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EQS-News: Softing AG / Key word(s): Quarterly / Interim Statement
Softing AG: Interim Statement on the 1st Quarter of 2024 (news with additional features)
2024-05-07 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.
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
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