EuroGroup Laminations S p A : 1H 2024 Results

Published August 2, 2024 at 6:51 a.m. UTC

Source: MarketScreener

THE BOARD OF DIRECTORS APPROVES THE INTERIM FINANCIAL REPORT AS OF 30 JUNE 2024

Results in line with expectations thanks to triple-digit growth in EV & Automotive in China and the progressing recovery in Industrial Entry in the Indian market with the acquisition of the control of Kumar Preliminary agreement with Hixih Group to accelerate the Electrical Vehicle market penetration in China

Guidance 2024 and medium-term organic targets confirmed

Consolidated revenues of € 422 million compared to € 454 million in 1H 2023 (-6.9%)
EV & Automotive segment growth continued, with revenues at € 264 million in 1H
2024 (+7.7% compared to 1H 2023)
Strong growth in China, with revenues in 1H 2024 at € 49 million, more than doubled compared to both 1H 2023 and 1Q 2024
Adjusted EBITDA was € 51 million compared to € 58 million in 1H 2023 (-11.3%) but was up 9.5% in 2Q compared to 1Q 2024, to € 27 million
EBIT of € 30 million compared to € 42 million in 1H 2023 (-28.5%), yet it remained stable at € 15 million in 2Q compared to 1Q 2024
Profit for the period of € 18 million compared to € 19 million in 1H 2023 (-4.4%), yet it was up 17.2% in 2Q compared to 1Q 2024, to € 9.7 million
Order Book1 and Pipeline EV traction as of 30 June 2024 were resilient and amounted to € 6.1 billion and € 5.1 billion, respectively
Signing of the acquisition of a 40% stake, and the control, in Kumar Precision Stampings, a leading player in the Indian industrial market
Signing of a preliminary Memorandum of Understanding for a partnership agreement with Hixih Group for a breakthrough in the Chinese ecosystem and to accelerate growth in the local electric vehicle market
Organic growth targets for FY 2024 and medium term confirmed

Baranzate (MI), 2 August 2024 - The Board of Directors of EuroGroup Laminations S.p.A. ("EuroGroup" or the "Group" or the "Company" or "EGLA") - a world leader in the design, manufacture and distribution of stators and rotors for electric motors and generators - approved the Interim Financial Report as of 30 June 2024.

Marco Arduini, Chief Executive Officer of EuroGroup Laminations, commented: "The results achieved in the first half of 2024 were in line with our expectations and programs. Organic growth in the EV & Automotive segment continued thanks to the performance in China, where revenues more than doubled compared to the first half of 2023. The partnership we are defining with the Hixih Group in China for the EV & Automotive business unit will allow a breakthrough in the largest global market and to further accelerate our progress with Chinese OEMs and Tier1s. The acquisition of the control of Kumar strengthens the global positioning of our Industrial business unit, after 1 year of preparation, by entering the high-potentialIndian market, setting the stage to take advantage of the great economic potential of this market. This transaction will allow us to enter in the Transformer magnetic lamination business, a market that has high growth potential not only in India. I thank all of the Team for the value brought forward over these months!".

1 Aggregate expected revenue (70 months rolling) from booked business awarded by the clients as of Jun -24EuroGroup Laminations S.p.A.

MAIN CONSOLIDATED ECONOMIC AND FINANCIAL RESULTS AS OF 30 JUNE 2024

Thousands of euro	1H 2024	1H 2023	% change

Revenues	422,468	453,804	(6.9%)

EBITDA adjusted	51,097	57,603	(11.3%)

EBIT	30,076	42,036	(28.5%)

Profit for the period	17,922	18,752	(4.4%)

Thousands of euro	30/06/2024	31/12/2023	% change

Net Financial Debt	210,541	110,786	+90.0%

Equity	461,196	459,187	+0.4%

During the first six months of 2024 revenues amounted to € 422.5 million, down 6.9% compared to the same period of 2023 (€ 453.8 million). The result was driven by the EV & Automotive segment, which almost entirely offset the contraction of the Industrial segment.

Consolidated revenues by operating segment:

Thousands of euro	1H 2024	1H 2023	% change

EV & Automotive	263,909	245,140	+7.7%

Industrial	158,559	208,664	(24.0%)

Total Revenues	422,468	453,804	(6.9%)

The EV & Automotive segment posted revenues of € 263.9 million, up by 7.7% compared to the same period in 2023 (€ 245.1 million), mainly due to the increase in production volumes on new projects and the ramp-up in production related to the growing demand for EV products for several clients, consistently with the net order book execution. This result confirms the Group's leadership in the markets it competes in.

