Earnings call transcript: Semperit reports profit in Q4 2024, stock dips

Semperit, a leading industrial elastomer manufacturer, reported its Q4 2024 earnings on February 20, 2025, showcasing a notable turnaround from the previous year’s losses. According to InvestingPro data, the company maintains a GOOD financial health score with strong profitability metrics. Despite the positive financial results, the company’s stock experienced an 8.16% drop in after-hours trading, reflecting investor concerns over revenue shortfalls and future growth prospects. Analysis indicates the stock is currently undervalued based on InvestingPro’s Fair Value model.

[Want deeper insights? InvestingPro offers 6 additional key tips for Semperit, along with comprehensive financial analysis and real-time alerts.]

Key Takeaways

• Semperit achieved a profit of €11.5 million in 2024, reversing a €17 million loss in 2023.
• Revenue for 2024 remained flat, missing forecast expectations.
• The company’s stock fell 8.16% in after-hours trading following the earnings release.
• Strategic focus on niche, high-margin markets and cost reductions improved EBITDA by 21.1%.
• Future guidance projects operational EBITDA between €70-90 million for 2025.

Company Performance

Semperit demonstrated a strong recovery in 2024, transitioning from a net loss in 2023 to a profitable year. The company reported an EBITDA increase of 21.1%, driven by strategic cost reductions and a focus on high-margin engineered applications. Despite these improvements, revenue remained stagnant, highlighting challenges in market demand across key sectors such as construction and agriculture.

Financial Highlights

• Revenue: €1.31 billion, flat year-on-year.
• Earnings per share: €0.18, beating the forecast of €0.16.
• EBITDA: €84.9 million, a 21.1% increase from the previous year.
• Free cash flow nearly doubled to €45.8 million.
• Net debt reduced to €103 million, representing 1.2x EBITDA.

Earnings vs. Forecast

Semperit’s earnings per share surpassed analyst expectations, posting €0.18 compared to the forecasted €0.16, marking a positive surprise of 12.5%. However, revenue fell short of the €1.55 billion forecast, coming in at €1.31 billion. This revenue miss contributed to the negative market reaction despite the EPS beat.

Market Reaction

Following the earnings announcement, Semperit’s stock dropped 8.16% in after-hours trading, closing at €17.68. This decline reflects investor apprehension about the company’s ability to meet revenue expectations and sustain growth amid challenging market conditions. The stock remains volatile within its 52-week range of €14.13 to €22.07. Analyst consensus shows optimism with price targets ranging from €19 to €25, suggesting potential upside. The stock’s beta of 1.4 indicates higher volatility compared to the market.

Outlook & Guidance

Looking forward, Semperit projects an operational EBITDA of €70-90 million for 2025, with capital expenditures around €60 million, focusing on maintenance and strategic growth projects. InvestingPro forecasts indicate a 6% revenue growth for FY2025, with analysts expecting continued profitability.

[Access the complete Pro Research Report for Semperit, part of our comprehensive analysis of 1,400+ top stocks, available exclusively on InvestingPro.] The company aims to achieve long-term EBITDA of €120 million by 2026 and return to revenues exceeding €1 billion, leveraging its strong market position and innovative product offerings.

Executive Commentary

CEO Manfred Staneck emphasized the strategic focus on growth, stating, "We are excited by the strategic challenge of building on those strong foundations to drive our growth further and return the group to revenues exceeding a billion as soon as possible." CFO Helmut Sorge highlighted the company’s emphasis on profitability, noting, "Our focus is on organic growth... If we talk about 120 million EBITDA we want to attain, the number of revenue euros should be around 900, probably a little bit less with higher profitable business."

Risks and Challenges

• Weak demand in construction, agriculture, and industrial sectors could hinder revenue growth.
• Potential delays in market recovery, expected in the second half of 2025, may impact financial targets.
• The need for ongoing cost management and efficiency improvements to maintain profitability.
• Global economic uncertainties and supply chain disruptions could affect operations and market conditions.

Q&A

During the earnings call, analysts inquired about the company’s ERP project costs, which are expected to be approximately €5 million annually until 2028. Questions also focused on the impact of U.S. tariffs, with management assuring minimal effects due to local production. Additionally, analysts expressed interest in the company’s working capital management strategies and potential for organic growth through new product innovations.

Full transcript - Select Medical Holdings Corp (SEM) Q4 2024:

Surgeon, Conference Call Operator: Ladies and gentlemen, welcome to the publication of the Full Year twenty twenty four Results Conference Call. I’m Surgeon, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session. The conference must not be recorded for publication or broadcast.

At this time, it’s my pleasure to turn over to Mr. Heider, CEO. Please go ahead.

