Good morning, ladies and gentlemen. Welcome to our webcast about the first nine months of the financial year 2024. My name is Frank Dernesch, and I'm responsible for investor relations at technotrans. Together with me are our CEO, Michael Finger, and our Head of Group Controlling, Natascha Sander. Following the resignation of our former CFO, Robin Schaede, Mrs. Sander was appointed as interim CFO.
Mrs. Sander will introduce herself to you later on. In today's webcast, we would like to focus on the following topics: the development in our markets, our financial performance, the progress of our strategy, and the efficiency program ttSprint and, last but not least, the guidance for this year and 2025. After the presentation, Mr. Finger and Mrs. Sander are looking forward to answering your questions.
If you would like to participate in the Q&A session, please click on the Raise Your Hand icon, which you find on the GoToWebinar toolbar. We will open the line for you so that you can ask your question. Please open your microphone before you begin to speak. Alternatively, you can submit your question in written form in the field Enter a Question for Staff. For further information, please refer to the quick reference guide, which was attached to your invitation.
Please note that the following presentation contains statements on the future development of technotrans Group. These reflect the present views of the board of management and are based on the corresponding plans, estimates, and expectations. These statements are subject to certain risks and uncertainties, which could mean that the actual results differ considerably from those expected. Please let me hand over to our CEO, Michael Finger. Michael, the floor is yours.
Thank you, Frank, and a warm welcome from me as well. Before I go into the details of third quarter, I would like to give you an update about the recent changes to the board of management. Our CFO, Robin Schaede, is leaving technotrans by end of November by mutual agreement. Robin resigned on October 11th for personal reasons. We would like to thank Robin for his personal commitment and wish him all the best for the future.
The supervisory board is already working on a succession planning. For the transition phase, Mrs. Natascha Sander, our Head of Group Controlling, has been assigned as interim CFO. In my view, we have established a very good solution for this important role without any interruptions, both personally and professionally. Ms. Sander will introduce herself to you later. Having said that, let's turn to the business performance of the third quarter.
Although the economy has developed weaker than expected, we realized a strong performance in the third quarter. After nine months, we have generated EUR 175.5 million, being 12% below previous year. Even if the revenue is increasing quarter by quarter, we are still facing a gap of EUR 24 million compared to last year.
At the same time, EBIT margin is improving from quarter to quarter. Having reported 3.5% for the first half of the year, we are now at 4.3%. If you would take out one-off expenses of almost EUR 1.3 million, we would have been on previous year's level of 5.1%, and as I said before, with EUR 24 million less revenue in an almost non-growing German economy.
This is the result of a strong personal commitment of our employees, executing on our strategy and our efficiency program, as well as consequent cost management. The economic environment remains difficult, which we also see in our focus markets, but with differentiated impacts. The exception is Energy Management. With 27% growth rate, another strong quarter. The other focus markets are more or less affected by the economic environment.
We are seeing signs of stabilization in some areas. The order backlog confirms this, remaining unchanged at EUR 84 million. Book-to-bill ratio is at 1.0x, also indicating a solid outlook. On the strategic side, our efficiency program, ttSprint, is fully on track. All milestones have been achieved, the first effects are already visible in our figures. Our transition into a market-driven, decentralized organization is making great progress. We'll go live on January first as planned.
Let's turn to our markets in detail. Print generated revenue of almost EUR 59 million, being 14% below previous year. The impact of the difficult economic environment is still visible. After a very low start into this year, the situation is getting better. First effects after Drupa became visible now in the third quarter, especially. Let's move to Plastics.
Our business development remains challenging. It is characterized by a reluctance to invest in large cooling plants due to the weak economy. Plastics generated revenue of EUR 38.1 million, which was 30% down on previous year. However, we've made important progress in expanding our market position. We recorded a significant sales success with future potential.
technotrans is the exclusive global supplier for energy-efficient, compact, temperature-control units for a battery production of a German car manufacturer. In addition, we are combining our expertise together with Enesty, a German market leader in water distribution systems. This partnership jointly strengthen our market position. It will create a clear competitive advantage in combining both solutions.