The Industrial segment in the first half of 2024 reported revenues of € 158.6 million, compared to € 208.7 million in the same period of 2023 (-24.0% YoY). The decrease in revenues is mainly due to the reduction in volumes as a result of an enduring de-stocking process of the Group's customers in Europe, as well as the continued decline in commodity prices, which escalated from 2Q 2023 onwards, and the persisting regulatory uncertainty for some sub-segments (e.g. pumps). Revenues in the Industrial segment also grew to € 80.6 million in 2Q 2024, up 3.4% from € 78.0 million in 1Q 2024, thus signaling slight market improvement.

Consolidated revenues by geographic area:

Thousands of euro	1H 2024	1H 2023	% change

EMEA	217,267	267,143	(18.7%)


of which in Italy	212,026	263,004	(19.4%)


North America	155,987	164,469	(5.2%)

EuroGroup Laminations S.p.A.

of which in Mexico	129,403	137,142	(5.6%)

of which in the USA	26,584	27,327	(2.7%)

Asia	49,214	22,192	121.8%


of which in China	49,214	22,192	121.8%

Total Revenues	422,468	453,804	(6.9%)

Revenues from the EMEA region amounted to € 217.3 million (€ 267.1 million in 1H 2023), down from 18.7%; revenues from North America amounted to € 156.0 million (€ 164.5 million in 1H 2023), down 5.2%, due to lower revenues in the industrial segment, despite the good performance of the EV & Automotive segment.

Revenues in Mexico amounted to € 129.4 million (€ 137.1 million in 1H 2023) despite the performance of the EV & Automotive segment. Revenues from the USA (which are entirely related to the Industrial segment) amounted to € 26.6 million (€ 27.3 million in 1H 2023) with a reduction driven by the marked reduction in steel prices, despite the recovery in volumes since the last months of 2023.

Revenues in the Asia region, which had seen the EV & Automotive segment exceed the Industrial segment during 2023, amounted to € 49.2 million, more than doubled YoY (€

22.2 million) due to the ramp-up of production of new projects for the EV & Automotive segment for non-Chinese customers. Production for the first Chinese OEM is scheduled to start in the last quarter of 2024.

In the first half of 2024, adjusted EBITDA, excluding non-recurring costs, amounted to € 51.1 million, down 11.3% compared to the same period of last year (€ 57.6 million) with an adjusted EBITDA Margin at 12.1%, down from 12.7% recorded in the first half of 2023.

Adjusted EBITDA by operating segment: in 1H 2024, adjusted EBITDA of the EV & Automotive segment stood at € 31.8 million (-3.4% compared to € 33.0 million in 1H 2023), with an adjusted EBITDA Margin at 12.1%, down from the 13.4% in 1H 2023, due to the start of production and ramp-ups carried out in the first half of the year. Industrial segment's adjusted EBITDA stood at € 19.3 million (-21.8% compared to € 24.7 million in 1H 2023), with an adjusted EBITDA Margin at 12.2%, slightly higher from 11.8% in 1H 2023. The effect of the reduction in production volumes on the Industrial segment margin has been limited due to the ability of the Group to synergically manage activities' swings between the two business segments, while the effect of the pass-through mechanism offset the negative impact of the changes in raw materials' prices on the top line.

Reported EBITDA in the first half of 2024 amounted to € 50.2 million, down 12.1% YoY (€ 57.0 million) with a reported EBITDA Margin at 11.9%, down from 12.6% in 1H 2023.

EBIT in the first half of 2024 amounted to € 30.1 million, down 28.5% compared to € 42.0 million in the same period of 2023, with the EBIT Margin decreasing from 9.3% in 1H 2023 to 7.1% in 1H 2024. The performance reflects the higher depreciation and amortisation, which increased from € 15.0 million in the first half of 2023 to € 20.1 million in 1H 2024 mainly due to the progressing of the investment plan to support business growth, in the EV & Automotive segment, which is on track for 2024 and the medium term.

Net profit for the period in the first half of 2024 amounted to € 17.9 million, down 4.4% from 1H 2023 (€ 18.8 million), reflecting a reduction in net financial expenses, which also included

3.3 million in unrealised foreign exchange gains, and the impact of taxation.

EuroGroup Laminations S.p.A.

Order Book and Pipeline: Order Book2 of the EV & Automotive segment reached an estimated value of € 6.1 billion, plus approximately € 5.1 billion in Pipeline as of 30 June 2024.

Financial position

In the first half of 2024, net investments (CAPEX) amounted to € 53.4 million, up 4.9% compared to the same period of the previous year (€ 51.0 million) to support the Group's expansion plans, mainly related to the EV & Automotive segment (>80% of total investments implemented).

