to build business models based on the interpretation and the processing of these data. We designed this platform. We implemented it in some pilot installations. We already received very, very positive customer feedback, and we are now in the process of really developing business models with the relevant pilot customers which are interested in this technology.
These digitalization initiatives or these digitalization initiatives will also help us in the first topic we discussed, the internationalization, because they allow strong differentiation in comparison to many of our customers, and this is exactly what you need if you want to step into markets where already the competition is since many years, has superior market shares, has superior structures and relationships. The way to enter those markets can only be superior technology. This is what we provide with these digital initiatives, and therefore those initiatives, internationalization and the digitalization of the business are very much connected and will be in the focus of our strategy in the coming years. Yeah, finally, the guidance. The guidance for 2025.
I probably never had so much difficulty to give a serious guidance at the beginning of the year, especially when we look into the current developments with taxes all across the world, where the insecurity and uncertainty you have in the markets, especially not only at our side, but also at our customer side. Nevertheless, we think we are pretty well on track, and even the start into the year was tough. We would expect that we remain on a sales level of EUR 340 million to 350 million. We managed to maintain profitability. That means we target a range for an EBITDA of EUR 35 million to 40 million. We again provide positive free cash flow in the middle single-digit Euro range, and we see a slightly increased equity ratio in our balance sheet. That is the part.
We have to see how the world is turning in the next days, weeks, and months. We have to see how these geopolitical conflicts develop and how the general economy develops. I mean, you all saw it in the last couple of days. It's almost not predictable, but we think we stay on track, and we will manage. Thank you very much.
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchscreen telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press s tar and one at this time.
One moment for the first question, please. The first question comes from Klaus Schlote from Solventis AG. Please go ahead.
Yes, good morning. Thanks for taking my question. I have a question concerning the ERP system that you're writing that this will be unified across the group. Is this SAP S/4HANA , or what kind of system is it? Is it self-made, and what are the costs involved?
I mean, when I started seven years ago, we had a pretty heterogeneous ERP landscape. The 1 May this year, we will have the last go-live for SAP in one of our subsidiaries in Norway. Then we will be 100% on SAP, and we will start with the HANA S/4 migration preparation, which will, according to plan, take place in late 2026 or start late 2026. We are on SAP. We are not on HANA yet.
We will have 100% of our business on SAP by the middle of the year, and we will migrate to HANA starting by the end of the year.
Okay. Second question is regarding our new government. It is not finalized yet, but the likelihood has increased. That was said during or standing in this agreement that the investments will be pushed by 30% in depreciation. Will this have an effect on your investments in Thüringen? Will you now wait for further next steps, or will you continue in order to catch this 30% depreciation?
No, I mean, we are almost ready. We are almost ready. This extension in Weimar will be up and running, I think, in June, July this year. We need the space. We have the orders. There is a clear business case behind. We are not waiting for anything.
Okay. Despite that, might you benefit from this change in investment regulations? Depreciation increase.
I mean, it's not so old that I have too much time to think about it, but I would not expect that it will change a lot for us. Yeah. I mean, definitely, we will have further investments in the coming years, but it's.
You might benefit via your customers because customers might push ahead with their investments and then.
Yeah. I think this is what I wanted to say. I think what's way more important for us is that this Industriestrompreis, what's planned to come, meaning lower prices for electricity in Germany, they are planning to bring it EUR 0.05 down. I think that will drive investments, especially in the chemical industry, but also in other sectors. General investments in infrastructure should drive our business.
I would simply expect that we will benefit from a more stabilized or from a growing economy where our customers have a solid environment to make investment decisions. That's exactly what's harming us today, that nobody is making decisions and everybody is holding back.
You're writing that there were two big orders coming in in the beginning of the year in the oil and gas industry. Can you give us some more information on that, or is it?
No, no. I can. I can. I can. It's two orders from one customer in the Middle East, volume around EUR 11 million. We are talking about what we call UPS systems. UPS systems mean uninterrupted power supply. It's systems for oil and gas platforms which should be automated.
