NORMA Group expands in the third quarter despite a volatile market environment.
Sales increased by 19.9 percent to EUR 318.6 million.
Organic and currency effects contribute equally to sales growth.
Business in America is experiencing rapid growth.
EBIT margin adjusted to 8.5 percent
Maintal, Germany, 2 November 2022 – In the third quarter of 2022, NORMA Group’s sales increased by 19.9 percent to EUR 318.6 million (Q3 2021: EUR 265.7 million). Organic sales increased by 10.3 percent. Higher selling prices had a positive impact, allowing the company to partially offset inflation-driven cost increases. Positive currency effects, particularly in relation to the strong US dollar, contributed to growth as well.
“The shock waves felt around the world as a result of Russia’s invasion of Ukraine and the ongoing pandemic had a significant impact on our business in the third quarter,” CEO Dr. Michael Schneider says. “We achieved strong growth in the face of a volatile market environment, despite the fact that the current challenges confronting our industry are diverse and complex.” As NORMA Group, we are doing everything possible to overcome these challenges by collaborating with our customers and suppliers in order to continue providing the best joining solutions in the future.”
Especially in light of the strong US dollar.
Growth across all business sectors
From July to September 2022, sales in the EMEA region (Europe, Middle East, and Africa) increased by 11.8 percent to EUR 119.9 million (Q3 2021: EUR 107.2 million). Organic growth of 12.2 percent was slightly reduced by 0.5 percent due to negative currency effects. Despite the difficult market situation in the European automotive industry, business with automotive customers has grown well. For example, a major order from a British carmaker for cooling lines for electric vehicles and cars with internal combustion engines has been in place since 2020. In contrast, sales of standardised joining technology, which is sold through retailers, were lower.
The Americas area had the third quarter’s biggest increase for NORMA Group, with sales increasing by 29.5 percent. Sales totaled EUR 151.7 million, a substantial increase over the previous year’s level (Q3 2021: EUR 117.2 million). Organically, sales increased by 10.9 percent, with favourable currency impacts accounting for a greater portion of the improvement. In this region, there was a high demand for joining technology for trucks and light cars in the third quarter. Like in prior quarters, business with irrigation and drainage systems also did well.
Sales in the Asia-Pacific area totalled EUR 47.0 million, up 13.9% from the previous quarter’s figure (Q3 2021: EUR 41.3 million), with organic growth accounting for 3.7 percent of the increase. The integration of automotive technologies made particularly significant contributions. Positive currency effects led to a minor increase in business using standardised joining technology for general industry applications and water management.
High costs have a detrimental influence on margin and earnings.
In the third quarter of 2022, NORMA Group produced adjusted earnings before interest and taxes (adjusted EBIT) of EUR 27.0 million, a substantial improvement compared to the prior year (Q3 2021: EUR 22.8 million). The adjusted EBIT margin was 8.5%, which was the same as last year (Q3 2021: 8.6 percent). Profitability was significantly impacted by higher costs for production operations and transportation services, as well as higher pricing for energy-intensive raw materials including steel and plastic resins. In order to help fulfil customer orders and make up for labour shortages caused by Covid, additional temporary workers were hired at various plants in the third quarter.
The third quarter of 2022 saw a decrease in net operating cash flow, falling by EUR -3.8 million from the same period last year (Q3 2021: EUR 31.2 million). This is mainly because of the stockpiling of raw material inventories and the development of backup supplies of finished goods to prevent supply shortages.
In response to the current economic uncertainty, NORMA Group is implementing a number of strategies to maintain as stable a supply chain and cost structure as feasible and to increase profitability. These steps include finding alternate raw material suppliers on a worldwide scale and negotiating prices with clients, including renegotiations in the event of multi-year agreements, with the aim of collectively bearing the unanticipated cost increases. Additionally, NORMA Group keeps looking for ways to improve production and efficiency at its locations around the globe.
Results for the past nine months highlight challenges.
The NORMA Group had group sales of EUR 940.9 million from January to September 2022. This is an increase of 12.8 percent from the same time last year (Q1-Q3 2021: EUR 833.8 million). Adjusted profits before interest and taxes (EBIT) for the first nine months of the current fiscal year came to EUR 79.7 million. This is much worse than the nine-month performance from the prior year (Q1-Q3 2021: EUR 95.8 million). In the first nine months of 2022, the adjusted EBIT margin was 8.5 percent (Q1-Q3 2021: 11.5 percent).
In the first nine months of the current year, net operating cash flow was EUR 6.0 million, which was lower than the same period in the previous year (Q1-Q3 2021: EUR 70.5 million). Low operating profit, an increase in inventory, and a larger level of accounts receivable are the causes of this.
At 45.7 percent as of the quarterly reporting date of September 30, 2022, the equity ratio was still high and marginally higher than year-end 2021. (December 31, 2021: 44.6 percent). This is because of increasing other reserves brought on by favourable currency effects and improved retained earnings from the first nine months of 2022 results.
NORMA Group statistics