Karl Heyda, Outgoing CEO, Semperit: Thank you very much, and good afternoon, ladies and gentlemen, and a very warm welcome from Vienna to our full year twenty twenty four results presentation. Thank you for joining us. And as always, we are very grateful for your time and interest in our company of Semparet. On this occasion, I’m in the call with our designated new CEO, Manfred Staneck, sitting left to me and our CFO, Helmut Sorge, who as usual will take you through the financial results in some minutes. Manfred, who joined us at the March, ’3 weeks ago, will first say some introductionary words before I continue with the operational highlights.

Helmut will finish with a brief market outlook for both divisions and the guidance for 2025. Afterwards, we are available for your questions and answers. So let me hand over to Manfred for a short personal introduction. Please, Manfred.

Manfred Staneck, New CEO, Semperit: Thank you very much, Karl. Ladies and gentlemen, first of all, I would like to wish you all a pleasant afternoon. I’m pleased to have this first opportunity to introduce myself. I have now been a member of the Semporeid management board for about three weeks. And in that short time, I have already gained a very positive first impression of the strength of our business model, the operational excellence at the manufacturing sites, which I have visited so far, and the commitment of all our Semperit employees.

I would like to give you a brief overview of my professional background. I began my career in the mid-90s in business consulting. Over the years, I have worked in the mining industry, the metal recycling industry and the downstream aluminum industry. I spent more than a decade in these fields, primarily in The Americas, specifically in The United States and in Brazil. And most recently, I served as a division CEO and Executive Board member of a company headquartered in Austria, focused on rigid plastic packaging solutions and the Medigly technology.

I would also like to say a brief word why I decided to join Semparete. First of all, Semparete is a company with a solid balance sheet and a strong profitability as you will see today. Thanks to the strategic steps which we have taken in recent years, in particular the focus on industrial elastomers and the comprehensive coverage of the entire value chain in liquid silicon, we are competitively positioned for the future. I am excited by the strategic challenge of building on those strong foundations to drive our growth further and return the group to revenues exceeding billion as soon as possible. So this was one of the key reasons why I chose to join Sempareid.

And now I would like to hand back to Karl for the details of the 2024 financial year. Karl?

Karl Heyda, Outgoing CEO, Semperit: Thank you very much, Manfred, and it’s a pleasure for me that you succeeded in my role and very welcome to Semporeid. I continue at Slide three. And as this is my last analyst call as CEO of Semporent, let me summarize some of the major milestones over the last three years. In this context, let me also thank you all for your interesting question over the years of the period and of all your support. Let’s take a brief look back to the early twenty twenty two.

At this time, key was focusing for the organization, notably through the divestment of Sempermid and strengthening our core confidence in industrial elastomer and in our core technologies. With this sale, Semperid has fully withdrawn from the glove business and we are focusing 100% on implementing our strategy as a specialist for elastomer products for industrial customers and applications. In 2023, we realigned our group and formed two powerful divisions, SEIA and SEIA, combining the respective strengths of our business with a special focus on growth and operating leverage. With the acquisition of Ricoh, we added a new strategic pillar for engineered technology in niche markets. On the back of this realigned strategy, we expanded our investments at DH5 in Odie and Tallham and are now set up for strong organic growth as soon as the market recovery kicks in.

The Sembrite Group sits on a more solid foundation than ever and serves a strong platform to further strengthen our market position. Let’s turn the page and the highlight to the financial result of 2024, which is perhaps best summarized in one sentence that we promised and we delivered and we over delivered. Throughout the year, we consistently guided on EBITDA of €80,000,000 and we can report now a 21.1 percentage year on year increase to $84,900,000 with a margin improvement by 2.3 percentage points to 12.5% in 2024. Further down the P and L, we managed to turn around earnings after tax from a loss of 17,000,000 around in 2023 to a positive of 11,500,000.0 in 2024. Our focus on profitable growth, strong cash flow and strengthened working capital management resulted in our free cash flow generation almost doubling to $45,800,000 in 2024, which gives us high flexibility for our growth investments.

Helmut Sorge, CFO, Semperit: At the

Karl Heyda, Outgoing CEO, Semperit: same time, we can reward our shareholders with an attractive dividend, which we propose at the same level as the previous year, per share. The next slide might be familiar to you, but is a reminder how our strategic positioning has evolved over the last years. With a growth platform in place, one market recovers, providing us with operating leverage and scale effects in the future. What I would like to remember is about that we have two divisions in place, which complement each other in operational and strategic terms. One, with most leadership in mind to drive volume growth, Sempolit industrial application and the other one with a cutting edge know how in engineered technology, Sempolit engineered application with a particular focus on attractive niche markets.