Last but not least, it is worth to mention that our competence in thermal management with environmentally friendly natural refrigerants was very well appreciated on this year's Fakuma Trade Show in October. Laser remained to be our most cyclical market, generating revenue of EUR 32 million. With 27% less revenue, Laser shows the biggest impact by the weak economy. Even if the situation is relaxing a little bit in the last weeks, a sustainable outlook is still not visible. Revenue of almost EUR 11 million were generated in focus market health care analytics.
Call-offs, particularly for analytic systems, are back on pre-COVID levels. 11% less revenue is reflecting another impact of the weak economy. To offset this, we are constantly developing new solutions. One example is a new laboratory cooling system. Based on a modular twin concept, the customer can double the capacity from 1,700 up to 3,400 watts. In addition, the new device is environmentally friendly as it uses propane as a refrigerant.
As each module contains less than 100 grams, there are no logistic restrictions, and we have first business won already. Serial production has started in October. Let's move to Energy Management. As I said at the beginning, the success story for Energy Management continues. Revenue rose by another 27% compared to last year. The demand remains strong despite all economic challenges.
Energy Management already generates 15% of Group revenue, and please remember, from almost scratch a couple of years ago. Let's take a look at the latest sales highlight. First, our stationary rail business, which we have announced recently. For a well-known German provider of mobility solutions with a global presence, we are equipping three German locations with customized cooling systems for converter stations.
Further joint projects with this long-term customer are already underway, including in Germany, Australia, Norway, and the U.S. The order volume is in the mid-single-digit euro range. Secondly, e-buses. In our last call, I've mentioned an initial major order for serial production of battery thermal management systems for e-buses. Even this was already a milestone for our market positioning in Europe. Now we have won the follow-up order in the high single-digit million euro range.
This shows that we are competitive and able to produce volume business. This order will run at least until 2025. The production has already started here as well. There is another highlight to share. It's again about data center. We have realized a major milestone in liquid cooling for data centers. Just recently, we have established the first framework agreement for series production in this market. This represents significant growth potential with a U.S.-based customer, and this is a great step for our future success.
To sum it up, the economy developed weaker than expected, especially in Germany. This has impact on our businesses here, apart from Energy Management. Positive to see that the order situation is stable. We are constantly winning new business in growing markets, business with strong growth potential. With that said, let me hand over to Natascha. She will give you an update how this translates into financials. Thank you very much. Natascha, please.
Thank you, Michael, and good morning from me as well. Before I start with the financials, I would like to introduce myself to you. My name is Natascha Sander. The supervisory board has given me responsibility as interim CFO. I have been working as Head of Group Controlling at technotrans since March 2023. Before I joined technotrans, I held various positions of responsibility in international automotive, energy, and mechanical engineering companies like HÖRMANN, RWE, and GEA.
Regarding my education, after an apprenticeship in a bank, I graduated from the University of Applied Sciences in Münster with a degree in business administration. In addition to that, I completed an executive MBA in controlling and accounting at the University of Münster. I am very pleased about the trust placed in me. Please let me turn to the explanation of the financial development of technotrans Group now.
Afterwards, I'm looking forward to answer your questions. Let's begin with a deeper look at revenue and EBIT performance in Q3. The charts on the left side show the quarterly development, whereas you see the nine-month figures on the right. Looking at the quarterly development, we could generate EUR 60.2 million revenue in Q3 2024.
This development shows a moderate growth of 2% compared to Q2. Over the course of the year, we can see a recovery in sales. In the nine-month period, sales reach EUR 175.5 million, which is 12% lower than last year. The main reason for the decline is the longer than expected weak economy. EBIT reached EUR 3.6 million in Q3. The EBIT margin was correspondingly strong at 5.9%.
