Softing AG: Interim Statement on the 1st Quarter of 2024

EQS-News: Softing AG / Key word(s): Quarterly / Interim Statement
Softing AG: Interim Statement on the 1st Quarter of 2024 (news with
additional features)

07.05.2024 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.

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Dear Shareholders, Employees, Partners and Friends of Softing,

We have finished the first quarter of what is not going to be an easy year.
The bar is set high, especially as 2023 was an exceedingly successful year
for us. Then there's the weak economic data to consider, which is not
limited to Germany either. Customers and market players alike are reporting
double-digit declines in revenue. Thanks to Softing's diversification, this
situation affects us only in our North American factory automation business,
though a significant share of our revenue stems from this market.

Softing generated revenue of EUR 24.2 million in the first quarter of this
year - a considerable drop from the EUR 28.5 million posted for a
record-breaking 2023 due to the clearing of backorders. However, if we
compare it with the EUR 20.6 million achieved for the first quarter of 2022,
this equates to strong growth of around 20%. Even when averaged with the
prior-year figures, we can see a clear growth.

The subdued economy led to a low volume of orders, which stood at EUR 37.2
million at the end of the first quarter of 2024. This had been expected to
fall short of the prior year's record-breaking EUR 69.8 million attributable
to the huge clearing of backorders. Current orders on hand are also down on
the 2022 figure (EUR 48.3 million), which points to a slowdown emanating
from the industrial automation business in the United States. I am happy to
report that even as early as the first quarter, the Industrial segment's
European business continued to grow compared with the exceptionally strong
previous year. The same can be said for our Automotive segment.

Industrial posted first-quarter revenue of EUR 16.1 million after a
record-breaking EUR 22.5 million in the previous year. Operating EBIT came
to EUR 0.7 million, down from EUR 4.5 million in the prior-year period. Not
only the undiminished growth in our European and Asian business makes us
optimistic about the remainder of the year, but major customers in the
United States also expect product demand to rise steeply from mid-year
onward. Even further, the acquisition funnel is better filled than ever with
extensive project and product opportunities.

Automotive took a leap forward at the beginning of the year with revenue
hitting EUR 6.5 million, up from EUR 4.5 million in the prior-year period.
The improvement is also reflected in operating EBIT, which now breaks even
after amounting to EUR -0.6 million in the previous year. That figure does
not yet include product revenue from a major project for an automaker.
Together with any new business we generate, this will drive up revenue and
earnings in the next few quarters.

IT Networks recognized a first-quarter revenue of EUR 1.8 million despite
some customer projects being pushed back. As a result, operating EBIT
remains negative at EUR -0.4 million, still an improvement to the prior-year
figure of EUR -0.7 million. We are bringing out two new devices this year.
The smaller one was already launched in April and has generated a very
positive response at trade fairs. All products are now available as
required. We also expect that contracts entered into with major distributors
will give a boost to revenue in the upcoming quarters.

On the whole, we are upbeat amid forecasts of sluggish economic growth and
profit warnings from market players. This year we will focus on market
penetration, in particular expanding our presence in regions where we are
not yet sufficiently represented. Yet, we also regularly receive offers for
acquisitions, which we examine carefully. Sellers' expectations are becoming
more realistic again, but we will only invest where we can see value for
money - even in a slow economy.

We are reiterating our full-year guidance for the Group of total revenue
between EUR 105 and EUR 113 million. We expect operating EBIT to come in
somewhere between EUR 5 and EUR 7 million depending on how business develops
during the rest of the year.

Sincerely yours,

Dr. Wolfgang Trier (Chief Executive Officer)

Interim statement on the 1st quarter of 2024

Report on net assets, financial position and results of operations

The global economic environment in Softing's most important markets is
clouding over due to a turbulent trade policy environment - something which
Softing was unable to escape completely in the first quarter of 2024. What
is more, the comparative figures from the previous year in the Industrial
segment, which generates the highest revenue for the Group, were dominated
by clearing an extensive delivery backlog from the Covid years. This effect
was particularly evident in business with North American customers, where
the short-term inventories of customers and distribution channels, which had
been stocked up considerably due to the delivery backlog, are currently
still oversaturated. Market participants are expecting these inventory
levels to go down by mid-year, with order volumes increasing significantly
after that.