And the common basis for this is our two hundred years experience in rubber components and innovation solution and mixing. Turning to page, you see evidence for this in the numbers as Sempolit Industrial Application managed to strengthen its share of EBITDA in comparative terms despite a lower top line, showing our effort for cost reduction and higher efficiency in distribution. In turn, separate engine application achieved top line growth, primarily to the full year consolidation of Ricoh, shifting its shares of total revenue to 57% of group sale in 2024. But SEIA still faces subdued demand in some businesses and price pressure, which explains the lower EBITDA share at a year on year comparison. Let me now go into greater divisional details, starting with Industrial Applications at Slide seven.

Here, sales were down by 11 percentage year on year given low volumes and product mix. But our cost reduction effort and operational improvements resulted in an 11% increased EBITDA with margins being up by 3.6 percentage points to the respectable 17.8 percentage. Among the business units, the order intake at Hoses is still at low levels, stabilized during the year supported by share of wallet wins. In terms, profile business continues to be impacted by the reconstruction industry, but our cost efficiency efforts shows up in the results. Going forward, we hope that a new infrastructure program announced by that incoming German coalition government will help the construction industry to recover.

This means the market challenges continue over the short period of time. Let’s go to the next slide, where you see the separate engineered application were up by 9% year on year as revenue, but EBITDA declined by 5% to the subdued demand, price pressure and product mix. Ricoh had the first year full year contribution with sales of €94,600,000 and 16,000,000 in operating EBITDA, which could not quite offset the impact of projects in Belting being postponed, facing competition from Asia and a shift to lighter belts. In turn, Form had mixed results with handrails, transport and mortar application achieving better profitability against the backdrop of demand in industry and construction remaining weak. Let me finish the operational highlights by presenting some new innovative products, which have not only a wide range of applications, but also support our growth pipeline.

In our form business, we developed molded heavy duty rubber metal parts for the mining application. Remember, the mining starts with digging out the stones, goes into crusher and then other mills. And it’s vertical tower mills and steel mills for fine or even ultra fine grinded processes, as example for copper, iron ore, gold or lithium. This is one of the heaviest part produced in compression molding in our Wimpasing plant in Austria, supporting the green energy transition by optimizing mining actions. We recently also developed hybrid handrails, which combine the best properties and performance of rubber and polymer technology by offering advanced rubber performance with a polyurethane surface appearance.

This results in a durable and shiny product, which is particularly in demand in Asia. Production has started at the end of last year and we are in the process of ramping up in 2025 this product. Our third example is that we is of a high quality track belt for snow vehicles, which offer exceptional durability, superior traction and easy installation, tested and improved under extreme conditions in top key resource worldwide. Finally, as operations go hand in hand with sustainability, I would like to update you on Page 10 about the implementation of our ESG targets set for 02/1930, as we publish this year our first integrated report, following sustainability reports over the seven prior years. Slide 10 summarizes the main defined targets, distinguished by different colors for the environment between energy, waste and emission, social between incident rates and diversity and inclusion and governance for supply chain.

I’m very pleased to report that we have made good progress in all except the energy target in 2024 with some substantial improvement in waste and incidence rate over the year. Given lower production volume in 2024, we had proportionally a higher usage of our, let’s say, base energy costs. Therefore, we have not achieved our energy target 2024. With this, I have come to the end of my part and hand over to Helmut for the financials of the Sempawidz company.

Helmut Sorge, CFO, Semperit: Hi, everyone. And before we get into the nitty gritty of the balance sheet, permit me to start with a personal note. I would really thank you, Karl, for your dedicated leadership, for your passion and for your spirited insights into Sempyrid that you’ve been sharing with all of us on these calls and also for your leadership of Sempyrid on behalf of 4,000 colleagues.

Karl Heyda, Outgoing CEO, Semperit: Thank you very much, Helmut. Thank you.

Helmut Sorge, CFO, Semperit: Now welcome, Mansfield. The stage is set for you. The stage is also set for the financial highlights. You’re familiar with Slide 11. It started out as the CFO work program.

Now it’s our continued mode of operations. And I use this slide also to shed some light on what happened in 2024. Market wise, it was not an easy year. It was rather We started out into the year in the second year of our cost reduction program, which was necessary and led to efficiency enhancements, operating leverage and also streamlining the business by taking $18,000,000 more than $80,000,000 out of our fixed cost base, $12,400,000 of those attributable to the year 2024. We not only focused on cost management, but also put some focus on free cash flow and cash generation.

Actually, it’s the third year in a row that we do this. And as many of you can tell, it gets harder from year to year, resulting in 45,800,000 free cash flow and cash reserves of $126,000,000 we reduced net debt to $103,000,000 which equates to about 1.2 times EBITDA at the end of twenty twenty four. Now, if we do cost management programs for a prolonged time, it becomes part of our corporate DNA, and I think this has happened for Semprit. So we have it well in all of our processes, and we will certainly continue to be very vigilant about overheads. And if you want to achieve operating leverage, we need to be vigilant about overheads because cost introduces itself if you don’t pay too close attention.