In the nine months period, EBIT declined from EUR 10.1 million to EUR 7.4 million in 2024. EBIT margin decreased from 5.1% to 4.3% compared to last year. The main driver for the decline is the strong sales decrease, which could only be partly compensated by short-time work at several production locations and strict cost management.
It should be noted that EBIT in the nine months period includes temporary expenses of EUR 1.3 million for restructuring and reorganization. Without this one-off cost, the adjusted EBIT margin would have been at the previous level of 5.1% despite significant lower sales. The adjusted EBIT margin in Q3 2024 could even reach 6.9%, which is a record margin on quarterly level looking back over the last five years.
Now, technotrans is on track due to the implemented efficiency measures. Let's turn to the segments. Technology segment generated a revenue of EUR 130 million in the first nine months, being 15% below previous year. The lower sales volume of equipment due to the longer than expected economic challenges was a decisive factor for this development.
The ongoing growth trend of Energy Management could compensate the decline in the other markets only partly. As a result of declining sales, segment profitability is at a low level. EBIT dropped from EUR 4.2 million to EUR 0.6 million in the nine months period due to the missing scaling effects after the strong sales decrease. Short-time work at various production sites could only partly compensate for the shortfall. EBIT margin sank accordingly from 2.7% to 0.6%.
The segment EBIT is affected by temporary expenses of EUR 0.7 million in the nine months period. Adjusted for these, a segment margin of 1% would have been achieved in the nine months period. The adjusted EBIT margin in Q3 amounts 2.4% and improved compared to Q2. Let's turn to services, which naturally shows less volatility than technology.
Revenue increased over the course of the year, reaching EUR 45.5 million in the first nine months of 2024, being only 3% below last year. Main reason was a slightly weaker spare part business in the print market. Despite lower revenue, EBIT rose from EUR 5.9 million to EUR 7 million in the nine months period. EBIT margin improved from 12.6% to 15.4% compared to the previous year. The segment EBIT includes temporary expenses of EUR 0.6 million.
The adjusted EBIT margin would be even at 16.7%, which is outstanding. Reasons for this positive development are efficiency improvements and a favorable product mix. Let's turn to the additional KPIs. ROCE was 10.8% compared to 12.3% in the previous year. The decline in ROCE is due to the lower profitability as capital employed could be reduced compared to Q3 2023.
Excluding temporary expenses from the EBIT, the adjusted ROCE reached 12%. Free cash flow was at EUR 0.2 million compared to EUR 3 million in previous year, mainly due to the lower profit. Gross margin increased from 26.4% to 27.3% compared to last year due to a higher service share, improved product mix in technology segment, and efficiency gains.
EBITDA decreased from EUR 15.3 million to EUR 12.7 million is in line with the EBIT development. Net income declined from EUR 5.6 million to EUR 4.6 million compared to last year. Accordingly, earnings per share decreased from EUR 0.0081 to EUR 0.0066. Equity ratio improved from 56% to 58.3% compared to year-end 2023 and remains strong.
Net debt rose from EUR 20.7 million to EUR 20.6 million compared to December 2023 due to the lower cash position. Net debt to EBITDA ratio increased to 1.43x compared to 0.98x at the end of 2023, remaining on investment grade level. The strong equity position, the low leverage ratio, and substantial available credit lines underline the strong financial setup of the group.
I would like to finish my part with a short roundup. The weak global economy continued to impact our business. However, we can see continuous progress and improvement in our financial performance. With the achieved and continuing efficiency improvements, we have a solid base for growth and increasing profitability. technotrans is on track and ready for the future. I hand back to Michael for an update on ttSprint and the outlook for 2024 and 2025 as well.
Yeah. Thank you very much, Natascha, for the financial details. Ladies and gentlemen, since our last webcast, the economic and political environment has changed significantly. The weakness of the economic environment in Germany is lasting longer than expected. Accordingly, growth rates in Germany have been revised downwards by leading research institutes. The IMF expects zero growth for this year, to highlight only one example.
