Business
STS : Annual financial report 2024
STS : Annual financial report
About this update from Sts Group Ag
Annual report 2024 This is a translation of the German "Geschäftsbericht 2024". Sole authoritative and universally valid version is the German language document. STS Group CONTENTS AT A GLANCE 1 COMPANY PROFILE 2 REPORT OF THE SUPERVISORY BOARD 3 SUMMARISED MANAGEMENT REPORT AND GROUP MANAGEMENT REPORT 11 CONSOLIDATED FINANCIAL STATEMENTS 70 CONSOLIDATED INCOME STATEMENT 70 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 71 CONSOLIDATED BALANCE SHEET AS AT 31.12.2024 72 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 74 CONSOLIDATED CASH FLOW STATEMENT NG 75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 76 SEGMENT REPORTING 76 GENERAL INFORMATION 80 Basics of the constellation 80 Consolidation principles 81 Currency conversion 83 NOTES TO THE CONSOLIDATED INCOME STATEMENT 86 Sales revenue 86 Changes in inventories 86 Other income 87 Cost of materials 87 Personnel expenses 88 Other expenses 89 Depreciation and amortisation 90 Financial income and financial expenses 90 Income taxes 91 Earnings per share 92 NOTES TO THE CONSOLIDATED BALANCE SHEET 93 Intangible assets 93 Property, plant and equipment 94 Other non-current and current financial assets 95 Non-current and current income tax receivables 95 Other non-current and current non-financial assets 96 Deferred tax assets and liabilities 96 Inventories and advance payments on inventories 99 Contract assets and contract liabilities 100 Trade receivables and other receivables other receivables 100 Cash and cash equivalents and restricted cash 102 Equity capital 102 Non-current and current financial liabilities 110 Provisions 112 Income tax liabilities 115 Other current liabilities 116 Other information 117 Notes to the cash flow statement 117 Further disclosures on financial instruments and financial risk management 118 Capital management 126 Contingent liabilities and other obligations 126 Relationships with related companies and persons 127 Executive Board and Supervisory Board 132 Additional mandatory disclosures according to HGB 136 Accounting and valuation methods 137 Changes in accounting and valuation methods 137 MEASUREMENT AT FAIR VALUE IN ACCORDANCE WITH IFRS 13 138 INTANGIBLE ASSETS 139 FACILITIES 140 IMPAIRMENTS 141 ACCOUNTING FOR LEASES 143 CASH AND CASH EQUIVALENTS 145 FINANCIAL INSTRUMENTS 145 INVENTORIES AND PREPAYMENTS MADE ON INVENTORIES 150 CONTRACT ASSETS AND CONTRACT LIABILITIES 150 PENSIONS AND SIMILAR OBLIGATIONS 150 OTHER PROVISIONS 151 REALISATION OF INCOME AND EXPENSES 151 Other income and expenses 153 INCOME TAXES 153 GOVERNMENT GRANTS 155 SIGNIFICANT ESTIMATES AND JUDGEMENTS 155 EVENTS AFTER THE BALANCE SHEET DATE 159 OPINION OF THE INDEPENDENT AUDITOR 161 AT A GLANCE RESULTS OF OPERATIONS EUR million 2024 2023 Revenues 311.1 277.9 Segment Plastics 247.9 203.1 Segment China 44.1 51.0 Segment Materials 34.5 38.5 Corporate/Consolidation -15.2 -14.7 EBITDA 23.0 20.5 BALANCE SHEET KEY FIGURES EUR million 2024 2023 Equity 45.0 46.6 Capital ratio 19.5% 17.5% Total assets 230.8 266.5 Cash and cash equivalents (unrestricted) 25.6 39.3 Net Financial Debt 1 48.8 30.3 1 Net financial debt = Bank liabilities + Liabilities from loans + Leasing liabilities + Loans from third parties - Cash and cash equivalents - Loans granted to related parties In the 2024 financial year, the Group generated sales of EUR 311.1 million and an EBITDA margin of 7.4 %. The sales growth of 12.0 % is primarily attributable to the European units and the start-up of the new plant in the USA. The Plastics segment thus achieved growth of 22.1 % , while the China and Materials segments recorded a decline of 13.6 % and 10.6 % respectively. COMPANY PROFILE STS Group AG, https://www.sts.group (ISIN: DE000A1TNU68), is a leading systems supplier for the automotive industry. The group of companies employs more than 1,400 people worldwide and generated revenue of EUR 311.1 million in the 2024 financial year. At its 12 plants and three development centres in France, Germany, Mexico, China and the USA, STS Group ("STS") produces and develops injection-moulded plastics and components made from sheet moulding compounds (SMC), such as rigid and flexible vehicle and aerodynamic trim, holistic interior systems, as well as lightweight and battery components for electric vehicles. STS is a technological leader in the production of plastic injection moulding and composite components. STS has a large global footprint with plants on three continents. The customer portfolio includes leading international manufacturers of commercial vehicles, passenger cars and electric vehicles. REPORT OF THE SUPERVISORY BOARD Dear Shareholders, STS Group recorded a successful business performance in the 2024 financial year despite a more challenging market environment with regional declines and the social, geopolitical and economic uncertainties that continue to exist worldwide. Following the successful integration into the Adler Pelzer Group and the restructuring measures implemented in 2023, the Supervisory Board's activities in 2024 focused in particular on the long-term and sustainable orientation of the STS Group, especially the expansion of the US business. Monitoring and consulting in continuous dialogue with the Executive Board In the 2024 financial year, the Supervisory Board of STS Group AG performed the advisory and supervisory duties incumbent upon it in accordance with the law, the Articles of Association, the Corporate Governance Code and the rules of procedure with great care. The Supervisory Board advised the Executive Board on all matters relating to company management and supported and monitored