I’m also very glad to announce that we are going to propose to the AGM a dividend of $0.5 per share to let our shareholders participate in the good liquidity situation and cash flow situation of Semporex. On the final topic of this slide, one which is very close to my heart, I want to elaborate a little bit more. It’s our digital transformation. We started the digital transformation through several smaller projects with a quick payback that I’ve talked about in the recent quarters. Now, we kicked off the second stage, which is the implementation stage of our one ERP project, which means we’ve decided in December to go with the SAP S4HANA public cloud edition and will be amongst the spareheads, the pioneers in industry, large industrial groups who are going to do so.

It’s a project that will be with us until 2028 when the plan is to have the last plant online with this new system, but it also means something for our EBITDA and the way we report expenses because as for public cloud addition as a software as a service, so it means that development cost for this cannot be capitalized according to IS38, but have to be expensed in the year incurred. So we are going forward providing you with an operating EBITDA before project expenses and the difference are going to be expenses for one ERP project just to ensure comparability. Over the page, we provide a summary of our main financials in comparison to the previous year, and we’ve included, as I just mentioned, the operational EBITDA, $1,400,000 were project costs for this digitalization project in 2024, but it’s going to be more in 2025. Our revenues effectively flat on last year. We’re going to talk about it a little bit more in the bridge.

So we lost volumes due to the general market environment. We had a positive impact from full year’s contribution of Ricoh, but we’re very glad to report an increase in EBITDA of more than 20%. Also, we were able to move Semperit back into the earnings after tax positive into a profitable position with earnings after tax of $11,500,000 And Karl has already mentioned a very respectable free cash flow of $45,800,000 On top of this, our $6,600,000 cash in from the sale of the medical business Part two. Turning to page, we’re plotting the last twelve months industrial revenues against the operating EBITDA margin. This continues to trend from previous quarters, both in top line pressure, but also improving margins.

What we also did is for your reference, we entered a dotted line, which is basically to signify the effect of our cost improvement program, which I think is quite respectively if you look at it in terms of margin. With this in mind, we will continue to focus on these factors, particularly those that are under management control, which is working capital, cost and focus on our strategic growth investments. When looking at the EBITDA bridge on Slide 14, both price and product mix as well as volume effect had significant downward impact year on year, which was essentially offset through our cost savings and the contribution from RECCO. Under the relevant columns for the cost items, we’ve detailed the sequence of our cost reduction program since it’s been initiated with an original target of $10,000,000 in 2023, achieving savings of $12,600,000 in 2024 alone, adding up to $18,400,000 in total. As I’ve already outlined, $1,500,000 were project costs for one ERP project to distinguish going forward between reported and operating EBITDA, which we’ll have to continue to do until 2028, when finally the last plant of Semperit will be on one ERP.

On Slide 15, you will find our development of trade working capital. And I think if we talk about free cash flow, we not only talk about profitability and the better cost structure, but also a focus on lowering inventories, being very vigilant with our trade receivables. And I think it’s now the second year in a row where we have reduced significantly reduced our trade working capital, which also makes room for what we hope for is a return in the markets where we need to purchase raw materials again in order to be able to produce. The bridge chart for year on year net debt development on the next slide shows the main moving parts that generated the free cash flow, which is more than covering growth projects as well as dividend project, we also repaid debt of $10,000,000 in the last year. This important development is further substantiated on Slide 17, where we present major balance sheet items in the financial profile.

As of end twenty twenty four, we had a cash position of $126,000,000 a lower net debt EBITDA ratio of 1.2 compared with 1.6 a year ago and a higher equity ratio of 47.2%. In terms of financial liabilities, I would like to highlight the 3% year on year increase due to the financing of the capacity expansion of DH5 in Audrey, while at the same time we repaid debt. In addition, as an example for our continued efforts to restructure financial debt, we also used the swap to convert variable into fixed interest rates during that period because we are going to repay a private bond mid-twenty twenty five, which was, of course, carrying a fixed interest rate. Over the page, I finished the financial section of the presentation with our capital allocation policy and the priorities for the usage of cash. You’re familiar with our distinction between maintenance and growth CapEx, with the former also including smaller growth projects to enhance our industrial base.