When you have such a platform which is fully automated, you have to have devices in place which help you to bring the platform into a stable condition if, for example, the electricity supply is cut. Yeah. It is battery solutions. It is battery solutions with relevant electric and electronic installations which then control the electrical devices across the whole installation and help it to bring themselves into a safe state. Clearly, you have high voltages. You have high current. You have critical conditions in pretty explosive environments, and this is why we are the experts for that.
It's something we started to discuss technically with customers six, seven, no, almost 10 years ago, where we received first small orders in the last three, four years, and now it's about to really start because the tendency in the global oil and gas business is that the players automate platforms, try to get all personnel off the platforms, and run it fully automated, only fly in from time to time with maintenance teams, but have no staff on the platforms in the normal operation. This is where we help our customers and where we, in the last couple of years, developed technical solutions which are obviously superior to other players. Now we get the nice orders.
With regard to the US, I understood correctly, you mentioned that you are implementing a new management there for North America.
Beyond that, are you planning to invest more in the US so you will have more business there directly in the country, or what is your idea there?
We already have a small production facility where we have enough space to expand. We started implementing a new management. We, in the meantime, also got the visa for this new management. So we have planning safety. At this point of time, when you refer, for example, to taxes, the taxes are not the biggest issue for us because America is still small for us, and we have significant value add, meaning we only deliver some components, and the rest engineering, assembly, and other things are taking place in the Americas. For example, in the automation business, where we import, all the competitors are German players.
This is a very much German-dominated part of the industry. If the tariffs come, the tariffs come for everybody, at least in the short term or midterm. I think we are focusing on really developing the market and then, consequently, follow with operations. The strategy definitely is that we first have to get a better grip on the market and then extend operations, which is not too difficult for us. We have, as we say, the space. We have the technology. We are typically not very capital-intensive when we want to do more things. It is all about getting a better grip in the market.
Okay. This new facility in Chennai, which it is written that you use it especially for the business in Asia, but might you also use it for exporting to the US in the end, or?
It has three dimensions. The strategy has three dimensions. I mentioned two. One is definitely the business in Asia. Producing local for local. The second thing is creating services for the whole group, maybe in accounting, in IT, in engineering. The third will also be to produce labor-intensive components, for example, which are not too much differentiating. We will definitely not produce automation there. Yeah. We will not produce high-end luminaires there because there is no advantage. We have high automation and high productivity in our Weimar facility. We might think about producing some labor-intensive components from our electrical business, which are anyway more commoditizing where differentiation is not really in place anymore. That can be the third dimension for that investment. We are investigating that at this point of time, but the major effects come from really having a better platform for delivering to Asia and Middle East.
Last question for the time being, do we have an idea on the dividend for 2024?
Yeah. There will be no dividend. If you look in our balance sheet, I mean, dividend comes not from the IFRS, but from the HGB numbers. If you look in those, we still have an equity ratio, which from our point of view is not sufficient. We also have some regulatory hurdles in order to pay dividends. There will be no dividend for 2024. All the consecutive years, we have to see how the world is turning and how the business is developing. Right now, with all the uncertainties, I think it is not bad advice to ourselves to have some reserves in the back.
Okay. Thank you very much, Dr. Hallmann.
Y ou're welcome, Mr. Schlote.
As a reminder, anyone who wishes to ask a question may press star and one at this time. There are no further questions at this time. I would now like to turn the conference back over to Judith Schäuble for any closing remarks.
Ladies and gentlemen, I have two further pieces of information for you. Please note that we have moved the publication dates for Q1 and Q2 reports since the last publication in November. Today's documents show the valid dates. Accordingly, our next report will be disclosed on May 6th. Thank you for joining our today's conference call and have a great day. Talk to you later. Bye-bye. Bye-bye.
Thank you also from my side. Bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.