3U Group reports profitable growth in the first half of 2024

3U Group reports profitable growth in the first half of 2024

• 3U continues its growth trajectory in Q2 2024 with revenue growth of 29.1 %
• Segment development attests to resilient business model
• Significant improvement in EBITDA a quarterly comparison as well as over the course of the year
• Management Board confirms goals for 2024 and specifies medium-term planning under MISSION 2026+

Marburg, 13 August 2024 – After a positive start to the financial year 2024, 3U HOLDING AG (DE0005167902; stock exchange symbol: UUU) accelerated its revenue growth significantly again in the second quarter. From a cumulative standpoint, consolidated revenue rose by 15.5 % to EUR 29.0 million in the first half of 2024 (H1 2023: EUR 25.1 million). In the actual reporting quarter, 3U lifted revenues by 29.1 % to EUR 15.3 million (Q2 2023: EUR 11.8 million).

The ITC (Information and Telecommunications Technology segment proved to be the strongest driver of growth. Following weak construction activity in the previous year, the SHAC (Sanitary, Heating and Air Conditioning Technology) segment also recorded a substantial increase in revenue in the first six months of 2024. Poor weather conditions, lower selling prices and isolated outages in the wind farms resulted in the Renewable Energies segment being unable to match its good year-earlier performance.

Along with revenue growth, the increase above all in other operating income contributed to a significant improvement in gross profit which grew from EUR 10.4 million to EUR 12.2 million. As a result, EBITDA in the six-month period remained at the year-earlier level despite the increase in personnel expenses due to acquisitions and higher other operating expenses which were attributable in particular to maintenance work and repairs to the wind turbines. The Group’s earnings before interest, taxes, depreciation and amortisation came in at just over EUR 2.6 million in the first half year of 2024, following on from around EUR 2.6 million in the year-earlier period. EBITDA that stood at EUR 1.9 million in the second quarter of 2024 more than doubled compared with the previous year’s figure of EUR 0.7 million. The Group’s EBITDA margin posted 9.1 % in the first six months compared with 10.3 % in the year-earlier period. The second quarter of 2024 brought a considerable improvement in the EBITDA margin that rose to 12.4 % as against the year-earlier figure of 6.1 %.

Depreciation and amortisation totalled EUR 2.1 million in the first six months of 2024 (H1 2023: EUR 1.7 million). From January through to June 2024, 3U continued to report a positive financial result of EUR 0.4 million (H1 2023: EUR 1.4 million), along with tax expenses of EUR 0.2 million (H1 2023: EUR 0.4 million).

The proportion of the consolidated result attributable to shareholders of the parent company amounted to EUR 0.8 million (H1 2023: EUR 1.6 million). Consolidated earnings per share amounted to EUR 0.02 (basic and diluted) following on from EUR 0.04 the year before.

Resilient business model ensuring growth

The ITC segment raised revenue substantially by 55.4 % to EUR 9.8 million in the first half of 2024 (H1 2023: EUR 6.3 million). Organic growth amounted to 16.1 % in the reporting period. The decline anticipated in the Voice Retail business was offset by very significant growth in Managed Services and Voice Business. Segment EBITDA improved considerably by 27.5 % (EUR 0.5 million) to EUR 2.3 million (H1 2023: EUR 1.8 million). The EBITDA margin posted 23.3 % in the first half of the year compared with 28.4 % in the same period in 2023.

Due to the weather conditions and lower feed-in rates and also because of technical problems, the Renewable Energies segment’s yield fell considerably short of the year-earlier period. A technical defect in the Langendorf Wind Farm’s substation in particular prevented virtually any electricity being fed into the grid in January. This severe damage had been repaired by the start of February. Furthermore, a wind turbine in Roge was also not available during the reporting period. In the first six months of 2024, the electricity produced by 3U power plants declined by 19.8% overall to 29.6 GWh compared with 36.9 GWh the year before. As a result, the Renewable Energies segment’s revenue dropped by 44.7 % to EUR 2.4 million (H1 2023: EUR 4.3 million). Consequently, segment EBITDA also fell significantly by more than half to EUR 1.4 million (H1 2023: EUR 3.2 million).