Donald Trump will be the next President of the United States and the German government is split. There will be new elections in February next year. All of these changes are affecting the industry as well. Therefore, it is mandatory to have a clear strategy, a sound business model, diversification, financial strength, and most important, motivated and skilled employees. technotrans has all of this. This is our foundation for future success. We constantly implementing our strategy and our efficiency program. All milestones have been achieved.
The transformation into a market-driven organization is almost done. As I said before, we are ready to start in January. The first effects can already be seen in the current results. That leads me to the next slide. In our last webcast, we have explained the bridge showing the effects on profitability we are expecting from our efficiency programs to achieve our goals. Today, I would like to give you an update. Let me start with our four main sub-projects.
The range in the sub-projects regarding our margin improvement remain unchanged of course. On portfolio and markets, we are very successful in winning new business, as mentioned before, especially for strategic important series products with attractive margin contributions. We are focusing on core business and constantly improving our portfolio, and we are in the final phase of making a decision about our non-core business.
We will give you an update as soon as this is possible. The most important change is our market-oriented decentral organization. As said a couple of times before, we will be ready in January. We have reduced our headcounts significantly across the whole group with this new format. This has generated one-off costs in a range of EUR 1.3 million so far. For the full year, we are expecting one-offs in a range of almost EUR 2 million.
Our sub-program efficiencies is also proceeding according to plan. Identified savings for material costs as well for synergies from our shared service centers shall kick in next year. Last but not least, our sub-program innovations. Great to see the progress in energy efficiency and environmental friendly solutions, inclusive the development of hydrogen applications, and we are using more and more natural refrigerants as already outlined before.
There is also a new factor that we have included due to current developments, the weak economic outlook for 2024 and especially for 2025. This outlook has exceeded to a critical level. It may result in burdens that could have an overall negative impact on our profitability in 2025. As for now, this could be in a range of approximately -2%. We had to take this fact into account for our budget 2025. This leads me to our guidance. Let's start with 2024. As already mentioned before, we were faced with headwinds 2024, the economic developments weaker than expected. The upturn in the third quarter failed to materialize. Revenue in the third quarter was stable, but at the lower end of our expectations.
For the rest of the year, we still expect an increasing momentum, especially in print from Drupa-related orders. Energy Management will continue to grow strongly. As there are only two months to go this year, we are able to be more precise with our forecast for this year. We expect to generate revenue at the lower end of between EUR 245 million and EUR 270 million, with an EBIT margin at the lower end between 5.5% and 7.5%. ROCE is also expected to be at the lower range, between 40% and 60%. Please consider this is without restructuring costs of approximately EUR 2 million this year.
If you look to the next year, various forecast institutes, the federal government, and just last week, the German Council of Economic Experts, which we call in Germany the Fünf Wirtschaftsweisen, have already lowered their outlook significantly for 2025. With these facts, it is clear that we had to take the weaker outlook into account when finalizing our budget for next year.
Based on these findings, we had to adjust the midterm forecast for 2025. We are expecting to generate revenue in a range between EUR 245 million and EUR 265 million, with an EBIT margin between 7% and 9%, ROCE between 30% and 60%. If everything runs well, we are meeting the lower end of the original guidance. At this point of time, we are planning conservative for the next year.
To sum it up, despite the rough economic environment, we have delivered the expected performance in the first nine months of 2024, and we will deliver as expected also for the rest of the year. These figures will include approximately EUR 2 million of restructuring costs. Without that, the numbers would look even better. We have adjusted our midterm guidance due to the weak economy. We have adjusted our cost structure massively with our ttSprint program.
Our new organizational structure promotes market proximity and entrepreneurs within the company. We have the right markets, products, and the right technologies. We have won strategically important and sustainable orders for the future. We have realized a successful entry into liquid cooling for data centers, a market with very promising growth potential. We are Future Ready 2025. With that said, I would like to open the Q&A session. Thank you very much. Frank, please open the lines.
Thank you very much, Michael. Thank you very much, Natascha. The lines are now open for the Q&A. If you would like to raise a question, please just raise your hand or type it in and we will open the line for you. Let's take a look. I see that Mr. Augustin has raised his hand. Just a second. Mr. Augustin, your line is now open, please.