the management and development of the company. In addition to the strategic focus, the Supervisory Board's advisory and monitoring tasks in the 2024 financial year continued to be strongly focused on the macroeconomic challenges. As part of a close working relationship, the Management Board reported regularly, promptly and comprehensively to the Supervisory Board in writing, by telephone and in personal meetings on the situation and prospects, the principles of business policy, the company's profitability and the company's key business transactions. In addition, the Supervisory Board was also in personal dialogue with the Management Board outside of the scheduled meetings and was involved in discussions and decision-making on issues of fundamental importance. The Chairman of the Executive Board informed the Chairman of the Supervisory Board immediately of all important events that were of material significance for the assessment of the situation and development as well as for the management of the company. All Supervisory Board members were comprehensively informed of these matters by the Chairman of the Supervisory Board at the following meeting at the latest. In addition, the entire Supervisory Board was continuously informed by the Executive Board about relevant developments and transactions requiring approval. The Supervisory Board was directly and promptly involved in all decisions of fundamental importance to the company or in which it was required to be involved by law, the articles of association or the rules of procedure. In urgent cases, the Board also had the option of passing resolutions by written circular if required. Thanks to the regular, prompt and detailed information provided by the Executive Board, the Supervisory Board was always able to fulfil its monitoring and advisory function. The Supervisory Board is therefore of the opinion that the Executive Board acted lawfully, properly and economically in every respect. Meetings and key topics discussed by the Supervisory Board In the reporting year, the Supervisory Board held a total of four meetings, which were held as video or telephone conferences, to discuss the fulfilment of its duties. The Supervisory Board was fully represented at all meetings. The Supervisory Board also complied with its statutory duty to approve the catalogue of transactions of STS Group AG requiring approval outside the regular Supervisory Board meetings by means of written circular resolutions. In the following table, the attendance of Supervisory Board members at Supervisory Board and committee meetings is disclosed in individualised form: Attendance of Supervisory Board members Supervisory Board Meeting Committee meeting AR-Sitzung Ausschuss-Sitzung Paolo Scudieri Chairman of the Supervisory Board Pietro Lardini Deputy Chairman of the Supervisory Board Pietro Gaeta virtual / phone Circulation Participation in % virtual / phone Circulation Participation 4 3 100 4 3 100 4 3 100 in % - 1 100 - 1 100 - 1 100 The Executive Board participated in the Supervisory Board and committee meetings; however, the Supervisory Board also met regularly without the Executive Board. At the meetings, the Supervisory Board regularly received reports from the Executive Board in accordance with Section 90 (1) sentence 1 no. 1-3 AktG on the intended business policy, profitability and the course of business, including the market and competitive situation, and discussed these in detail. In addition, the Management Board reported on transactions that could be of significant importance for the profitability or liquidity of the company and/or the Group in accordance with Section 90 (1) sentence 1 no. 4 AktG. Finance and controlling, risk management and compliance, sales and marketing, production, quality management, human resources, research and development as well as mergers and acquisitions were also regular topics of discussion at the plenary sessions. In addition to preparing for the Annual General Meeting on 13 June 2024, the Supervisory Board dealt with STS Group's strategic corporate planning. In this context, the current economic development, possible acquisitions and cooperations as well as future market prospects were examined in detail. Another focus of the Supervisory Board's deliberations in the 2024 financial year continued to be the consistent realisation of synergy effects at the international locations of STS Group AG in conjunction with the Adler Pelzer Group. As a result of these activities, the improvement of cost structures at the locations was also discussed, reviewed and scrutinised. This was particularly the case in light of the challenging market environment and the fact that the reporting year was influenced by start-up costs for the new plant in the USA. The Supervisory Board also dealt intensively with the rather weak development of the markets, particularly the market in China, due to the many global uncertainties. The STS Group is examining the possible construction of a plant in Taixing in cooperation with the Chinese government and the main shareholder Adler Pelzer Group, among others. Part of the new plant will be used to manufacture SMC products specifically for electric vehicles. Production at the plant is scheduled to start in January 2026. During the year, the Supervisory Board received regular reports on the production progress of the new plant in the USA. The new plant was completed at the end of 2023 and started series production a few months ago. The processes for improving series production are currently being optimised and further projects are being negotiated with new customers. At its meetings, the Supervisory Board always dealt with securing STS Group's liquidity as part of the