TAKKT EXPECTS GRADUAL IMPROVEMENT IN GROWTH RATES IN THE SECOND HALF OF THE YEAR
 

• TAKKT increases gross profit margin, implements leaner cost structures and achieves slight increase in free cash flow
• Organic sales in the first half of the year at minus 17.7 percent, adjusted EBITDA margin at 7.0 percent
• Business performance affected by weak general conditions and challenges in the FoodService division
• Priority for the second half of the year is on improving order intake and optimizing processes and systems

Stuttgart, Germany, July 25, 2024. With economic conditions remaining persistently difficult, TAKKT focused on strengthening its own resilience in the first half of 2024 by improving the gross profit margin, implementing leaner cost structures and increasing free cash flow. Customer demand in the second quarter remained similarly subdued as at the beginning of the year. Adjusted for currency effects, sales declined by 19.0 percent. "The two divisions I&P and OF&D performed very similarly to the first quarter. Numerous talks with customers have confirmed that many of them are currently cutting costs. Companies are releasing staff, reducing expenses and postponing investments," says CEO Maria Zesch. In the FoodService division, TAKKT has integrated the systems and processes of the two brands Hubert and Central. This led to slower processes in sales and order processing in the second quarter. There was also a significant decline in project business. Organic sales development in the division was minus 27.8 percent in the second quarter. The challenges have been identified and are being addressed. TAKKT is working hard to increase efficiency again. However, this is taking up time and resources that are not available to approach customers and for sales activities.

TAKKT generated EUR 529.4 (641.2) million in sales in the first half of the year. The organic growth rate was minus 17.7 percent, while currency effects were slightly positive with 0.3 percentage points. In view of the challenging sales development, TAKKT continued to implement resilience measures in the areas of gross profit margin, cost management and free cash flow. The Group improved its gross profit margin to 40.5 (39.7) percent. On the cost side, TAKKT succeeded in significantly reducing marketing and other costs and keeping the cost ratios almost stable. The Group also continued to adjust its personnel structure in the second quarter. "We are consistently working on leaner cost structures. This includes reviewing and closing or merging office and warehouse locations as well as adjusting the number of employees to the lower demand. This will reduce our cost base by more than EUR 20 million annually in future," says CFO Lars Bolscho. The implementation of these measures is associated with one-time expenses in the current year. In the first half of the year, these amounted to a total of EUR 7.3 (2.5) million. At EUR 29.9 (57.0) million, EBITDA in the first half of the year was significantly lower than in the previous year due to the weak sales performance and the one-time expenses. The adjusted EBITDA margin was 7.0 (9.3) percent. In addition to the improvement in the gross profit margin and leaner cost structures, TAKKT also achieved good results in terms of cash flow with the implementation of the resilience measures. By further reducing inventories and other improvements in cash conversion, TAKKT was able to more than compensate for the effects of the significantly lower EBITDA on cash flow. In the first half of the year, the Group generated a free cash flow of EUR 25.6 (24.2) million, slightly more than in the previous year.

As announced, CEO Maria Zesch will hand over her role to interim CEO Andreas Weishaar at the end of July. "TAKKT is a different company today than when I started three years ago. We have strategically and organizationally repositioned TAKKT and driven the transformation to a more integrated, customer-focused, sustainable and resilient company. I wish Andreas and the entire team much success and joy at TAKKT in the future," says Zesch.

In recent weeks, Maria Zesch and Andreas Weishaar have worked together on important issues and ensured a good handover. "TAKKT has well-established brands, attractive products and a strong customer base. In addition to the economic conditions, we are facing a number of internal challenges. Measures to improve order intake and optimize our processes and systems while continuing our focus on gross profit margin, cost management and cash flow are clear priorities for us in the second half of the year," says Andreas Weishaar.

The expected improvement in the economy in the Eurozone at the beginning of the year has made only hesitant progress. Current forecasts predict only a slight upturn in the second half of the year. In the USA, on the other hand, a slight slowdown in the pace of growth is expected. Order intake in July has so far shown a similar trend to the second quarter. TAKKT anticipates a gradual slight improvement in growth rates in the second half of the year. However, the existing challenges in the FoodService division are also likely to have a negative impact on the Group’s performance in the second half of the year. Together with the only hesitant recovery of economic conditions in Europe, this has led TAKKT to recently adjust its expectations for the full year 2024. The Group now anticipates negative organic sales development in the range of minus 12 to minus 17 percent. "We are continuing to work on the successful implementation of the resilience measures with regard to gross profit margin, costs and cash flow. However, the overall weak sales trend and the additional challenges in the FoodService division are also affecting our profitability. Our adjusted EBITDA margin is therefore expected to be in the range of 7.3 to 8.3 percent," says Lars Bolscho. By continuing the successful measures to strengthen free cash flow, the Group will further reduce net working capital. TAKKT therefore continues to expect a good free cash flow in the current year, which will decline significantly less than the reported EBITDA compared to the previous year.

The current very weak sales and earnings performance in the FoodService division may have an impact on its valuation as part of an impairment test. Together with potential changes in the valuation parameters, this leads to an increased risk of impairment.

Earnings Call: July 25, 2024 at 2pm (CEST)
To participate in the Earnings Call, please register in advance at the following link: Registration Earnings Call

Financial calendar
TAKKT will publish the figures for the first nine months on October 24, 2024.

IFRS figures for the TAKKT Group as of the end of the first half year 2024
(in EUR million)

About TAKKT AG

TAKKT AG is the leading omnichannel distributor for business equipment in Europe and North America. The Group is represented in more than 20 countries with its Industrial & Packaging, Office Furniture & Displays and FoodService divisions. The product range of the subsidiaries comprises more than 600,000 products for the areas of plant and warehouse equipment, office furniture, transport packaging, display articles and equipment for the food service industry, hotel market and retailers. The company is listed on the SDAX and is represented in the Prime Standard of the German Stock Exchange.

Contact
Benjamin Bühler    

phone +49 711 3465-8223
Email: investor@takkt.de