Yes, hello. First question is, can you hear me?
Yes.
Yes.
Loud and clear.
Thank you very much, and congratulations to the improvements on the profitability side. My first question is on the sales development in Q3 and I need to elaborate a little bit on that. If I look in your Q2 presentation, you were actually looking for something like on the mid-range, 10% more sales in Q3. If I deduct the lower point from your current guidance for Q4, you're expecting now around EUR 70 million for Q4. We had a couple of very interesting and good sound orders coming in during Q3. My first question is actually what happened in Q3 and where did you eventually saw, let's say the unintended underperformance on the sales side?
It must also have come quite quickly as you said for Q3, that was already mid of August, so we needed to have a quick change here. That is the first question. What happened here on the budget side? Also when we look in the guidance, in the sales guidance for 2025, the upper end is below the extrapolation of Q4, although you have quite good orders at hand and you promised new good orders like the framework contract for the data center. Can you square this up a little bit, please?
Thank you, Mr. Augustin, for sure. I start with Q3 and the outlook for Q4 and beyond. What has happened in Q3 is which markets are running well, which are not so. If you saw, as you saw in the presentation, despite Energy Management, most of the markets have been affected, especially affected were Plastics and Laser. They are suffering most from the economy, from the cyclicality and there we saw a more heavy impact than in the others, more than expected. Looking further into Q4 and beyond, you are fully right. We have won strategically very important and promising orders with very high volume.
All of them are going into production or already in production right now, but in the ramp-up phase and we see first effects in Q4 and for sure the peak in 2025. This is the, if I be more precise, especially driven by Energy Management, by the new data center orders, by battery cooling for rail and for road, to highlight just three examples.
Thank you. A bit on very high profitability on the service business, respectively also the little bit lower profitability on the technology business. You mention lower service business from print and at the same time a favorable product mix. Could you elaborate a little bit on that? Is that we should conclude that the service business in print has an under proportional low margin?
We had in the print business, a low spare part business and, this is the main driver for the favorable product mix.
That's how it should be. Yeah
... the margin in spare part business is lower.
In the other printing then in the other service tasks. Does that answer your question?
Okay. Yep, it does. The last one would be, when could we expect an updated midterm outlook?
An update, an updated midterm outlook?
Yes. I mean, with 2025, you're obviously nearing the end of your prior midterm outlook, so I would expect you to come up with a new one.
We came up with a new one with our new guidance for the next year, which is around about 2% less than the old guidance. Are you missing something concrete or how can I understand your question?
No, no. Are you looking, let's say, will we have an update and get an outlook for 2028, for example?
Understood. For sure. Next year. We are next year, our strategy, Future Ready 2025, comes to an end for sure, as the name is saying that. We kicked it off in 2020, as you know. From that point, we could generate significant growth. We have sharpened the company with a clear profile, we need to develop, or we are developing already a new strategy how to go into the next years and even beyond.
Okay. Thank you very much.
We haven't finalized on a disclosure for this new point yet. You will see something, but give us some time.
Sure. Thank you.
You're welcome.
Thank you very much, Augustin, also from my side. I do not see any raised hands, but we have received some written questions, and I would now go through them and ask the board members, a board member, and Natascha Sander to answer them. First of all, the first question is by Roland Könen. It's just for clarification, guidance of 5.5% EBIT is for reported EBIT and not adjusted EBIT. I can directly confirm that. Our guidance, you have seen it on the last slide, 5.5%-7.5%. The second question is from Carlos Aizpurua, and I read it now. If you achieved the lowest range of the guidance, that would mean EUR 69.5 million in revenue for Q4 and EBIT at 9.4%. Are you confirming that?
Yes. As we said in the presentation, we, at this point of time, we are able to be more precise. For this year, we are confirming that we are able to reach the lower end of the guidance in turnover, which means lower end means EUR 245 million in that range, and for sure also for the lower end of the EBIT range.