necessary strategic measures and monitored the financial, earnings and liquidity forecast of the company and its subsidiaries. The Supervisory Board also reviewed and discussed the financial planning for the 2025 financial year presented by the Executive Board as well as the medium-term planning for the company's further development. Report on the work of the Committee The primary task of the Audit Committee is to prepare decisions and topics for the plenary meetings. The tasks of the Audit Committee include monitoring the accounting process, the effectiveness of the internal control system, the risk management system and the internal audit system as well as the audit of the financial statements, in particular the selection and independence of the auditor, the quality of the audit and the additional services provided by the auditor. Due to the size of the Supervisory Board, the Supervisory Board and the Audit Committee are composed of the same members. In the interests of good corporate governance, the Chairman of the Supervisory Board is not also the Chairman of the Audit Committee. There are currently no other committees. Corporate Governance and Declaration of Conformity The implementation of the German Corporate Governance Code is an integral part of the meetings of the Supervisory Board of STS Group AG. In 2024, the Supervisory Board and Executive Board again discussed the recommendations and suggestions of the Code in the version dated 28 April 2022 in detail. On this basis, the Supervisory Board adopted the declaration of compliance in accordance with Section 161 AktG by way of circulation on 23 February 2024, which is permanently available to our shareholders on the company's website. In addition to the declaration of compliance, the corporate governance declaration is also available for inspection by our shareholders on the STS Group AG website. There were no conflicts of interest for members of the Management Board or Supervisory Board in the reporting period. Audit of the annual and consolidated financial statements for the 2024 financial year PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, was appointed as auditor and Group auditor for the financial year from 1 January to 31 December 2024 by resolution of the Annual General Meeting on 13 June 2024 and commissioned accordingly by the Chairman of the Supervisory Board. The Supervisory Board satisfied itself of the auditor's independence before appointing the auditor. The audit covered the annual financial statements of STS Group AG for the financial year from 1 January to 31 December 2024, which were prepared by the Executive Board in accordance with the provisions of the German Commercial Code (HGB), the consolidated financial statements for the financial year from 1 January to 31 December 2024, which were prepared by the Executive Board in accordance with Section 315e HGB on the basis of the International Financial Reporting Standards (IFRS), and the management report of STS Group AG, which was prepared in accordance with the requirements of Section 289a HGB and Section 315a HGB and combined with the Group management report of STS Group. At the end of the audit, PricewaterhouseCoopers GmbH issued an unqualified audit opinion on the annual financial statements, the consolidated financial statements and the summarised Group management report of STS Group and STS Group AG. The audit revealed that the Executive Board of STS Group AG has taken the measures required by Section 91 (2) AktG to establish an early risk detection system and an internal control system (ICS) in an appropriate form and that the systems are suitable for recognising developments that could jeopardise the company's continued existence at an early stage. The auditor reported to the Supervisory Board on the progress and key findings of its audits and was available to answer questions, discuss them and provide additional information. He took part in the Supervisory Board's deliberations on the annual and consolidated financial statements and in a preliminary meeting of the Supervisory Board to adopt the annual and consolidated financial statements and approve the consolidated financial statements on 28 March 2025. The annual financial statements, the consolidated financial statements, the combined management report and Group management report, the non-financial statement, the remuneration report, the dependent company report and the auditor's report on its audit were available to all Supervisory Board members for approval in good time before the Supervisory Board meeting on 31 March 2025 to approve the financial statements. At its balance sheet meeting, the Supervisory Board discussed the financial statements of STS Group AG and STS Group as well as the summarised Group management report and the remuneration report. The discussion and review of the non-financial Group report in accordance with Section 315b (1) of the German Commercial Code (HGB) were also the subject of this meeting. The committee also scrutinised the dependent company report prepared by the Management Board, the accounting process and the company's risk management system, as well as the effectiveness and appropriateness of the internal control systems and compliance with integrity in financial reporting. After detailed discussion of the audit reports on the separate and consolidated financial statements as at 31 December 2024, the combined management report of the company and the Group and the remuneration report, the Supervisory Board raised no objections. At its Supervisory Board meeting on 31 March 2025, the Supervisory Board approved the annual financial statements of STS Group AG prepared by the Executive Board and the consolidated