HOMAG announces high sales revenue for FY2023, but declining order intake

Image: Homag

The HOMAG Group has announced their sales and earnings performance for the 2023 fiscal year, citing “high figures” but a decline in “order intake” that reflect the weak demand that persisted since Q3 2022.

The press release stated that the preliminary figures showed HOMAG was able to slightly increase its sales revenue to €1,625m from the previous year of €1,602m.

“We benefited from our high order backlog at the beginning of the year, which we have gradually worked through. There was also growth in the service business,” explained CEO Dr Daniel Schmitt. Accordingly, the order backlog decreased to €841m as of 31 Dec 2023.

The slight increase in sales is also reflected in earnings before extraordinary effects, which rose by around 4% to €129.7m from the previous year of €124.8m.

The HOMAG Group attributes this increase, among other things, to the efficiency improvements achieved in previous years and cost reductions in response to the market downturn.

Despite a major order from China at the end of the year, the order intake in 2023 declined by around 18% to €1,395m from €1,706m the previous year, which was still characterised by the special economic situation in the furniture industry due to the pandemic.

“We are dealing with a pronounced cyclical market weakness, which has resulted in a sharp decline in orders,” explained Dr Schmitt.

“We were expecting a slowdown in the furniture sector, but we were hoping for a better trend in the timber house sector. The sharp rise in interest rates has led to a crisis in the construction industry, which has significantly slowed down investment in production technology for timber construction elements.”

The HOMAG Group responded to this weak order intake in November 2023 with a package of measures to adjust capacity in order to avoid losses in the current year.

The key element is the reduction of around 600 jobs worldwide to reduce fixed costs by €25m initially and by a total of €50m per year from 2025. The extraordinary expenses for this amounted to a just over €50m and were largely booked in Q4 2023.

As a result, EBIT after extraordinary effects decreased to €71.1m from €107.5m in the previous year.

“We do not anticipate a general market recovery before the end of 2024 and, from today’s perspective, expect order intake in the current fiscal year to be at most on par with the previous year’s level,” concluded Dr Schmitt.

“As a result of the continuing weakness in orders, we expect a sharp decline in sales and earnings. Our capacity adjustment measures are designed to sustainably increase our flexibility so that future market fluctuations will have less of an impact on earnings.”