Positive Outlook Machine manufacturer Hermle raises forecast for 2021
Germany — In the third quarter of 2021, Hermle recorded surprisingly dynamic demand. Against this background, the Swabian machine tool and automation specialist is raising its forecast for the full year.
Due to rising demand in the third quarter of 2021, Hermle adjusted its outlook and expects a 20 to 25 percent increase in revenue in 2021 (2020 revenue: € 296.9 million) and an almost proportional improvement in earnings (2020 operating profit: € 54.2 million), provided that the increasingly frequent disruptions in the supply chain can continue to be offset by internal measures. Previously, the company had assumed an increase in turnover of at least 10 percent and a disproportionately low development in earnings.
Measured against the corresponding period of the previous year, which was significantly impacted by the Covid 19 pandemic, Hermle's incoming orders increased by 75.1 percent to € 309.9 million (previous year: € 177.0 million) in the first nine months of 2021. New orders from Germany increased by 75.9 percent to 116.3 million euros (previous year € 66.1 million) and from abroad by 74.6 percent to € 193.6 million (previous year € 110.9 million). The strong demand in the third quarter, which also included larger one-off projects and catch-up effects, was based on a broad base from various customer industries, so that the investment restraint still prevailing in parts of the automotive industry was more than compensated for. As at 30 September 2021, Hermle had an order backlog of € 128.4 million in the Group, compared to € 62.6 million on the previous year's reporting date and € 44.8 million on 31 December 2020.
As expected, the consolidated revenue of the manufacturer of 5-axis machining centres continued to catch up in the third quarter and, at € 226.4 million in the first nine months of 2021, was 6.0 percent higher than the corresponding figure for the previous year (previous year: € 213.6 million). Of this amount, € 92.4 million, earnings also improved significantly in the third quarter, but for the entire nine-month period of 2021 they were still slightly below the comparable figure for 2020.
Thanks to a long-term, steady personnel policy, the company was able to react quickly to the dynamic development in demand. At the end of September 2021, the group employed 1309 people, similar to the number at the turn of the year and on the previous year's reporting date (30 September 2020: 1,312; 31 December 2020: 1,304). Short-time work was ended throughout the company at the end of August 2021; overtime was already necessary in some areas recently.
The financial position and net assets of the Hermle Group remained solid in the reporting period: as at the reporting date of 30 September 2021, an equity ratio of 73.5 percent was reported (30.09.2020: 75.3 percent; 31.12.2020: 79.1 percent).
From January to September 2021, Hermle invested € 4.4 million in property, plant and equipment and intangible assets (previous year: € 14.0 million). The investment focus was on a large machining centre for parts production, which has now been put into operation, as well as measures in quality assurance, own machines for production and new storage technology for the US site.
The good order development continued in October, even though demand, which had increased in the third quarter due to catch-up effects and larger individual projects, normalised somewhat. The company therefore expects very high capacity utilisation in the final quarter. The prerequisite for this is that possible shortfalls from growing Covid 19 incidences and the considerable disruptions in the supply chain can continue to be compensated for by internal measures such as extra work, design changes or switching to alternative suppliers. Hermle's traditionally well-stocked inventories, which serve as a buffer for fluctuations in demand and supply bottlenecks, have largely melted away as a result of the strong business in the third quarter. From today's perspective, Hermle will start 2022 with a solid order base.