financial statements of STS Group for the 2024 financial year, including the combined management report and Group management report. The 2024 annual financial statements are thus adopted (Section 172 sentence 1 AktG). Dependency report Furthermore, at the meeting on 31 March 2025, the Supervisory Board examined the report of the Executive Board of STS Group AG pursuant to Section 312 AktG on relationships with affiliated companies for the 2024 financial year (dependent company report). The report on relationships with affiliated companies prepared by the Executive Board in accordance with Section 312 (1) AktG has also been audited by the auditor. The auditor has issued the following unqualified audit opinion in accordance with Section 313 (3) AktG: "Following our mandatory audit and assessment, we confirm that the actual disclosures in the report are correct, the consideration paid by the company for the legal transactions listed in the report was not unreasonably high or disadvantages were compensated." The audit report on the dependent company report was submitted to the Supervisory Board in good time before its meeting to approve the financial statements. The auditor attended this meeting of the Supervisory Board and reported on the key findings of its audit of the dependent company report. The Supervisory Board has reviewed the dependent company report of the Executive Board and the audit report of the auditor and concurs with the result of the audit by the auditor. Following the final result of its own examination, the Supervisory Board approves the dependent company report of STS Group AG. Following the final result of the audit, the Supervisory Board has no objections to the declaration of the Executive Board at the end of the dependent company report. Dear Shareholders, The efficiency measures introduced last year led to increased profitability within the STS Group. As a result, the realisation of synergies between the STS Group and Adler Pelzer Group continued in the 2024 financial year. This forms the basis for the continuous improvement of cost structures within the Group. In addition, market opportunities can be proactively shaped within this group of companies. The STS Group continued to focus on further expansion and development in Europe and China, but above all in North America, in 2024. In this respect, we are particularly pleased that the ramp-up of our new production site in the USA has progressed according to plan and that the first sales have already been recorded in the 2024 financial year. Uncertainties arising from geopolitical unrest and global economic uncertainties have unfortunately become the new normal, which are integrated into the day-to-day operations of the Management Board and Supervisory Board and can have an unforeseen impact on business development. The Supervisory Board would like to express its thanks and appreciation to the Executive Board and the employees of all Group companies for their personal commitment and the work they performed in 2024. Hagen, 31 March 2025 For the Supervisory Board Paolo Scudieri Chairman of the Supervisory Board SUMMARISED MANAGEMENT REPORT AND GROUP MANAGEMENT REPORT BASIS OF THE GROUP BUSINESS MODEL STS offers its customers a wide range of system solutions and components for the interior and exterior panelling of vehicles. STS components enhance the visual appearance of the vehicle design, contribute to the aerodynamics of the vehicle and ensure a significant reduction in weight thanks to their lightweight construction. Due to its high level of vertical integration, STS is able to map the complete manufacturing process of each component from the idea to the finished product. As a one-stop-shop provider with many years of expertise, the Executive Board sees a clear competitive advantage. Production facilities and logistics are mainly designed for small and medium-sized series, as is typical for light to heavy commercial vehicles, but also for special models and electromobility or weight-optimised plastic solutions, as is increasingly the case in the passenger car sector. The STS production facilities are located close to the respective customer plant sites. This makes all aspects of co-operation simpler, more efficient and more sustainable. Headquartered in Germany, the Group operates a global network in all key markets. At the end of the financial year, STS had twelve plants in five countries on three continents. STS combines the production technologies of injection moulding and hot and compression moulding of composites. It manufactures the semi-finished products and composite materials itself and can therefore react flexibly to customer-specific requirements. The Group produces parts and systems for trucks, commercial vehicles and cars. Its customer base includes well-known commercial vehicle and car manufacturers, including many market leaders. Numerous manufacturers also rely on STS Group's expertise in the rapidly growing electric vehicle market. The Group has three research and development centers, two in France and one in China, for rapid product development and innovation. BUSINESS ACTIVITY STS Group's business activities are managed partly according to product types and partly according to geographical aspects. This principle is reflected in the following segmentation of business activities: Plastics: This segment manufactures a wide range of exterior body parts and interior modules for trucks, other commercial vehicles and passenger cars. It includes hard trim products made from injection moulding and composite materials such as SMC (Sheet Moulding Compound), glass fibre-reinforced thermoset semi-finished products. The semi-finished product plays an important