The SHAC segment’s revenue increased by 16.2 % to EUR 17.1 million in the first six months of 2024 (H1 2023: EUR 14.7 million). Growing demand for photovoltaic modules, inverters and electricity storage right through to full-scale PV plants was especially evident in the upturn in e-commerce operations during the reporting period. The SHAC segment’s gross margin improved notably to 19.8 % over the six-month period, up from 17.2 %. The segment’s gross profit advanced by 27.8 % to EUR 3.6 million following on from EUR 2.8 million in the year before. Against the backdrop of higher operating expenses (personnel and other operating expenses) EBITDA came in at EUR –0.1 million at mid-year (H1 2023: EUR –0.4 million), which nevertheless also reflected improved profitability here over the course of the year. In the second quarter, the segment generated positive EBITDA of EUR 0.1 million compared with the year-earlier figure of EUR –0.4 million.

Sound balance sheet ratios as a foundation for future growth

The 3U Group’s balance sheet structure is stable and did not show any unexpectedly great changes in the reporting period. Accordingly, total assets amounted to EUR 118.6 million as of 30 June 2024, thus virtually unchanged from the level posted on 31 December 2023 (EUR 119.3 million). On the assets side, the growth in inventories of EUR 3.5 million to EUR 17.2 million is mainly attributable to business activity in the SHAC segment. The increase in property, plant and equipment from EUR 27.0 million to EUR 32.4 million is to be seen mainly in the context of disbursements for the Langendorf repowering project and the construction of new company headquarters in Marburg. The purchase of BITCOIN lifted intangible assets by EUR 5.5 million to EUR 9.3 million. The decline of EUR 12.1 million in cash and cash equivalents to EUR 43.3 million is largely associated with the higher level of inventories in the reporting quarter, as well as with the BITCOIN investment as part of diversifying the company’s assets.

The equity ratio remained virtually unchanged. As of 30 June 2024, it stood at 74.4 % compared with 74.7 % on 31 December 2023. Non-current and current liabilities increased slightly overall from EUR 30.2 million to EUR 30.4 million, which raised debt-to-equity ratio slightly from 33.9 % to 34.4 %. In the first six months of 2024, the sum total of current and non-current financial liabilities increased to EUR 17.6 million from EUR 15.6 million compared with the year-earlier period.  

Outlook: Guidance affirmed for 2024 – ambitious EBITDA target

Germany’s economy as by far the most important market for the products and services of the 3U Group were assessed as subdued by trade associations and the German government at the beginning of the second half of 2024. The protracted war in Ukraine, the burgeoning conflict in the Middle East, compounded by high interest rates, are disrupting economic development.

The Management Board considers the Group’s economic situation to be well balanced overall at the present point in time due to diversification. The Board anticipates that business will develop well in the second half of 2024, flanked by ongoing profitable growth in the ITC segment. As regards the Renewable Energies segment, 3U is investing extensively in line with its plans to expand its own power generating capacities. Having obtained approval for the Langendorf Wind Farm repowering project, the Group can move ahead as scheduled in realising the project in the coming quarters, with the aim of raising installed capacity in Langendorf from 22.5 MW to 43 MW over the period through to the end of 2025.

As part of the plans to ramp up capacity in the Renewable Energies segment, opportunities for cooperation with partners outside the company will also be increasingly sought and fostered in the future. To this end, 3U signed a joint venture agreement with Wiso Energie GmbH which provides for the joint implementation of wind turbines with a total nominal output of up to 50 MW.

The recovery in the SHAC segment originally anticipated in the second half of the year is unlikely to materialise against the backdrop of the prevailing uncertainty in the market and slack demand, particularly in the field of heat generators. Accordingly, stable to modest business development is assumed in the months ahead.

As before, 3U expects overall revenue for 2024 to settle in a range of between EUR 58 million and EUR 62 million, which would correspond to year-on-year growth of around 10 % to 18 %. Owing to the necessary upfront investments in 3U’s future competitiveness, and in conjunction with repowering measures commencing at the Langendorf location, an EBITDA margin of approximately 7 % to 8 % is expected in 2024. Achieving the profitability envisaged is ambitious from today’s standpoint, but nevertheless realistic, and depends on a number of different positive factors in the second half of the year. Along with the technical availability of the wind farms, these factors include how monthly market values for onshore wind energy develop and the demand trend in the company’s SHAC e-commerce operations.

