HOMAG Group responding to muted demand
Package of measures adopted to reduce capacity and boost efficiency
Schopfloch, November 7, 2023. The HOMAG Group is responding to its significantly lower order intake in the first nine months of 2023 by adopting a package of measures. Just under 600 jobs are to be cut worldwide. Thanks to the high order backlog at the beginning of the year, the Company’s sales and earnings remained at the previous year’s high level in the first three quarters of 2023.
“After extraordinarily heavy capital spending by our customers in 2021 and 2022, we had anticipated a cyclical downswing. However, with order intake down by almost one third worldwide, this downturn is substantially more pronounced than expected,” says Dr. Daniel Schmitt, Chief Executive Officer. “We must respond to this and have therefore swiftly assembled a package of measures to adjust capacity and discussed these with the employee representatives.” The HOMAG Group plans to cut just under 600 jobs worldwide and expects this to produce savings of around EUR 25 million next year and roughly EUR 50 million per year from 2025. Roughly 350 of the 600 jobs are to be eliminated at the German facilities. In Germany, this is to be done by means of voluntary programs as well as phased-retirement models to reduce social hardship. Lay-offs for operational reasons are currently not planned but cannot be ruled out. In addition to reducing jobs, the HOMAG Group also plans to make use of other flexibilization instruments such as the reduction of working-hour accounts and short-time work and has imposed an extensive freeze on new recruitment.
Disparate situation in the first nine months of 2023
Between January and September 2023, order intake decreased by 32 percent to EUR 968 million (previous year: EUR 1,418 million). In terms of sales, which increased slightly again compared to the previous year’s high figure to EUR 1,222 million (previous year: EUR 1,195 million), the HOMAG Group continued to benefit from the very large order backlog that it had amassed at the beginning of the year. This order backlog was gradually run off, dropping to EUR 832 million as of September 30, 2023 (September 30, 2022: EUR 1,256 million). At EUR 93.2 million, EBIT before extraordinary effects remained at the previous year’s high level (EUR 92.4 million). As of September 30, 2023, the HOMAG Group had 7,482 employees (September 30, 2022: 7,462).
Outlook: lower sales expected in 2024
The extraordinary expenses resulting from the package of measures are valued at €35 to 50 million and will be placed on the books in the fourth quarter of 2023. As a result, the HOMAG Group’s full-year earnings before tax and before profit transfer will fall short of the previous year in 2023.
“The sharp decline in order receipts will hit us with a delayed effect and result in a substantial decline of up to 15% in sales in 2024,” explains Dr. Daniel Schmitt. “With this package of measures, we want to adjust our cost structure so as to limit the impact on our earnings. We stand to benefit from this in the medium and long term and will grow again profitably when the next upswing emerges.”
Company Background
The HOMAG Group is the world's leading provider of integrated solutions for production in the woodworking industry and woodworking shops. Its 14 specialized production sites, about 20 Group-owned sales and service companies and approximately 60 exclusive sales partners worldwide make the company a unique system provider. Backed by a workforce of some 7,000 employees the HOMAG Group offers its customers solutions for digitized production, based on digital data continuity from point of sale through the entire production process, combined with a comprehensive software suite. In addition, the open ecosystem "tapio" (open Internet-of-Things platform) maps the data flow along the entire value chain of the timber industry. The HOMAG Group has been majority-owned by the Dürr Group since October 2014.
Disclaimer
This press release contains certain statements relating to the future. Future oriented statements are all those statements that do not pertain to historical facts and events or expressions pertaining to the future such as “believes”, “estimates”, “assumes”, “forecasts”, “intend”, “may”, “will”, “should” or similar expressions. Such future-oriented statements are subject to risks and uncertainty since they relate to future events and are based on current assumptions of the Company, which may not occur in the future or may not occur in the anticipated form. The Company points out that such future-oriented statements do not guarantee the future; actual results including the financial position and the profitability of the HOMAG Group as well as the development of economic and regulatory framework conditions may deviate significantly (and prove unfavorable) from what is expressly or implicitly assumed or described in these statements. Even if the actual results of the HOMAG Group including the financial position and profitability as well as the economic and regulatory framework conditions should coincide with the future-oriented statements in this press release, it cannot be guaranteed that the same will hold true in the future.
Contact:
HOMAG Group AG
Jens Fahlbusch
Kommunikation
Tel.: +49 7443 13-2796
E-Mail: jens.fahlbusch@durr.com