role in automotive production thanks to its numerous positive properties, such as high rigidity and heat resistance. It often replaces metal structural parts and makes an important contribution to covering battery systems in electric vehicles. The Plastics segment has production facilities in Europe and Mexico, as well as the new plant in the USA. Customers in North America are supplied from Mexico and the USA. Hard trim systems are used in commercial vehicles, e.g. for exterior parts (front modules, roof modules and other aerodynamic panelling) or interior modules ("bunk box" under the driver's bed and shelf elements) and in passenger cars, e.g. for structural parts (tailgate). The segment also has its own capacities for painting plastics. China: Activities in the Chinese market are bundled in this segment. These include supplying customers with plastic parts for the exterior panelling of vehicles, primarily for the cabins of commercial vehicles, but increasingly also for passenger cars. The product range offers solutions and components for commercial vehicles such as bumpers, front panelling, deflectors, roofs, mudguards and entrances as well as parts for passenger cars, such as battery covers for electric vehicles, through to complex structural parts, such as tailgates for SUVs. Composite moulding processes and injection moulding technology are used here. The segment also has its own capacities for painting plastics. Materials: This segment comprises the development and production of semi-finished products (Sheet Molding Compound - SMC), fibre molding compounds (Bulk Molding Compound - BMC) and advanced fibre molding compounds (Advanced Molding Compound - AMC). The semi-finished products are used both within the Group for hard trim applications and supplied to external third parties. As part of the development of these base materials, it is already possible to influence key parameters of the end product. In December 2016, the Group acquired the truck business of French automotive supplier Mecaplast France SAS (now Novares France), thereby entering the hard trim business. With the acquisition of the commercial vehicle supplier business of the Plastic Omnium Group in June 2017, STS significantly expanded its product portfolio with semi-finished composite products and composite components for exterior parts for truck cabins and light commercial vehicles as well as structural parts for passenger cars (tailgate). In the fourth quarter of 2018, the Group established a new headquarters in Wuxi for the Chinese market, which also bundles local development activities. In April 2019, STS opened its third production facility in China in Shiyan. The Group is also represented in Qingdao and Jiangyin. As part of its growth strategy for North America, STS opened its first production site in the USA in the city of Salem in the US state of Virginia in March 2023. The first prototypes rolled off the production line in 2023 and series production was ramped up in the second half of 2024. The plant will be operated as a separate company STS Group North America Inc. as a subsidiary of STS Group AG and within BU Plastic and will supply the truck assembly of one of the larger commercial vehicle manufacturers as well as other truck and car plants throughout the Midwest and Southeast of the USA. The STS Group is pursuing the strategic goal of further expanding its promising lightweight solutions for commercial and electric vehicles. As the majority shareholder, the Adler Pelzer Group1 was able to lay the essential foundations for expanding the STS Group's position as one of the leading system suppliers in the automotive industry, even in these challenging times. Thanks to the Adler Pelzer Group's existing presence in North America, profitability in Mexico has been significantly strengthened and expansion in the US market has also been driven forward. As of 31 December 2024, Adler Pelzer Group holds 74.42 % of the shares in STS Group AG The Adler Pelzer Group refers to Adler Pelzer Holding GmbH and all of its subsidiaries. GROUP STRATEGY AND MANAGEMENT GOALS AND STRATEGY STS Group AG is one of the leading suppliers of components and systems for the commercial vehicle and automotive industry. The aim is to expand this position. The focus is on components made from composite materials and injection moulding, from the initial idea to the finished product. The company's strategy continues to focus on the future markets of lightweight components and e-mobility. STS products are designed to make vehicles fit for the future by making a significant contribution to reducing weight and thus CO 2 emissions. STS products also improve the look, feel and functionality of vehicles. The STS Group's growth strategy is based on process optimisation through increased automation of manufacturing processes on the one hand, but also on addressing technological trends such as autonomous driving and e-mobility on the other. STS also supports customers in the commercial vehicle sector in the development of more CO 2 -efficient and innovative trucks. In order to expand its competitive position and achieve sustainable profitability, the Group focuses on four strategic pillars: "market leadership", "technology leadership", "customer proximity" and "operational excellence". CONTROL SYSTEM All business units and subsidiaries report monthly on their earnings, financial position and net assets, which are included in the company's half-year and annual reports. In addition, the business units provide a monthly assessment of current and expected business development and the business unit managers present monthly variance analyses of certain key operating figures (including productivity, absenteeism