Rigorous pursuit of the 2026+ value strategy in the medium term

Against the backdrop of the current development of business and in consideration of future expectations, the Management Board has reviewed and updated the medium-term goals it set under MISSION 2026 which was presented back in mid-2023. The concrete outcome of these deliberations now runs under the title of MISSION 2026+. There have been no fundamental changes as far as the original goals are concerned. However, the time horizon necessary for implementation may take longer than expected due to the ongoing difficult conditions in the environment. With this in mind, the company has underpinned its value ambitions by specifying revenue targets. The growth initiatives in combination with an extensive investment programme should continue to generate value potential of around EUR 510 million to EUR 620 million to be achieved in the Group in the coming years.

Clearly defined growth ambitions for all three segments

Growth in the ITC segment is to be accelerated by acquisitions and EBITDA kept at a high level of 25 % to 30 %. 3U intends to significantly expand its energy plant portfolio in its Renewable Energies segment. In the medium term, the repowering planned for the Langendorf and Klostermoor wind farms, in conjunction with further expansion projects, are aimed at more than trebling the Group’s existing nominal output of 53 MW to up to 200 MW.

In its SHAC segment, 3U will be striving to increase annual revenue of currently around EUR 30 million to approximately EUR 100 million through acquisitions. At the same time, the necessary measures to strengthen competitive capabilities are to be implemented. These measures include the realignment of the range on offer, flanked by expanding the proportion of profitable products and services, along with streamlining low growth niche activities. This would set in place a key prerequisite for the stock market eligibility of the e-commerce operations. With the prospect of an IPO or of a sale, earnings are then to be raised in a second step to more than EUR 150 million and the EBITDA margin up to 8 %. Operational measures under MISSION 2026+ are to be flanked by the holding’s asset management activities. To this end, and for the purpose of diversification, the Group has invested around EUR 12 million in BITCOIN in recent months as a long-term reservoir of value, alongside its real estate investments.

Thanks to 3U’s broad-based business model aligned to the megatrends of e-commerce, digitalisation and renewable energies, the company continues to have access to huge potential for sustainable and profitable growth to achieve the aforementioned medium-term goals under its MISSION 2026+. The Group has sufficient liquidity and options at its disposal for financing and expanding its operations.

“We are satisfied with the development of business in the first six months of 2024. We have confirmed the growth targets for the year as a whole and, with our MISSION 2026+, we will continue to garner success in the medium and long term. One thing is for sure: we will be steadily forging ahead with our value strategy and doing our utmost to leverage the tailwind from the three megatrends we cover in our segments,” states Uwe Knoke, Board member of 3U HOLDING AG, commenting on the Group’s performance in the first half of 2024.

3U financials

3U HOLDING AG’s H1 2024 Earnings Call will take place today at 10:00 CET, together with CFO Christoph Hellrung and Uwe Knoke, Board member responsible for Strategy and Business Development.

Please register here to participate in the web cast:

https://tinyurl.com/3U-HOLDING-AG

A recording of the web cast will be available for viewing after the event at 3u.net/newsroom/mediathek/.

The interim report on the first half year of 2024 is available for downloading at https://www.3u.net/en/investor-relations/publications/

About 3U:

3U HOLDING AG (www.3U.net), based in Marburg, Germany, was founded in 1997. As the operating management and investment holding company, it heads up the 3U Group. With a view to increasing the value for the shareholders, employees, customers, suppliers and all stakeholders, the company acquires, operates and sells companies in the three segments of ITC (Information and Telecommunications Technology), Renewable Energies and SHAC (Sanitary, Heating and Air Conditioning Technology). The 3U Group operates successfully and profitably with its business models in mega trends in all three segments and is striving to attain market leadership in particular with its e-commerce business model. 3U HOLDING AG shares are traded on XETRA, Tradegate and on German regional stock exchanges (ISIN: DE0005167902; identifier: UUU).