However, the fundamental demand for products and services for the automation
and digitalization of production continues unabated. This is why Softing is
investing specifically in expanding market penetration and developing
pioneering products.

Softing posted revenue of EUR 24.2 million in the first quarter of 2024. In
the same period last year, clearing the huge amount of backorders pushed
revenue to EUR 28.5 million, up from EUR 20.6 million in the same period of
2022. This shows that Softing has grown by around 20% since 2022, even after
adjusting for the special circumstances in 2023.

A similar picture emerges when looking at orders on hand, which stood at EUR
37.2 million in the first quarter of 2024, after EUR 69.8 million in the
exceptional year 2023 and EUR 48.3 million in 2022.

Despite these challenges, Softing closes the first quarter of 2024 with
positive earnings. Overall, the Softing Group generated positive EBIT of EUR
0.5 million in the first three months of 2024, although this was
significantly less than in the same period of the previous year, which was
dominated by the aforementioned catch-up effects resulting in EBIT of EUR
2.0 million.

The Industrial segment, which in 2023 saw the bulk of the reduction in
delivery backlog, reported revenue of EUR 16.1 million in the first three
months after the record figure of EUR 22.5 million seen in the first quarter
of 2023.

The Automotive segment is not impacted by these effects and continues to
experience purely organic growth. Driven by the systematic acquisition of
new key customers, Automotive shows a massive increase in revenue to EUR 6.5
million after EUR 4.5 million in the previous year.

Revenue in the IT Networks segment remained stable at EUR 1.8 million. The
disruptions in production processes that occurred from the second quarter of
2023 have now been resolved. The sales team can draw on a growing product
range, which means we expect to see a significant boost compared to the
previous year, particularly for the traditionally strong second half of the
year.

Due to the aforementioned effects, EBIT in the Industrial segment decreased
from EUR 4.2 million to EUR 0.4 million, while operating EBIT fell from EUR
4.5 million to EUR 0.7 million. In the Automotive segment, however, EBIT
improved significantly from EUR -0.4 million to EUR 0.6 million, while
operating EBIT rose from EUR -0.6 million to EUR 0.0 million. The IT
Networks segment still posted a slightly negative EBIT of EUR -0.4 million
compared to the previous year's figure of EUR -0.7 million.

The Group's operating EBIT (EBIT adjusted for capitalized development
services and amortization on these as well as effects from purchase price
allocation) in the reporting period totaled EUR 0.5 million (previous year:
EUR 2.5 million).

The Group's EBITDA came to EUR 2.5 million in the first three months
(previous year: EUR 4.0 million), resulting in an EBITDA margin of 10.3%
(previous year: 14.0%).

Capital expenditure on property, plant, and equipment was insignificant and
comprised replacements. As of March 31, 2024, this results in cash and cash
equivalents of EUR 4.4 million after EUR 4.9 million as of December 31,
2023.

Due to the slight increase in total assets, the equity ratio as of March 31,
2024 was 51% after 53% as of December 31, 2023.

Research and Product Development

In the first three months of 2024, Softing capitalized a total of EUR 1.4
million (previous year: EUR 0.9 million) for the development of new
products, Other significant amounts for the enhancement of existing products
were expensed.

Employees

As of March 31, 2024, the Softing Group had 430 employees (previous year:
400). No stock options were issued to employees in the reporting period.

Risks and Opportunities for the Company's Future Development

As of the reporting date of March 31, 2024, the Company's risk and
opportunity structure had not deviated significantly from the description in
the consolidated financial statements for the year ended December 31, 2023.
Material changes are also not expected for the remaining nine months of
2024. For more detailed information, we refer to our Group Management Report
in the 2023 Annual Report, page 10 et seq.

