JOST generates strong free cash flow in the third quarter of 2024 despite cyclical market downturn and paves the way for further strategic long-term growth
- Cycle-driven decline in sales: sales of EUR 246 million (Q3 2023: EUR 292 million)
- Profitability remains strong: adjusted EBIT margin with 10.8% at the upper end of range and adjusted EBIT reaches EUR 27 million trailing the sales development (Q3 2023: EUR 33 million)
- Strong free cash flow despite decline in sales: free cash flow of EUR +23 million generated (Q3 2023: EUR +23 million)
- Leverage stable: leverage ratio stable at 1.02x despite investments made and cyclical market weakness (December 31, 2023: 0.99x)
- Outlook for the 2024 financial year confirmed: Decline of sales by around 15% compared to 2023 and adjusted EBIT margin between 10.5% and 11.0%
Neu-Isenburg, November 14, 2024 - JOST Werke SE ("JOST"), a leading global producer and supplier of safety-critical systems for the commercial vehicle industry, published today its interim report for the third quarter of 2024 and confirmed preliminary results announced on October 11, 2024.
Joachim Dürr, CEO of JOST Werke SE, said: "The third quarter of 2024 was an eventful and successful quarter for JOST. The announced acquisition of Hyva will accelerate the implementation of our strategy and brings us a decisive step closer to achieving our new medium-term growth targets. Our customers appreciate that with this addition, JOST is positioning itself as an excellent, global business partner for the future: At the major leading trade fair IAA Transportation, there was great interest and enthusiasm following the announcement, particularly with view to expanding and deepening existing business relationships. In operational terms, we were also able to further improve our strong profitability in North America and Asia-Pacific-Africa despite the challenging market environment and could thus cushion the earnings impact caused by the cyclical decline in sales in these regions. In Europe, we succeeded in stabilizing profitability at the level of the previous quarter due to the cost control measures introduced. Here, we will continue to examine and implement further efficiency measures in future. The good operating performance is confirmed by the fact that JOST was able to generate the same free cash flow in the third quarter of 2024 as in the previous year despite the decline in sales."
Sales and earnings performance
The cyclical slowdown in demand in the transportation markets continued to increase over the course of the third quarter of 2024. In Europe and North America in particular, the typical seasonality of the summer months was more pronounced than in the previous year, which was still positively influenced by pent-up demand effects. Demand also remained weak in the agricultural business. In this market environment, JOST's group sales declined by 15.7% to EUR 246.3 million in the third quarter of 2024 (Q3 2023: EUR 292.0 million). The acquired companies JOST Agriculture & Construction South America LTDA (JACSA; formerly: Crenlo do Brasil) and LH Lift Oy, contributed inorganic sales of EUR 13.6 million. Adjusted for the acquisition and currency effects, sales in the third quarter of 2024 declined by 19.9% compared to the previous year.
Sales in the Transport business line decreased by 22.7% to EUR 187.4 million in the third quarter of 2024 (Q3 2023: EUR 242.5 million). In the Agriculture business, JOST grew sales by 18.8% to EUR 58.8 million (Q3 2023: EUR 49.5 million), supported by the contribution of the acquired companies and the successful ramp-up of a production plant in Chennai, India. Adjusted for acquisition and currency effects, however, sales in the Agriculture business declined by 5.2% compared to the previous year.
As a result of JOST's high operational flexibility, adjusted EBITDA in the third quarter of 2024 decreased less strongly than sales by 14.7% to EUR 35.3 million (Q3 2023: EUR 41.4 million). Accordingly, adjusted EBITDA margin improved to 14.3% (Q3 2023: 14.2%). Adjusted EBIT declined trailing the sales development and reached EUR 26.5 million (Q3 2023: EUR 33.4 million). The adjusted EBIT margin remained at a high level of 10.8% (Q3 2023: 11.4%).
Europe
In Europe, sales contracted by 9.2% to EUR 139.7 million during the third quarter of 2024 (Q3 2023: EUR 153.9 million). The companies acquired in the previous year made a positive contribution of EUR 12.6 million to sales. Adjusted for this, organic sales in the third quarter of 2024 decreased by 16.8% compared to the previous year. As Europe bears the group's administrative costs and therefore has a significantly higher proportion of fixed costs, JOST could only partially offset the negative impact of this sales development on earnings. Adjusted EBIT in Europe thus decreased to EUR 7.1 million in the third quarter of 2024 (Q3 2023: EUR 13.4 million). The adjusted EBIT margin amounted to 5.1% (Q3 2023: 8.7%). Compared to the previous quarter (Q2 2024: 5.0%), JOST was able to stabilize profitability in Europe through cost control measures introduced, such as short-time work.
North America
In the third quarter of 2024, sales in North America declined sharply by 30.9% to EUR 59.6 million due to the cyclical decline in demand, particularly for trailers and trucks, as well as the downturn in the agricultural business (Q3 2023: EUR 86.3 million). However, North America benefited from a positive change in the product mix. While sales for compact tractors’ front loaders continue to decline, sales for high-tech front loaders for professional agricultural use were proportionately higher than in the prior year. The proportion of aftermarket business also increased compared to the previous year. These effects, paired with measures to increase efficiency led to a significant improvement in profitability in the region. In the third quarter of 2024, adjusted EBIT declined less strongly than sales by only 10.7% to EUR 7.7 million (Q3 2023: EUR 8.7 million). As a result, the adjusted EBIT margin improved by 3.0 percentage points to 13.0% compared to the previous year (Q3 2023: 10.0%).