rates, rejects) to the Executive Board. In addition, the following components essentially ensure compliance with the internal control system: Regular Management Board and Supervisory Board meetings Regular shareholder meetings at the subsidiaries Risk and opportunity management Liquidity planning Management reporting FINANCIAL AND NON-FINANCIAL PERFORMANCE INDICATORS The Group's key financial performance indicators include, in particular, sales, revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA). EBITDA is used to measure and assess operating performance. The reconciliation of EBITDA to earnings before taxes is as follows: EUR million 2024 2023 EBITDA Group 23.0 20.5 Depreciation and amortization expenses -15.5 -13.8 Earnings before interest and income taxes (EBIT) 7.5 6.8 Interest and similar income 0.5 0.2 Interest and similar expenses -7.6 -6.5 Finance result -7.1 -6.3 Earnings before income taxes 0.4 0.5 The STS Group does not have any significant non-financial performance indicators that are used for internal management or are relevant to remuneration. EMPLOYEES Motivated employees expect an attractive and fair working environment in which they can work independently, contribute their ideas and develop further. The key to successful and respectful cooperation is the joint development of an STS culture and its anchoring in everyday interaction. STS continues to attach great importance to accident prevention and health promotion. This is reflected, among other things, in accident prevention measures such as employee training, conducting safety audits, sharing best practices across locations, improved process monitoring and technical measures for machine safety. STS promotes health through a variety of local initiatives: there are free vaccinations for employees, cancer screenings and training courses on mindfulness. In addition, the external audits of operational measures addressed in the previous year are being continued. The main individual companies are certified in accordance with ISO 45001 (occupational health and safety). Due to the wide range of HR requirements and laws, HR work is managed at country level and implemented locally as required. In order to strengthen development and career prospects, managers hold regular appraisal interviews with employees to discuss the issue of future opportunities within and outside the company. The results of these discussions form the basis for individual development plans and the further training measures derived from them. The results of the employee appraisals are supported by regular performance reviews, which are intended to help harmonise the employees' self-assessment and external assessment and define appropriate measures to develop their skills. As of 31 December 2024, the Group employed a total of 1,402 people (2023: 1,392) RESEARCH AND DEVELOPMENT Innovative products are a cornerstone of the Group's strategy and should contribute to achieving the medium-term goals of profitable and sustainable growth. This mainly concerns the STS plants in France. The STS Group's strategy was to use the available resources of the development centers to successfully implement innovation programs. Our three research and development centers in France and China continue to pool their expertise and exploit synergy effects. Finite element analyses and thermoplastic rheology are carried out internally by the Chinese development center in Wuxi, and the rheology for SMC composites is developed by the French team. This strengthens our simulation capabilities. SMC rheology simulation is now being used to increase the efficiency of material/tool/process development and better solve problems. Further successful projects for new product lines were realised thanks to R&D activities: The R&D department for sustainability for SMC, can now propose the introduction of 25 % recycled CaCO₃ material based on shell waste from the food industry and 15 % bio-resin/LPA consisting of bio-based components for the development of new materials in the tender phase. Development of an automated process which is able to position screw inserts in the inner part of the front panel using a special tool design and process. IMC process (In Mould Coating) with a large plate, which enables a thin layer of resin to be sprayed onto the SMC surface in order to achieve an optimum surface after painting. Our R&D department is currently working on the following challenging topics: Recycling SMC parts at the end of their service life SMC integration of 10 % recycled material from painted SMC parts already validated for automotive parts SMC integration of 10 % recycled material from painted and bonded SMC parts: POC (proof of concept) validation in 2025 Process and cost efficiency of the battery cover Development of an interior module to increase driver comfort on board long-distance lorries Our vertical integration - materials are developed in-house - enables us to quickly turn ideas into opportunities. The expertise of the research and development team and our well-equipped development centers and prototyping facilities enable us to turn these new opportunities into innovative and reliable solutions. At the end of the year, 45 people were employed in the STS Group's research and development centers worldwide (compared to 40 in 2023). Development costs totaled EUR 5.4 million in the reporting period (2023: EUR 2.9 million). At EUR 3.4 million, non-capitalised development costs were significantly higher than in the previous year (2023: EUR 0.9 million). Development costs of EUR 2.0 million were capitalised in the reporting period (31 December 2023: EUR 2.0 million) and no amortisation was recognised. ECONOMIC REPORT MACROECONOMIC AND