In turn, our growth CapEx provides investments for strategic projects such as the hydraulic hose production at Audrey in The Czech Republic and capacity expansion at our Ricoh site in Karl Heimer, Austria. In the latter, we also include digitalization projects adding up to $29,500,000 compared to $35,100,000 maintenance CapEx in 2024. In addition, we remain open for opportunistic bolt on acquisitions, which provide a strategic fit and compelling investment proposition. This is something where we keep rigorous screening process and pursue regional product and technology opportunity. And let me add, first and foremost, it needs to be very attractive financially, so we’re talking multiples that are dirt cheap.

Finally, our commitment to shareholder returns in form of dividends, we reiterated today by proposing €0.5 dividend per share for the 2024 financial year, which is at the same rate as previous year. Let me turn to the outlook for 2025 on Slide 19, some information we’ve already given through our guidance in a press release earlier. The commodity driven industrial application continues to face a cyclical downturn, largely due to weak demand in the construction in yellow goods industries, here notably in construction and agriculture. As Karl mentioned, we hope that the new infrastructure program of the incoming German government will provide some impetus. In turn, Engineered Application operates in diversified markets with different dynamic and its focus on technology and industry solutions, whether mountain applications, mobility or healthcare helps to be more resilient and stable despite some renewed price threshold.

Overall, we continue to have currently a good visibility for the first half of twenty twenty five, facing ongoing challenging market environments. For the second half of the year, we see the potential for recovery to start in individual regions and markets. With this in mind, we expect the operational EBITDA in the range between $70,000,000 and $90,000,000 strongly depending on the market recovery dynamics and the timing of the market recovery, CapEx should reach around $60,000,000 in 2025, split between $40,000,000 for maintenance and smaller automation projects and $20,000,000 for strategic growth projects. From today’s perspective, I can also confirm our operating EBITDA target of $120,000,000 in 2026, provided we get sufficient support from the market recovery in 2025. Finally, before we finish the presentation, let me just recall our five investment propositions of our equity story, which comprise leading market positions, innovation, a resilient business model, and I think what we’ve proven well in 2024, our cash generation capacity.

This in all should lead to a value play with recalibrated growth for Sempyrid. We’re now available for any questions you might have. Operator?

Surgeon, Conference Call Operator: Yes, I start the yes, I’m sorry. Ladies and gentlemen, we’ll now begin the question and answer And the first question comes from the line of Markus Reimers from ODDO BHF. Please go ahead.

Markus Reimers, Analyst, ODDO BHF: Good afternoon, gents. I would have a question related to the ERP spending. If you could shed some light on the expected trajectory beyond 2025, What should we expect in terms of P and L effective costs? And then, of course, there should be a payback to those charges. Maybe you can also outline the benefits and to which extent you expect the benefit then to your cost base?

Helmut Sorge, CFO, Semperit: Thank you, Marcus. It’s a very good question. At the moment, we have 23 different ERP systems, 23 systems which are installed on premise, which have IT folks and third party support, making sure that they work. And the payback of software

Markus Reimers, Analyst, ODDO BHF: as

Helmut Sorge, CFO, Semperit: a service is clearly you don’t have IT infrastructure for the ERP system. It’s provided as part of the service. So if we’re talking about the payback, it will be a significant one that I’m not going to quantify right now. What are the costs for it? $1,500,000 were the cost for the initial stage, the template design.

We now entered into the stage two where we basically create the global template in 2025 and will have the first roll ins, the first companies moving to the new system this year. We will have parallel infrastructure until 2028, but we will phase out the old systems and bring more and more companies online with the new system. Expected expenses for 2025 are $5,000,000 and I think this is a run rate we can expect depending on how many roll ins we do each year, also for the years until 2028. What I can say is we are eager to learn and we are fast learners. So we have a third party consultant who is not on this call, I hope.

So what we are certainly going to do is look over our consultants’ shoulders and learn and internalize knowledge. And you will hear this from a lot of companies. We are now reporting operating EBITDA and somehow this is when the CFO lacks fantasy, then we start or the company lacks performance, then we start adjusting EBITDA. But I think this is something that we need to be prepared for with a lot of companies who will move on SAP public cloud, because it’s just expenses that used to be in intangible assets, used to be capitalized. Now it’s a different way of looking at it.

But it’s still for us a cash out and we look at it as a project with a payback. I will answer your question.

Markus Reimers, Analyst, ODDO BHF: Yes. Thank you. That was very comprehensive. So including 2028, roughly 5,000,000 with a quick payback.

Helmut Sorge, CFO, Semperit: Every year.

Christian Upps, Analyst, Badabank: Yes.

Markus Reimers, Analyst, ODDO BHF: Okay. And then a question which arises probably in many calls these days. U. S. Tariffs are quite a dominant topic.

Can you help us with the share of U. S. Imports or from your perspective exports into The U. S. That are derived from non U.