As of 30 June 2024, Net Trade Working Capital was € 256.5 million (€ 179.1 million as of 31 December 2023) compared to € 253.6 million as of 30 June 2023, with the trend primarily attributable to the increase in inventories required to support around 10 production startups for EV & Automotive projects across all geographies, which are expected by the end of the year, 5 of which have already started in the first half of 2024.

Net financial debt as of 30 June 2024 amounted to € 210.5 million, up from 31 December 2023 (€ 110.8 million) and 30 June 2023 (€ 113.5 million), with leverage of 2.0x as of 30 June 2024, compared to 1.0x as of 31 December 2023. The trend is mainly due to the seasonality of working capital absorption, and to operating investments to support capacity growth for the EV & Automotive segment. Excluding the effects of the buyback deals undertaken in the first half of 2024 and the payment of the dividend, net financial debt would be approximately € 192 million, of which € 54 million related to the effect of IFRS 16.

SIGNIFICANT EVENTS DURING THE PERIOD

On 12 January 2024, the new plant in Mexico was inaugurated for the production of stators and rotors for the EV & Automotive segment.

On 17 January 2024, the Group announced that it had acquired the status of a listed SME pursuant to the CONSOB regulation adopted by resolution No. 11971 of 14 May 1999, while on 18 January 2024, it announced its adherence to the UN Global Compact.

On 24 January 2024, the Group Board of Directors co-opted Dr Axel Volker Dill, the new CEO of the Industrial segment, as a director following the resignation of a director.

On 20 February 2024, the Group announced that it had obtained a significant development contract with a public grant from MIMIT totalling €13.3 million to cover research and industrialisation activities in Italian plants over the next few years.

On 6 May 2024, the Shareholders' Meeting approved, among other things, the 2023 annual results and the payment of a dividend per share of € 0.042.

The Shareholders' Meeting also confirmed Board Member Axel Volker Dill, whose term of office will expire upon approval of the 2025 financial results, as for the other board members.

On 19 June 2024, the buyback programme initiated on 27 September 2023 ended following the authorisation obtained by the Shareholders' Meeting on 20 July 2023. As of the date of this press release, the Company holds 5,030,800 treasury shares, representing 3.00% of the share capital.

On 27 June 2024, EuroGroup Laminations successfully concluded a financing transaction for the signing of four loan agreements with Intesa Sanpaolo - IMI/CIB Division, UniCredit, BNL BNP Paribas and Deutsche Bank, respectively, for a total maximum aggregate amount of up to € 140 million. These loans are in line with the Company's broader strategy of growth and expansion, particularly at the international level. Thanks to them, EuroGroup will be able to count on greater flexibility from a financial point of view, as well as on the resources necessary to further strengthen its growth path in the medium and long term, also through inorganic growth. At the same time, the contracts signed enable

2 Aggregate expected revenue (70 months rolling) from booked business awarded by the clients as of Jun -24EuroGroup Laminations S.p.A.

EuroGroup to optimise its financial structure, making it more efficient by centralising the management of credit lines and debt at the parent company level and increasing the average life of the latter.

SIGNIFICANT SUBSEQUENT EVENTS

On August the 1st, 2024, at the headquarters of the Ministry of Enterprise and Made in Italy in Rome, in the presence of Minister Adolfo Urso, EGLA signed a preliminary Memorandum of Understanding for a strategic partnership with China's Hixih Rubber Industry Group, a leader in automotive components for the automotive market in China. The agreement commits the parties to work on an industrial partnership, based on a joint venture under the control of EGLA, to further accelerate growth in the Chinese market with local manufacturers of electric cars, and also provides for the establishment of a new research and development center for innovative technologies in the Hixih Group's industrial area in Shandong, aimed at protecting intellectual property and supporting all co-development and partnership activities with local customers. Integrated in the same area there will be a new high-tech industrial plant dedicated to the production of motor cores for manufacturers of New Energy Vehicles, with investments that will also be supported also by dedicated incentive programs.

Furthermore, on August the 1st, 2024, the Group announced the acquisition of 40 percent of the share capital, and of the control, of the Indian company Kumar Precision Stampings, a leading manufacturer and distributor of stators and rotors for electric motors for various industrial and domestic applications, also active in the Transformer business, with a total investment of 19.9 million euros. Through this transaction, which will be completed by the end of 2024, EGLA will be able to further strengthen the Industrial Business Unit by entering the fast-growing local market, and also the transformer sheet business, thus expanding its customer portfolio and strengthening its global position in the industry. In the context of the transaction, a shareholders' agreement is also expected to be signed between the Company and Kumar's current shareholders, which will regulate, among other things, Kumar's governance following the completion of the transaction, in accordance with principles that will give EGLA control and subsequent consolidation, thanks to, among other things, EGLA's right to designate a majority of the members of the board of directors.