Asia-Pacific-Africa (APA)
Demand in the transport business also cooled down in Asia-Pacific-Africa in the third quarter of 2024. However, JOST was able to benefit from an increase in the agricultural business, mainly due to the commissioning of the new production plant in Chennai, India. Nevertheless, APA sales decreased in the third quarter of 2024 by 9.3% to EUR 47.0 million compared to the previous year (Q3 2023: EUR 51.8 million). The favorable regional product mix combined with synergies from the integration of LH Lift's Chinese production plant into JOST's existing plant in Ningbo, China, led to an increase in adjusted EBIT by 3.4 % to EUR 10.0 million despite the decline in sales (Q3 2023: EUR 9.7 million). Accordingly, the adjusted EBIT margin improved by 2.6 percentage points to 21.3% in the third quarter of 2024 (Q3 2023: 18.7%).
Consolidated profit
As a result of the sales development, earnings after taxes declined to EUR 8.2 million in the third quarter of 2024 (Q3 2023: EUR 13.6 million). Earnings per share developed similarly and amounted to EUR 0.55 (Q3 2023: EUR 0.91).
Adjusted for one-off effects, which mainly relate to non-operating or non-cash exceptional effects from the depreciation and amortization of the purchase price allocation (PPA), adjusted earnings after taxes reached EUR 14.5 million in the third quarter of 2024 (Q3 2023: EUR 21.8 million). Adjusted earnings per share amounted to EUR 0.98 (Q3 2023: EUR 1.46).
Net assets and free cash flow
As at September 30, 2024, JOST Werke SE's equity increased to EUR 393.5 million (December 31, 2023: EUR 382.2 million), although the payment of dividends and currency translation effects reduced equity. The equity ratio increased further to 39.9% compared to year-end (December 31, 2023: 38.0%).
Cash and cash equivalents increased by EUR 16.1 million to EUR 103.8 million as at September 30, 2024 (December 31, 2023: EUR 87.7 million). Compared to year-end, JOST was able to reduce net debt by EUR 17.5 million to EUR 163.2 million (December 31, 2023: EUR 180.7 million), despite having invested to acquire a stake in Trailer Dynamics GmbH in the amount of € 15.0 million in the third quarter of 2024, having paid a dividend of € 22.4 million in the second quarter of 2024 as well as the earn-out for Ålö (Quicke) in the amount of € 21.2 million in the first quarter of 2024. JOST thus succeeded in keeping its leverage ratio stable at 1.02x as at September 30, 2024, in spite of the challenging market environment caused by the cyclical downturn (December 31, 2023: 0.99x).
Working capital decreased by 27.8% to EUR 199.5 million in the third quarter of 2024 (Q3 2023: EUR 276.4 million). Accordingly, the ratio of working capital to last-twelve-months sales improved significantly to 17.7% (Q3 2023: 20.4%).
Cash flow from operating activities increased slightly year-on-year to EUR +30.7 million even though sales were down compared to prior year (Q3 2023: EUR +29.0 million). Investments also increased to EUR 7.9 million in the third quarter of 2024 (Q3 2023: EUR 6.3 million). Supported by the improvements in cash flow from operating activities, JOST could generate a strong free cash flow of EUR +22.8 million in the third quarter despite the higher investments (Q3 2023: EUR +22.7 million). In the first nine months of the year, free cash flow improved to EUR +83.4 million (9M 2023: EUR +56.3 million).
Oliver Gantzert, Chief Financial Officer of JOST Werke SE, said: "We were able to successfully leverage further synergies from the integration of LH Lift and JACSA during the quarter. In addition, we managed to clearly demonstrate our financial strength by keeping leverage stable at 1.0x in a declining market environment, while at the same time continuing to invest heavily in the future of our company. The strong financial position combined with the successful closing of our new ESG-linked syndicated loan in September 2024 are key safeguards to secure the long-term financing of the group."
Adjusted outlook confirmed
For fiscal year 2024, JOST expects a decrease in sales of around 15% (+/- 2.5 percentage points) compared to the previous year (2023: EUR 1,249.7 million). Despite the expected cyclical decline in sales, JOST believes it will be able to maintain a high level of profitability. Adjusted EBIT in 2024 is expected to decrease only slightly faster than sales, also in the low double-digit percentage range compared to the previous year (2023: EUR 140.8 million). Thus, JOST expects adjusted EBIT margin to be between 10.5% and 11.0% in fiscal year 2024 (previous year: 11.3%).
The interim report for the third quarter of 2024 is available at http://ir.jost-world.com/reports. The accompanying earnings conference will take place on November 14, 2024 at 11:00 a.m. CET. After the conference, a replay will be available on the JOST website http://ir.jost-world.com.
Contact:
JOST Werke SE
Romy Acosta
Head of Investor Relations
T: +49 6102 295-379
romy.acosta@jost-world.com
About JOST:
JOST is a leading global manufacturer and supplier of safety-relevant systems for the commercial vehicle industry with its core brands JOST, ROCKINGER, TRIDEC and Quicke. JOST’s global leadership position is driven by the strength of its brands, its long-standing client relationships serviced through its global distribution network, and its efficient and asset-light business model. With sales and production facilities in over 25 countries across six continents, JOST serves manufacturers, dealers and end customers in the transportation, agriculture and construction industries worldwide. JOST currently employs more than 4,500 staff across the world and is listed on the Frankfurt Stock Exchange. For more information about JOST, please visit www.jost-world.com
