TAKKT records improved sales and earnings development in the third quarter and focuses on long-term success

• Sales and earnings in the third quarter significantly better than in the previous quarter
• Positive contributions to the improvement from non-recurring effects
• Measures to resolve internal challenges prove effective, but business development remains impacted
• TAKKT prioritizes increasing order intake, improving systems and processes, and strengthening cash flow

Stuttgart, Germany, October 24, 2024. Despite the continued slowdown in economic conditions, TAKKT was able to noticeably improve its sales development in the third quarter. Organic growth increased from minus 19.0 percent in the second quarter to minus 14.1 percent. The positive development was particularly noticeable in the FoodService division (FS), which benefited from improvements in internal challenges and generated additional sales from the targeted processing of longer-term project orders. The measures to overcome internal challenges also had an impact in Industrial & Packaging (I&P), where organic growth improved compared to the previous quarter.

At the same time, business development continued to be impacted by negative effects. In Industrial & Packaging, these resulted from the discontinuation of the ratioform brand, which has since been reversed. In FoodService, sales activities in the call center continued to be less efficient due to the problematic system integration at Hubert and Central. In the Office Furniture & Displays (OF&D) division, the negative trend of the first half of the year continued, with the growth rate being slightly weaker than in the second quarter. Besides the negative impact of ineffective positioning of the NBF brand, the relocation of production at an important supplier led to temporary disruptions. In the third quarter, this resulted in a delayed approval of products for distribution to government customers, among other things.

In the third quarter, TAKKT made good progress in resolving its internal challenges. I&P reactivated the ratioform brand and is using the brand recognition to sell packaging products. The division also improved processes and systems to restore the quality of its order processing to its usual high level. The FoodService division has solved the direct technical problems resulting from the ERP migration and implemented workarounds in some cases. The next step will be to further increase the level of automation and functionality. In addition, the division has reorganized its call center sales team and added new staff. The NBF brand is now returning to balanced omnichannel product marketing for the sale of office furniture, after a stronger focus on brand marketing led to a noticeable decline in orders in the current year. “We have identified the right topics, implemented specific measures and are seeing positive developments in many areas. However, this task is not yet complete. We have to consistently offer our customers the quality of service, reliability and speed they have come to expect from us. As expected, it will take some time before the improvements are fully reflected in our key figures,” says interim CEO Andreas Weishaar.

“We have adjusted our cost and personnel structures to the lower demand. In addition, we benefited from lower expenses for variable compensation. Adjusted for one-time expenses, our personnel costs in the third quarter were significantly below the previous year. Together with the slightly improved sales development, this helped us to improve our profitability compared to the weak previous quarter. The adjusted EBITDA margin was 9.0 percent, less than one percentage point below the previous year’s level of 9.7 percent,” said CFO Lars Bolscho. In the first nine months, TAKKT realized total sales of EUR 798.4 (954.5) million, a decline of 16.4 percent from the previous year. Adjusted for currency effects, the growth rate was minus 16.5 percent. The gross profit margin increased to 40.2 (39.7) percent. The cost and cash flow management measures were successful. In terms of costs, TAKKT was able to significantly reduce personnel and marketing costs as well as other costs. In the first nine months, TAKKT generated an EBITDA of EUR 50.4 (87.3) million. Adjusted for one-time expenses of EUR 10.8 (2.4) million, the EBITDA margin was 7.7 (9.4) percent. TAKKT also made further progress in adjusting its net working capital by primarily reducing inventories and improving payment terms for trade payables. This compensated a good part of the negative impact on cash flow from the significantly lower EBITDA. In the reporting period, TAKKT generated free cash flow of EUR 36.5 (50.1) million.

In the third quarter, TAKKT implemented a leaner management structure, made personnel changes to the team and strengthened it with key skills. In the future, the Group will be managed operationally and strategically by an Executive Leadership Team consisting of the Management Board, Division Presidents and the heads of the group functions. “In addition to the short-term priorities, we are focusing on laying the foundations for our medium and long-term success. This includes an uncompromising focus on the needs of our customers, as well as strengthening our sales brands and internal processes and systems. In addition, we are working on our long-term positioning and targets as part of a strategy process. We will communicate further details at the end of the first quarter of 2025,” says Andreas Weishaar.

Despite the improvement in the growth rate in the third quarter, TAKKT recently narrowed its sales forecast to the lower part of the previous range. Since September, the seasonal upturn in order intake across the Group has been significantly lower than in previous years. In addition to the persistently difficult market environment, the continued impact of internal challenges also plays a significant role here. In addition, TAKKT benefited from positive effects from the targeted reduction of order backlog in the third quarter. These are not expected to repeat in the final quarter. For the fourth quarter, the Group expects a similar growth rate as in the year to date. For the full year, organic growth is expected to be in the range of minus 15 to minus 17 percent.

“We are focused to keep the right balance between cost management and strengthening cash flow on the one hand, and investing in our growth as well as in systems and processes on the other. We actively continue our activities to increase order intake, and with that are laying the foundation for a return to profitable growth and long-term success,” says Andreas Weishaar. The ongoing weak sales performance and the intentional decision to refrain from purely short-term oriented measures to boost earnings will have a negative impact on profitability in the final quarter. For 2024, TAKKT thus expects an adjusted EBITDA margin between 6.3 and 7.1 percent.

“In addition to continuing our internal improvement measures, we are pushing ahead with the processing of longer-running, large-volume project orders as well as the sale of products from our inventory that are rarely in demand. We expect this to make a noticeable contribution to free cash flow, but also to negatively impact the gross profit margin at the end of the year,” says Lars Bolscho. As planned, the Group will also make further structural adjustments. In addition, TAKKT is temporarily using external resources to address internal topics. Given the higher need for structural adjustments, one-time expenses are expected to be higher than originally anticipated at the beginning of the year and to come in between EUR 15 and 20 million. Based on further reduction of net working capital, the Group continues to expect free cash flow to develop much more stable than reported EBITDA.

Earnings Call: October 24, 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 preliminary figures for 2024 on February 13, 2025.

IFRS figures for the TAKKT Group as of the end of the first nine months 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