BUSINESS OUTLOOK

Given the evolution observed in the dynamics of the two business segments, the organic targets for both 2024 and for the mid-term are confirmed.

***

Pursuant to paragraph 2 of Article 154-bis of the Consolidated Finance Act, the manager in charge of preparing the company's accounting documents, Matteo Perna, declares that the accounting information contained in this press release corresponds to the documented results, books and accounting records.

***

The income statement, balance sheet and financial position information was prepared in accordance with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and endorsed by the European Union. In this document, in addition to the financial measures envisaged by International Financial Reporting Standards (IFRS), a number of measures derived from the latter are presented even though they are not envisaged by IFRS (Non-GAAP Measures) in line with ESMA's guidelines on Alternative Performance Indicators (ESMA/2015/1415 Guidelines, adopted by Consob with Notice no. 92543 of 3 December 2015) published on 5 October 2015. These measures are presented in order to enable a better assessment of the Group's operating performance and should not be regarded as alternatives to IFRS.

***

This document contains forward-looking statements relating to future events and future operating, economic and financial results of EuroGroup Laminations. These forward- looking statements have, by their nature, an element of risk and uncertainty because they depend on the occurrence of future events and developments. Actual results may

EuroGroup Laminations S.p.A.

therefore differ materially from those disclosed due to a variety of factors, most of which are beyond the control of EuroGroup Laminations.

***

ATTACHMENTS: The Consolidated Statement of Financial Position, Income Statement, and Cash Flow Statement as of 30 June 2024 are attached to this press release.

***

The press release is available on the Group's website https://www.euro-group.it/in the Investors/Press Releases section, as well as on the authorized storage device www.1info.it

***

The presentation summarising the key figures for 1H 2024 will be made available on https://www.euro-group.it/in the Investor Relations/Presentation section, in support of the call with financial analysts and investors scheduled for today, 2 August 2024 at 11:00 AM.

FOR FURTHER INFORMATION

EUROGROUP LAMINATIONS - INVESTOR RELATIONS

Matteo Picconeri | H e a d o f Investor Relations | [email protected]

PRESS OFFICE | COMMUNITY - COMMUNICATION ADVISORS

Giulia Polvara | [email protected]| T. +39 334 2823 514

Valeria Longo | [email protected]| T. +39 351 1410 677

ABOUT EGLA

EuroGroup Laminations is a world leader in the design, production and distribution of the motor core (stators and rotors) for electric motors and generators. The Group's business is organized along two segments: (i) EV & AUTOMOTIVE, which designs and produces the motor core of electric motors used in electric vehicle traction, as well as a wide range of non-traction automotive applications; and (ii) INDUSTRIAL, which designs and manufactures products used in various applications including among others industrial applications, home automation, HVAC equipment, wind energy, logistics and pumps. With registered office in Baranzate (MI), EuroGroup Laminations recorded revenues of approximately € 836 million in 2023, currently has a workforce of approximately 3,000 employees, 8 production plants in Italy and 6 abroad (2 in Mexico, 2 in China, 1 in the United States and 1 in Tunisia) and an Order Book for the EV & AUTOMOTIVE segment with an estimated value of approximately € 6.1 billion, and a pipeline of orders under discussion at approximately € 5.1 billion.

EuroGroup Laminations S.p.A.

Consolidated Statement of Financial Position as of the 30th June 2024

						of which with	31 December		of which with
	(Amounts in thousands of Euro)		30 June 2024			related		related
						2023
						parties		parties

Goodwill	10,543				10,543
Intangible assets	7,202				7,517
Tangible assets	311,878				269,341
Rights of use	66,272	25,291		61,122		29,706
Non-current financial assets and receivables	4,184				3,649
Deferred tax assets	18,551				20,810
Other non-current assets	2,478				2,241
Total non-current assets	421,108				375,223
Inventories	389,568				357,044
Trade receivables	162,508	37	117,544		150
Cash and cash equivalents	255,649				204,836
Other current assets and receivables	50,640				66,710
Current financial assets and receivables	16,171				50,736
Tax receivables	2,905				3,188
Total current assets	877,441				800,058
TOTAL ASSETS	1,298,549				1,175,281
Share capital	6,112				6,112
Share premium reserve	270,288				270,288
Other reserves	(12,077)				(4,016)
Retained earnings	160,626				151,966
Total Group's equity	424,949				424,350
Total equity of third parties	36,247				34,837
Total equity	461,196				459,187
Non-current financial liabilities	251,146				167,589
Non-current financial liabilities from rights of	43,137	22,608		40,117		26,888
use