Thank you, Michael. The second question by Mr. Aizpurua is, what does it mean the framework agreement for data center? What does the framework for data center mean? Does it simply imply more growth than originally expected? Do you have a revenue number for 2025?
We are not disclosing revenue numbers specifically for data centers for 2025 yet. It means that in addition to the press releases we have announced so far, this is something new. We are reporting brand new today. We have received a framework contract, which means that we have a rolling call-off plan now for serious production. This turns up into growth, more growth, than we have highlighted before.
Thanks. Coming to the third question by Mr. Aizpurua. For 2025, if sales were 10% higher, would the margin have been in the original range?
Sorry. 10% higher means. Sure. The main driver is revenue indeed. As you could see in Natascha's part of the presentation, with the adjusted EBIT and the one-offs, we need to consider here as well for the outlook. If our revenue would be in the expected range from the original forecast, of course, we are able to meet the higher end of our guidance. Unfortunately, we need to face the reality. As I said before, if everything runs well, we are able to meet lower ends of the original guidance. If not, and if the economy runs at the moment like it is, then we are facing a challenge.
That was the reason why we've decided to adjust our midterm guidance. That's only because of potential weak sales call-offs for next year. That's what it is all about. It's all about the growth. We have heavily and strongly worked on our cost structure, as you could see. We are ready to meet our future goals, maybe, with more sales next year or the year after.
Thank you, Michael. These were the written questions. Mr. Augustin, your hand is raised. Do you have another question?
Oh, sorry, that was a mistake.
All right, thank you. I do not see any more raised hands. We have answered all questions. Are there any more questions?
Another one.
Carlos has raised his hand, so Carlos, I've opened the line for you. Mr. Aizpurua, you have to unmute your. Yes, now. Yeah.
Okay. Hi.
Please go ahead.
About M&A for next year, do you plan to sell any division?
Regarding our divestments, as we said before, we have analyzed our non-core business. This is around about EUR 15 million-EUR 20 million. We are very clear in what, in what we are doing in this case, but for different reasons, we can't publish or disclose more at the moment. We'll keep you updated once we can give you a better update. We have a very clear position in what we are doing with these non-core business areas.
Thank you.
Thank you.
Carlos, is your question answered? This seems to be the case. Let's turn to another written question, which we received by Lukas Spang. Can you please explain again in more detail where this uptick in Q4 is coming from in terms of revenue and earnings?
Yes. The main main drivers, if you look back to the latest press releases and to our last web call, is down to programs kicking in from Energy Management, from battery thermal management systems for rail and for road. There's a big order which or orders which we have won for e-buses, which we have highlighted again today.
This is helping a lot. Same then, the first relaxing situation and of contracts coming from print after Drupa are helping a lot. Data centers are kicking in now in our production schedule. All those programs which are driving the growth and starting being more visible in the fourth quarter and beyond.
Thank you, Michael. Another question by Lukas Spang. Can you please give some more color about the new data center framework agreement you received? Is this from a new or existing customer? Can you share some financial details, please?
I think I've answered this already before. What I haven't answered is it is from the same customer. We have a very big customer where we are working and cooperating with since months. Again, we are not able to disclose more precise sales numbers at this point of time, but I'm sure we are able to announce something over the next couple of weeks in this regard.
Thank you very much, Michael.
Thank you.
Are there any further questions? This seems not to be the case. Please let me hand back to Michael Finger.
Thank you, Frank, and thank you very much for all your questions. Our next reporting day, date will be April 2nd next year when we will present our annual report. Next week we are attending the German Deutsches Eigenkapitalforum in Frankfurt, and we hope to see some of you, or almost all of you, out there.
As this is the last call in 2024, we wish you all the best for the rest of the year and a good start into 2025. In case of any further questions, please call us at any time. Also on behalf of Natascha, I would like to thank you for your patience and your interest in technotrans. Thank you very much. Take care and goodbye.
Thank you. Goodbye.