The cloudy economy in Germany and Europe has not changed much compared to
the description in the consolidated financial statements for the year ended
December 31, 2023. While previously high inflation has almost come down to
normal levels, high energy prices continue to weigh on German economic
growth. Prospects for economic recovery were scaled back in the first
quarter, with many institutions (ECB, World Bank, ifo Institute, etc.)
expecting growth to be only marginal. In risk management terms, this means
implementing measures aimed at improving profitability. In spite of the
steps taken, the risks cannot be controlled completely. We do not anticipate
a significant loss of revenue that is not directly realizable because most
of our products cannot be easily replaced in our customers' value chains.

Geopolitical uncertainty caused by Russia's war of aggression and, most
recently, terror and war in the Middle East remains a concern. Because
Softing AG's customer base is essentially limited to Western countries, we
do not fear any direct negative impacts on our business model.

Despite the current economic and political environment, we anticipate the
procurement situation to remain stable for the remainder of 2024.

The Group takes the issue of cyber security and the potential widening of
hostilities in this area extremely seriously. The current recommendations of
the authorities are being reviewed and implemented taking into account the
situation at Softing. Softing is in the process of liaising with other
companies to determine its own position. Softing has invested substantial
sums in cyber security and provides its staff with regular training on the
subject. As no company is immune from a cyber attack, it is essential to
ensure that resilience and recoverability are built into IT systems and that
all employees remain vigilant.

Outlook

We confirm the Group's guidance published in the management report of the
2023 Annual Report (p. 31). Overall, we continue to expect revenue to come
in between EUR 105 million and EUR 113 million.

We anticipate EBIT of between EUR 3.2 million and EUR 4.6 million, with
operating EBIT between EUR 5.0 million and EUR 7.0 million. In seasonal
terms, we once again expect that the second half of the year will prove to
be much stronger than the first half. We will provide quarterly reports with
more details on these figures.

Events after the Reporting Period

There were no events of special importance after the reporting date of March
31, 2024.

General accounting policies

The consolidated financial statements of Softing AG as of December 31, 2023
were prepared in accordance with the International Financial Reporting
Standards (IFRS) based on the guidance of the International Accounting
Standards Board (IASB) applicable at the reporting date. The quarterly
management statement as of March 31, 2024, which was prepared on the basis
of International Accounting Standard (IAS) 34 "Interim Financial Reporting",
does not contain all of the required information in accordance with the
requirements for the presentation of the annual report and should be read in
conjunction with the consolidated financial statements of Softing AG as of
December 31, 2023. In general, the same accounting policies were applied in
the quarterly management statement as of March 31, 2024 as in the
consolidated financial statements for the 2023 financial year. This
quarterly management statement was prepared without an auditor's review.

Changes in the Basis of Consolidation

As of March 31, 2024, no changes occurred in the basis of consolidation of
Softing AG compared to December 31, 2023.

Key figures for the 1st quarter of 2024

   All figures in EUR       Quarterly management    Quarterly management
   million                      statement 1/2024        statement 1/2023

   Incoming orders                          16.5                    23.5
   Orders on hand                           37.2                    69.8
   Revenue                                  24.2                    28.5
   EBITDA                                    2.5                     4.0
   EBIT                                      0.5                     2.0
   EBIT (operating)                          0.6                     2.5
   Net profit for the                        0.2                     1.2
   period
   Earnings per share in                    0.02                    0.13
   EUR (operating)

Contact:
Dr. Wolfgang Trier
CEO


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Additional features:

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07.05.2024 CET/CEST Dissemination of a Corporate News, transmitted by EQS
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   Language:       English
   Company:        Softing AG
                   Richard-Reitzner-Allee 6
                   85540 Haar
                   Germany
   Phone:          +49 (0)89 456 56-333
   Fax:            +49 (0)89 456 56-399
   E-mail:         InvestorRelations@softing.com
   Internet:       www.softing.com
   ISIN:           DE0005178008
   WKN:            517800
   Listed:         Regulated Market in Frankfurt (Prime Standard);
                   Regulated Unofficial Market in Berlin, Dusseldorf,
                   Hamburg, Munich, Stuttgart, Tradegate Exchange
   EQS News ID:    1896693

End of News EQS News Service
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1896693 07.05.2024 CET/CEST