S. Sites? So what’s kind of the

Helmut Sorge, CFO, Semperit: export? Our U. S. Sales are about 17% of group sales. We have local production there for Simtek, which is a RECO company with high end liquid silicone parts that mainly go into the medical industry, high margin products, good products, locally manufactured, so not impacted by any tariffs.

We have, of course, belts going into The U. S, heavy belts for the mines industry, to our knowledge not impacted by any elevated tariffs. We have handrails going into The U. S. Mainly from Europe, not impacted by any of the elevated taxes.

Our main competitor is in Canada, impacted

Markus Reimers, Analyst, ODDO BHF: by taxes

Helmut Sorge, CFO, Semperit: and tariffs. We have products for the railway industry going into The U. S. Not impacted by taxes, but we envision local production anyway because public projects in The U. S.

Have to be made in America. So we’re certainly planning to do that as soon as we are awarded contracts. Mark, as you know, we have a manufacturing site there, so we will certainly move these products locally. And we’re not in the gloves business anymore, which would have been heavily impacted by tariffs. Anything on this call?

So it’s a balanced view, as we’ve said with the Q3 call. So at that time, I think we said either way we can live with it. Now uncertainty, of course, is in the system, and we will see how the tariff policies of the Trump administrations are going to stabilize.

Markus Reimers, Analyst, ODDO BHF: Okay. And then a question related to the material cost development. I mean, you can see also looking at the quarterly development that kind of the material expense ratio has come down nicely, especially then also in the fourth quarter, with some moderate growth and material costs down 8% year on year. Can you maybe help us understand in which parts of the business or segments there was the biggest benefit?

Karl Heyda, Outgoing CEO, Semperit: I would say there is not, let’s say, one particular. It’s across the business in SBR, in EPDM, all this came down. And therefore, there’s not one really one particular that you say it is this raw material for this application or this product.

Helmut Sorge, CFO, Semperit: Yes. We had the fixed price contract on silicone, some discounts due to volumes that impact, but that’s not the big thing. I think with rubber, it’s across the board and silicone prices were pretty stable, I would say. They were not downward and not little bit downward. Okay.

Markus Reimers, Analyst, ODDO BHF: And final question at this stage would relate to your corporate segment. Is there any kind of cost that you can guide us for now going onwards in the new kind of corporate setup? So what’s like the sustainable EBITDA? I mean, it has come down over the quarters actually now. Q4 was a rather minor amount, it’s like $10,000,000 12 million dollars Would that be reasonable?

Helmut Sorge, CFO, Semperit: Yes. I mean, we’re at about $12,000,000 right now, so $1,000,000 less is certainly still possible. But it will be challenging since after $18,400,000 in cost savings over the last one point five years, We’ve already cut deep into it and we don’t have such a huge corporate structure to be honest. So we are essentially quite lean. We expect savings from digitalization going forward, but this will take a little bit of time.

But our commitment still is to get as lean as possible. So $10,000,000 or below, but this is something I cannot guide at the moment. 11 is possible.

Markus Reimers, Analyst, ODDO BHF: 11, okay. I’ll take that. And another kind of bookkeeping question, which I think given the history of the recent years, which is a bit tough to assess what’s like the corporate tax rate for our models that we can’t pencil in.

Helmut Sorge, CFO, Semperit: You’re better off using 25 because we go from 0% to 40%. And this is the impact of the deferred taxes because in the countries where we are profitable, I mean, the main manufacturing side, Czech Republic, Poland, China, we are paying taxes, but we have tax loss carry forward in the Austrian tax group. Ricoh is part of the Austrian tax group as well, and we have about $140,000,000 in nonactivated tax loss carry forward. So this will be somehow a factor to bear in mind in the Austrian tax group and effective corporate tax rate.

Surgeon, Conference Call Operator: The next question comes from the line of Marc Rineton from Rauburg Research. Please go ahead.

Marc Rineton, Analyst, Rauburg Research: Yes, good afternoon and thank you for taking my questions as well. First one would be on the revenue line you’re expecting this year. I think you alluded already on, let’s say, the difficult market and challenging market developments and presumably a better second half year. On the other hand, I think we could already see that in Q4, the top line was up first time on a twelve month rolling basis for the first time since the first quarter of ’twenty three. If you could confirm that you expect that the top line being, let’s say, more below the previous year’s level in the first half and then catching up in the second?

Or should we expect the first half year already on last year’s level? That would be my first question.

Helmut Sorge, CFO, Semperit: Yes. Top line in the first quarter won’t be too nice. I mean, we’ve already guided that first quarter results will be probably 50% of lower than last year’s. That’s due to delays in certain projects, shifts in demand and ongoing difficult market conditions. So at the moment, we don’t see the big volume increases.