Employee benefits	4,637	131		4,657		119
Provisions for risks and charges	526				637
Deferred tax liabilities	15,838				17,811
Other non-current liabilities	6,981				6,802
Total non-current liabilities	322,265				237,613
Current financial liabilities	176,963				147,303
Current financial liabilities from rights of use	11,072	3,587		11,178		3,518

Trade payables	295,609	490		295,448		1,448
Tax liabilities	2,853				999
Other current liabilities	28,591	1,079		23,553		586
Total current liabilities	515,088				478,481
TOTAL LIABILITIES AND SHAREHOLDERS'	1,298,549				1,175,281
EQUITY

EuroGroup Laminations S.p.A.

Consolidated Income Statement for the six months ended on the 30th June 2024

			30 June			of which with			of which with
	(Amounts in thousands of Euro)						30 June 2023	related
		2024			related parties
								parties

Revenues	422,468	163		453,804		70
Other revenues and income	4,851				1,718
Changes in inventories of finished and semi-	3,680
finished products			3,970

Raw material costs	(264,708)				(295,255)
Costs for services	(53,088)	(1,340)		(50,370)		(1,715)
Personnel costs	(61,660)	(2,263)		(55,353)		(1,820)
Other operating expenses	(1,383)	(2)		(1,479)
Depreciation and amortisation	(20,084)	(1,912)		(14,999)		(1,834)
Operating profit	30,076				42,036
Financial expenses	(12,988)	(290)		(10,554)		(274)
Financial income	3,749			1,788		12
Exchange gains (losses)	3,309			(4,923)
Profit before tax	24,146				28,347
Taxes	(6,224)				(9,595)
Profit for the period	17,922				18,752
Profit attributable to the Group	15,726			16,947
Profit attributable to third parties	2,196			1,805
Earnings per share	0.10			0.11

EuroGroup Laminations S.p.A.

Consolidated Cash Flow Statement for the six months ended on the 30th June 2024

(Amounts in thousands of Euro)

30 June 2024

30 June 2023

Profit for the period	17,922		18,752
Income taxes	6,224		9,595

Depreciation and amortisation	20,084		14,999
Difference between pension contributions paid and pension			(178)
charges	281

Financial income	(3,749)		(1,788)
Financial expenses	12,988		10,554
Capital (gains)/losses from the disposal of tangible assets	(141)		(97)
Net changes in provisions for risks and charges	76		(343)
Provision for bad debts	391		427
Inventory write-down	1,367		(52)
Share-based compensation expenses	190		51
Cash flow before changes in Net Working Capital	55,633		51,920
(Increase)/decrease in trade receivables	(45,355)		(13,788)
(Increase)/decrease in inventories	(33,891)		(43,036)
Increase/(decrease) in trade payables	161		(40,154)
Increase/(decrease) in tax payables	9,788		13,179
(Increase)/decrease in other receivables	6,123		5,679

Increase/(decrease) in other payables	4,392		5,190
Cash flow after changes in Net Working Capital	(3,149)		(21,010)
Income taxes paid	(3,253)		(2,277)
Cash flow from operating activities (A)	(6,402)		(23,287)
(Investments) in tangible assets	(52,282)		(50,420)
Realization price, or reimbursement value, of tangible assets	141		160
(Investments) in intangible assets	(1,159)		(531)
(Investments)/divestments in current financial assets	34,607		(58,658)
(Investments) in other medium or long-term assets	2,450		-
Interest collected	2,104		1,031
Dividends received	28		-
Cash flow from investing activities (B)	(19,011)		(108,418)
Equity increase	-	236,276
Purchase of treasury shares	(10,873)		-
New bank loans and other lenders	99,785		8,203
Repayment of bank loans and other lenders	(20,974)		(16,155)
Increase in current financial liabilities	76,386		30,477
Repayment of current financial liabilities	(39,150)		(66,676)
Repayments of financial liabilities arising from rights of use	(5,499)		(4,955)
Dividends paid	(8,018)		-
Interests paid	(11,679)		(9,664)
Cash flow from financing activities (C)	79,978		177,506
Increase (decrease) in cash and cash equivalents (A+B+C)	54,565		45,801
Cash and cash equivalents at the beginning of the period	204,836		116,503
Effect of changes in exchange rates	(3,752)		2,441
Cash and cash equivalents at the end of the period	255,649		164,745

EuroGroup Laminations S.p.A.