Final quarter of 2023 in line with expectations - focus on gross profit margin, cost management and cash pays off

Final quarter of 2023 in line with expectations - focus on gross profit margin, cost management and cash pays off
 

• TAKKT free cash flow increases to EUR 91.9 million in 2023
• Gross profit margin improved to 39.8 percent, EBITDA margin at 9.0 percent
• Organic sales development at minus 5.9 percent
• Dividend proposal of EUR 1.00 per share in total

Stuttgart, Germany, February 15, 2024: The Group generated a free TAKKT cash flow of EUR 91.9 million in the 2023 financial year and thus increased its cash inflow by more than EUR 21 million despite the challenging environment. As expected, customer behavior in the markets relevant to TAKKT remained cautious in the fourth quarter. Therefore, sales and earnings development in 2023 was in line with the forecast from October. Sales reached EUR 1,240.0 (1,336.8) million. Organic growth, adjusted for the slightly negative currency effects, amounted to minus 5.9 percent. "2023 was a year of highs and lows for us. We made great progress in executing our strategy. At the same time demand was noticeably dampened by uncertain markets, geopolitical tensions, and weak economic indicators, especially in the second half of the year.  We support our customers in shaping future worlds of work. In the current environment, in which many companies are acting cautiously, and some are laying off staff, investments in this area are being held back," says CEO Maria Zesch.

Due to the subdued demand, TAKKT intensified its measures to improve gross profit margin, cost management, and cash generation over the course of the year. As a result, the Group increased its gross profit margin to 39.8 (39.3) percent and generated EBITDA of EUR 111.8 (132.1) million. The EBITDA margin was 9.0 (9.9) percent. "2023 has shown: We can react quickly to changing conditions with our business model. Over the course of the year, we proved that we have our costs under control despite transformation projects and inflation. And we were able to free up EUR 35 million by reducing inventories thanks to targeted management of net working capital. As a result, our free cash flow increased significantly to EUR 91.9 (70.4) million," says CFO Lars Bolscho.

Due to strong cash flow and continued high equity ratio, the Management Board is proposing a special dividend of EUR 0.40 per share in addition to the payment of the base dividend of EUR 0.60. "We want our shareholders to participate in the strong cash flow of the past year through the special dividend. And we will remain fully capable of acting on M&A and share buybacks even after the distribution," says CFO Lars Bolscho.

As a result of the rise in interest rates and a decline in demand since the coronavirus crisis, TAKKT recognized an impairment loss of EUR 37.0 million on the goodwill of Displays2go at the end of the year. The impairment reduces EBIT but is not cash effective. Displays2go has already made good progress by taking countermeasures, including growth with digital displays. However, the volume is not yet sufficient to compensate for the lower demand for traditional products because of the coronavirus pandemic.

In the fourth quarter, TAKKT generated sales of EUR 285.4 (329.2) million, 13.3 percent less than in the previous year. Organic growth amounted to minus 11.3 percent. Despite the significant decline in sales, the Group was able to improve profitability and achieve an EBITDA of EUR 24.6 (27.0) million, only slightly below the previous year's level. "Our efforts to focus on gross profit margin, cost management and cash flow are paying off. In the final quarter, we increased our gross profit margin by almost two percentage points and our cost base was significantly lower than in the previous year. Our EBITDA margin rose to 8.6 (8.2) percent compared to a weak previous year. We will continue to work on improving our cost structures in 2024," says CFO Lars Bolscho.

Despite intensive cost management, TAKKT has made good progress in implementing the strategy with the three pillars Growth, OneTAKKT and Caring in 2023. Two years after the start of the transformation, the Industrial & Packaging and Foodservice divisions have an integrated organizational structure and address their customers via joint teams for sales, marketing, and category management. Cross-selling activities are making a growing contribution to sales. And by establishing the Operations and Tech group functions, TAKKT is making its logistics and IT infrastructure more compact, consolidating warehouse locations, and increasingly using standardized systems. This already enabled noticeable savings in 2023 and forms the basis for future efficiency gains. The Group is also taking responsibility when it comes to sustainability, for example by expanding its range of eco-friendly products. Their share of order intake rose to 24 percent in 2023. At the end of the year, the Group was awarded the German Sustainability Award in the Investment Goods - Distribution category for this commitment.

Current economic forecasts for the new year predict only slight economic growth for Europe and the USA. Although inflation is declining, high central bank interest rates will continue to limit growth, particularly at the beginning of the year. TAKKT therefore expects the start to the new year to remain challenging. "We have responded to the weak environment and are continuing to focus on consistent cost management, our gross profit margin, and cash flow. We are also increasingly benefiting from advantages of our integrated positioning, which enables us to achieve leaner cost structures. And we remain prepared for an upturn in demand over the course of the year," says CEO Maria Zesch.


Earnings Call: February 15, 2024 at 14:00 (CET).
Please register in advance to participate in the Earnings Call at the following link: Registration Earnings Call

Financial calendar
TAKKT will publish the final figures for the 2023 financial year and a detailed outlook for 2024 with the annual report on March 28.

Preliminary IFRS figures for the TAKKT Group 2023
(in EUR million)

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