We have pretty good visibility for the first half of the year. Order books doing somewhat an uptick, but it’s still too early to tell that we’re going to have the big impact on revenue growth. For the second half, as we said in the outlook, we see potentials there. So we expect it to be overall higher than last year’s, but focus for us is the profitability of the products. We look at it from a cash flow return, EBITDA return perspective.

And of course, mix is a key element to it. In the commodity business, performance commodity business, it’s somehow easier to forecast in the tempered engineered applications. It’s tougher because we’re talking about high end project applications with relatively high margins. So focus is on EBITDA, whatever it takes revenue wise. But 700 plus should be the case.

Marc Rineton, Analyst, Rauburg Research: Second question would be on the, let’s say, return of the company to more than 1,000,000,000 in revenues from where we are right now, let’s say, around 700. Basically, give us some expectation from your side on how much of that you would expect from, let’s say, some kind of organic growth with new products and new customers and significant recovery? And how much M and A and think you already alluded on valuation you would like to see there in both on acquisitions being very cheap? Perhaps you could also give us some indication regarding the size of companies, sectors you are looking at and perhaps also regions which would be in focus in this regard?

Helmut Sorge, CFO, Semperit: I would really focus on organic growth right now because the dirt cheap targets are not so easy to find until you get the lucky punch with a succession like we had with Ricoh or its restructuring cases. And we don’t shy away from restructuring cases because we certainly have the industrial expertise, the expertise in back office in finance customer service to onboard businesses, which are probably a little bit struggling at the moment. But you’re well aware of our valuation in stock market right now. An acquisition has to be value accretive, so you can just calculate very easily what multiples they have to go by. Focus is on organic growth.

So if we talk about 120,000,000 EBITDA we want to attain, the number of revenue euros should be around 900, probably a little bit less with higher profitable business. And if you say half of it is coming from a market recovery and the other half is coming from new PMCs that Carl can explain much better than Arkane. I think this is sound case. So for $27,000,000,000, 20 8 billion dollars is within region. I hear Manfred, he’s very committed to get there as early as possible.

Karl Heyda, Outgoing CEO, Semperit: Maybe, Karlaela, I add a couple of information. PMCs, I introduced you into three PMCs. Hybrid Henry, as example, it’s a very interesting good product with two combinations of properties and the Asian countries love this product. Means nice expectation for this. Then in new, let’s say, mining field, Is it further filtration membranes, which are necessary there to the higher regulations in ESG?

Or is it in what I described before in the mills, new interesting applications or track belt or even we have, let’s say, small chips sensors, which can be organized into rubber and gives you property information about the product, the rubber tax. We are working on all these fields and there’s a really nice prospect to get more revenue out of that. But I would like to add on Helmut’s thing. I would say we are ready for harvesting on for example, is a DH5 in Odray, it’s ready to be used when the demand of the market is increasing. Oerico is ready to be used, the buildings are what we bought with Ricoh to fill with machines for new healthcare application or mobility.

From that point of view, many things are prepared that this journey to 1,000,000,000 can be done as Helmutzied as soon as possible.

Marc Rineton, Analyst, Rauburg Research: Okay. Thank you very much. And last question would be on the working capital ratio, which I think is very nicely between 1516%, but I think pretty much factoring unchanged compared to when, if I remember right, what it was at the end of the third quarter. Basically, give us some indication what you would see as kind of a sustainable working capital ratio? Should we think about, let’s say, this 15% to 16% was about, let’s say, million in terms of let’s say, not even million, but million to million in factoring as a reasonable assumption also for the years ahead?

Helmut Sorge, CFO, Semperit: Yes, we were able to lower factoring actually in towards the end of the year. So we had $16,800,000 in receivables sold at the end of twenty twenty four. ’15 point ’2 million dollars percent, I think, for our industry is about as good as it gets. To hold this level will be extremely challenging. And you will appreciate when markets return knocking on wood.

If they return very late in the year 2025, we will have not a lot of revenue impact, but a lot of working capital impact. So what we are certainly trying to do throughout 2025 is make and keep room for growth, meaning raw materials, high inventories. Going forward, our target was to be below 20%. I think staying below 17%, eighteen % is what we can realistically aspire for without using excessive amounts of factory. We still have potentials there.

Surgeon, Conference Call Operator: The next question comes from the line of Christian Upps from Badabank.

Christian Upps, Analyst, Badabank: First, I have a question concerning CapEx. You mentioned that strategic growth projects will account for approximately 20,000,000 this year. So in Audrey and for Ricoh, you have enough capacity, I think, for demand catching up, especially when nothing is catching up so far. So what are you spending the 20,000,000 CapEx for? Thank you.

Yes.