SECTOR-SPECIFIC FRAMEWORK CONDITIONS OVERALL ECONOMIC DEVELOPMENT GLOBAL ECONOMY WITH MODERATE GROWTH According to the Kiel Institute for the World Economy (IfW), the global economy continued to lack momentum in 2024. Geopolitical and trade conflicts as well as political events, such as the outcome of the US presidential election, proved to be persistent sources of uncertainty. After a positive start to the year, the economy cooled increasingly as the year progressed. Continued strong growth in the USA was offset by only moderate growth momentum in China and Europe. The services sector continued to drive growth, while the manufacturing industry was burdened for large parts of the year by unfavourable financing conditions as a result of the ongoing restrictive monetary policy. Although the European and US Federal Reserve, for example, have now initiated a turnaround in interest rates, global demand for consumer goods and companies' willingness to invest remained subdued and had a dampening effect on industrial production. Although global trade developed favourably, the weak growth in the manufacturing sector meant that this too provided little impetus for the global economy. According to the IfW, global production once again only increased by 3.2 %, as in the previous year. The IfW is forecasting slightly weaker growth of 3.1 % for 2025. 2 DECLINING GROWTH MOMENTUM IN CHINA The negative factors for the Chinese economy, above all the unresolved crisis in the property sector, consumer uncertainty and the high level of public debt in some regions, have hardly changed in 2024. The Chinese central government attempted to counter these with monetary and fiscal policy measures, although their ultimate success is still uncertain. There was a slight upturn in the economy at the end of the year, although this also included anticipatory effects as a result of the trade policy plans of the new US President Donald Trump. According to the IfW's winter forecast 2024, gross domestic product in the People's Republic of China will therefore only increase by 4.9 % in 2024, following growth of 5.6 % in the previous year. Growth of just 4.4 % is forecast for 2025.3 SLIGHT RECOVERY IN THE EUROZONE The eurozone overcame the previous year's stagnation in 2024, but is still a long way from a dynamic upturn. The IfW even expects growth to weaken again by the end of the year. In view https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ of falling inflation and rising wages, positive impetus came primarily from private consumption, while the willingness to invest still suffered from the long period of unfavourable financing conditions. This can also be seen when looking at the individual countries, where service and tourism-oriented economies in particular developed positively, while production-intensive countries, such as Germany, once again showed weakness.4 Overall, the IfW assumes an increase in gross domestic product within the currency union of 0.8 % in 2024, following an increase of 0.5 % in 2023.5 Growth in the eurozone is expected to accelerate minimally to 0.9 % in 2025, followed by growth of 1.1 % in 2026.6 The protectionist trade policy plans of the new US President Donald Trump in particular pose major risks. Consumer prices rose by an average of 2.3 % in 2024, once again significantly slower than the previous year's 5.47 The unemployment rate averaged 6.4 % in 2024. 8 MEXICO'S GROWTH SLOWS SIGNIFICANTLY According to GTAI (Germany Trade & Invest), growth in the Mexican economy slowed significantly in 2024 compared to the same period of the previous year, coming in at just 1.6 %. This is primarily due to the political situation in the country. For example, a highly controversial judicial reform was passed in September 2024, which critics believe jeopardises the separation of powers and legal certainty in the country. Companies are increasingly concerned about the power of the ruling Morena party and are reacting by holding back on investment. For example, foreign direct investment actually declined in the first half of 2024, although an increase had actually been expected due to the nearshoring trend.9 Investors' mistrust is also reflected in the performance of the local currency, which depreciated significantly over the course of the year.10 The manufacturing industry in particular performed negatively. Private consumption continued to increase, but the pace of growth slowed here too. Gross fixed capital formation benefited greatly from major government infrastructure projects. Foreign trade, particularly with the USA, also continued to develop positively with rising exports.11 However, in view of the protectionist trade policy statements made by the new US President Donald Trump, there were more and more question marks over the future nature of these trade relations. Donald Trump had announced that he would impose tariffs of 25 % on goods from Mexico. These were implemented at the beginning of March 2025, but were subsequently suspended again until 2 April. There is a risk that such tariffs will make products from Mexico more expensive and lead to a decline in demand. However, given the erratic decisions of the US President, future developments are difficult to predict. Further information on this can also be found in the risk https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.gtai.de/de/trade/mexiko-wirtschaft/wirtschaftsausblick https://www.fuw.ch/waehrung-mexikos-abwertung-974740103346 https://www.gtai.de/de/trade/mexiko-wirtschaft/wirtschaftsausblick report.12 Mexico continues to play an important role in the commercial vehicle sector. In 2023, the country was once again one of the leading producers13 of heavy trucks and was once again the largest exporter14 of trucks worldwide. This underlines the importance of the country for the industry and the STS Group. ROBUST US ECONOMY REMAINS THE PILLAR OF THE GLOBAL ECONOMY Supported by continued strong private consumption and despite the long period of restrictive monetary policy, the US economy remained an important pillar of the global economy in 2024. Overall, gross domestic product in the US grew by 2.8 %15 and thus only slightly slower than in the previous year (+2.9 %). The unemployment rate remained at a relatively low level of 4.0 % and private consumer spending once again recorded stable growth of 2.7 %16. Government spending, on the other hand, declined slightly.17 Although the expiry of government subsidy programs resulted in significantly lower growth in commercial construction, this was offset by an increase in residential construction. Fixed asset investments also developed correspondingly positively.18 https://www.tagesschau.de/wirtschaft/weltwirtschaft/mexiko-usa-zoelle-106.html https://www.oica.net/wp-content/uploads/Heavy-Trucks-2023.xlsx https://www.worldstopexports.com/exported-trucks-country/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-winter-2024-im-zeichen-wirtschaftspolitischer-unsicherheit-33587/ ECONOMIC DEVELOPMENT IN THE SECTOR Following the strong growth - due to pent-up demand following the Covid-19 pandemic - in 2023, market observers predicted a normalisation of the commercial vehicle markets and a decline in global sales figures of up to 10 % in 2024.19 In Europe in particular, restrictive monetary policy, weak consumer confidence and the uncertain macroeconomic environment caused hauliers to hold back on investment decisions. Supply chain problems have eased further in 2024 and only rarely cause disruption. Most truck manufacturers are reporting a normalisation of delivery times. According to the manufacturers' association ACEA, new registrations of medium and heavy-duty trucks in the EU fell by 6.3 %.20 In Germany, the decline was 6.9 % and in France 2.9 %, according to ACEA. In the USA, sales of corresponding vehicles were 4.8 % lower.21 In China, sales of commercial vehicles fell by 3.9 %22, with sales of heavy trucks declining by around 1 %.23 24 25 The stable sales of heavy trucks are due in particular to a strong December, which benefited from the expiry of the "scrappage scheme" introduced on 31 July 2023 on 31 December 2024. In Mexico, the commercial vehicle industry was not quite able to match the record figures of the previous year in 2024. Declining demand in key sales markets such as the USA, Colombia, Chile and Peru had a dampening effect. However, with a decline of 4.3 % to 213,241 vehicles produced, the Mexican commercial vehicle industry still achieved the second-best year in its history. 159,466 vehicles (-10 %) were exported. Domestic sales rose by a good 22 %, reaching a new record high of 67,704 units.26 BUSINESS PERFORMANCE Despite a more challenging market environment with regional declines, the STS Group recorded positive business development overall in the 2024 financial year. While the China and Materials segments were negatively impacted by the declining markets, the Plastics segment recorded a significant increase in sales. The segment benefited in particular from higher mould sales for newly launched customer projects. The new US plant, which ramped up as planned, also made a relevant contribution to sales for the first time, particularly from the realisation of customer tools. Overall, the expansion of the North American business is and remains highly relevant for the STS Group. The STS Group could therefore also https://www.spglobal.com/ratings/en/research/articles/241211-2025-global-outlook-for-heavy-duty-trucks-isn-t-rosy-13354457 https://www.acea.auto/cv-registrations/new-commercial-vehicle-registrations-vans-8-3-trucks-6-3-buses-9-2-in-2024/ https://wardsintelligence.informa.com/wi968224/us-bigtruck-sales-end-2024-with-12-decrease-2024-down-48 https://autonews.gasgoo.com/m/70035689.html https://www.steelorbis.com/steel-news/latest-news/heavytrucksalesin-china-up-516-percent-in-december-1373282.htm https://www.steelorbis.com/steel-news/latest-news/heavy-truck-sales-in-china-up-70-in-november-from-october-1368745.htm https://www.shacmaninternational.com/news/the-heavy-truck-industry-is-recovering-and-rising-steadily/ All information about Mexico: https://mexico-now.com/mexicos-heavy-vehicle-sales-increase-in-2024/ benefit from a revitalisation of the US market. In addition, a new order was won for the plant in Mexico, which will ensure high capacity utilisation there in the future. The efficiency measures introduced in 2023 had an impact in the 2024 financial year. As expected, the STS Group achieved an increase in sales in the high single-digit percentage range of 8.5 % in the 2024 financial year, adjusted for one-off effects of EUR 9.7 million, which are purely attributable to fixed cost reimbursements. Including the aforementioned one-off effects, sales were significantly higher than the previous year at EUR 311.1 million (2023: EUR 277.9 million). The EBITDA margin remains unchanged at 7.4 % . This corresponds to an increase in EBITDA from EUR 20.5 million to EUR 23.0 million. Sales, EBITDA and the EBITDA margin are therefore in line with the forecast issued on 28 March 2024 of sales growth in the high single-digit percentage range and EBITDA and an EBITDA margin in the stated range. STS Group has therefore performed successfully overall in a global economic environment that remains challenging in 2024. This is also reflected in the Group result, which improved to -0.6 million in the reporting year despite higher financial expenses (2023: -1.2 million).