Helmut Sorge, CFO, Semperit: One element is certainly the expansion in Ricoh. We have a rented site in Florida. We were able to sign the option. It’s basically a rented hall, two parts. We have one part rented and mid year twenty twenty four, we signed the option to do also rent the second part of it in order to expand.

And in The U. S, the name of the company there is Simtek, highly specialized in the medical device industry, medical components, high end, very complicated silicone parts. And that interest that industry is really taking off. We’re talking about components. I hope we can mention it.

It’s for insulin pumps, devices that are in high demand. We’re producing to several manufacturers and we see growth and of course we need space to put the machinery in there. The thing is some of the projects are delayed because the parts are extremely hard to manufacture and also our customers have a hard time getting their parts in a row. So it’s not like the demand is not there, but we have to catch up with the production and really get up to speed there. So this is part of the strategic growth investments.

Audrey and automation projects are the other part, yes.

Karl Heyda, Outgoing CEO, Semperit: Okay. And one as example, we have offered for big railway projects in U. S. Some rubber parts on the tracks. And if this is materialized, we need to install some equipment in U.

S, but it’s depending if we are awarded with this project.

Helmut Sorge, CFO, Semperit: Yes. Injection molding machine that we’ll have to get on the ground to be have the made in America standpoint.

Christian Upps, Analyst, Badabank: Okay. Depending on the contract to come or not?

Helmut Sorge, CFO, Semperit: Yes, absolutely. We are not going to invest, we hope.

Christian Upps, Analyst, Badabank: Okay. Then just for a clarification, are the financial liabilities increased from approximately 9,000,000 to 44,000,000? Can you really remind me, is this for the mid term midyear repayment? Or what is this increase about?

Helmut Sorge, CFO, Semperit: Yes, the short term liabilities are the private bond, the Schulcher in Dalian, that moved from long term into short term. Okay. And we’ve been prepaid.

Christian Upps, Analyst, Badabank: Yes. Would you pay back midyear?

Helmut Sorge, CFO, Semperit: Midyear, yes, sir.

Christian Upps, Analyst, Badabank: Okay. And then next one is on I was a little bit surprised because the return on capital employed is 30% of your long term LTI. But it is not I do not find it in a presentation or even in your report. Can you remind us of the figures maybe? So how much of capital employed?

Or is it how much does it move from 23 to 24? And what is your target there?

Helmut Sorge, CFO, Semperit: The return on capital employed at the moment is at 3.8%. It’s a figure that we’ve probably forgotten to publish. It’s in the remuneration report, I’m sorry. So we can send it to you. The target is clearly to be as quickly as possible above the cost of capital, and our long term target here is 12%.

Okay.

Christian Upps, Analyst, Badabank: Yes. Say that again. I was a little bit surprised that it is either in the presentation or in the report I have seen so far.

Helmut Sorge, CFO, Semperit: Okay. Yes, it’s basically the capital employed return on capital employed is in the long term, I’m with you a very important figure. But our focus, I hope we made that point, is clearly on cash generation, increasing the cash flow, free cash flow, reducing working capital, which reduces capital employed as well. And then basically very, very vigilant where we invest. So this all helps for the ROCE and we will certainly go back to reporting the ROCE on a regular

Christian Upps, Analyst, Badabank: basis. The problem with the analysts is that we always ask the questions you in some cases, you do not like that much. And of course, it was very impressive when we see that inventories went down by approximately 23% with sales going only down by 6% on a reported basis. This is what I’m looking at. But you mentioned, and if I got you right, there’s a question from Mr.

Tom before that this is some kind of a very low point. And if really markets start to improve, demand start to improve, which you currently do not see that much, then we have to calculate with an increase in working capital, of course.

Helmut Sorge, CFO, Semperit: Yes. Yes, we will have a wash now. But

Christian Upps, Analyst, Badabank: you can finance that without any problem, of course. Okay. Thank you very much. These were my questions.

Helmut Sorge, CFO, Semperit: Thank you.

Surgeon, Conference Call Operator: There are no more questions at this time. I would now like to turn the conference back over to Mr. Heyda for any closing remarks.

Karl Heyda, Outgoing CEO, Semperit: Well, thank you very much for listening and asking the right questions and for all the interest in the last years of the company’s and for it. And I would like to hand over my stick to Lampard. Okay. Thank you, Karl.

Markus Reimers, Analyst, ODDO BHF: Well, this is my first call and the next one I

Manfred Staneck, New CEO, Semperit: will do without you. But thank you very much for your dedication and also thank you very much for the smooth handover, which I think was a good sign also to all the employees that’s in Parit how a handover from one CEO to another should be done.

Karl Heyda, Outgoing CEO, Semperit: Thank you very much. And I’ll take that foundation is built where Manfred can, let’s say, create the 78 And 9 floor of the big houses. Thank you very much and all the best.

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