Source | Gurit

On August 18, Gurit (Zurich, Switzerland) reported unaudited net sales for the first half of 2024 of CHF 213.5 million (~$246.7 million), a decrease of -8.8% at constant exchange rates or -12.7% in reported CHF compared to the first half of 2023. Gurit achieved an adjusted operating profit of CHF 11.6 million (~$13.4 million) with an adjusted operating profit margin of 5.4%. In comparison, operating profit in the first half of the previous year was CHF 13.6 million (~$15.8 million) or 5.6%. After restructuring expenses, operating profit is CHF 9.9 million (~$11.4 million) with an operating profit margin of 4.6%.

For the first half of 2024, the company reports no significant changes in the markets in which Gurit operates:

• In the western countries, the wind market remains flat and “cautious” in the short term. Positive news comes from strong improvements in permitting and auctions in Germany, renewed interest in onshore wind in the UK and the IRA-induced restart of many production sites in the US.
• In China, the number of new wind turbines being added remains high, but is still well below the capacity built. This is leading to ongoing price pressure on turbines, turbine components and materials.
• After a period of weakness at the beginning of 2024, marine markets resumed growth and industrial markets continue to offer numerous opportunities.

In this context, Gurit continues to pursue the following path:

• Adapting to customer demand, selecting only profitable opportunities and reducing costs in the wind market segments. In particular, the structural profiles business is almost balanced.
• Expanding technical capabilities in the marine and industrial markets at the company’s Canadian Corecell site and with the successful integration of the newly acquired FX Composites in the US
• Debt reduction of the company, so that net debt fell to CHF 63 million (approximately $72.8 million) at the end of June.

Wind materials achieved net sales of CHF 141.0 million (~$169.9 million) in H1 2024, a decrease of -7.6% at constant exchange rates compared to H1 2023. Short-term market issues remain as several OEMs need time to resolve quality issues and have stopped or reduced production until the causes are clear and inventories are reviewed. Gurit reports OEMs below their full-year guidance, so order intake in the wind business remains subdued. Plant activity is flat year-on-year, higher in pultruded sheets with positive developments in India and slightly lower in core kits, but supported by the integrated core supply strategy as Gurit sources most of the pre-manufactured core materials in its own plants.

Manufacturing solutions reported similar revenue levels to the second half of 2023 at CHF 21.0 million (~$24.3 million). Nevertheless, this represents a decrease in net revenues in the first half of 2024 of -27.0% at constant exchange rates compared to the previous year at CHF 30.7 million (~$35.5 million). Western OEMs slowed the introduction of new turbine platforms and extended the lifetime of existing turbines, resulting in a postponement of orders when otherwise expected. By expanding Gurit’s presence to include blade mold building in Chennai, the company strengthened its local market presence in India while securing its position against Chinese competitors. Local presence in India strengthens Gurit’s ability to attract new global business by ensuring security of supply and mitigating geopolitical concerns.

Marine and Industry reported net sales of CHF 51.5 million (~USD 59.5 million) in the first half of 2024. This represents a decrease of -1.9% at constant exchange rates compared to the previous half year. After some weakness at the beginning of the year, the marine markets have resumed growth and the industrial markets continue to offer numerous opportunities. Overall, the marine and industrial business is developing as expected in 2024.

On August 15, Gurit decided to close its structural profiles production site in Middelfart, Denmark. Production volumes will be gradually transferred to Gurit sites in Chennai, India and Tianjin, China, where Gurit already has the Group’s entire offering for the wind market and can fully utilize its production capacities.

Gurit expects the relocation to be completed by July 2025 and that impairment charges, restructuring and relocation costs totaling approximately CHF 10 million (approximately USD 11.5 million) will be incurred mainly in the second half of 2024. The total payout is estimated at approximately CHF 6 million (approximately USD 6.9 million), of which less than CHF 1 million (approximately USD 1.2 million) is expected to be incurred in 2024.

Profitability. In the first half of 2024, Gurit achieved an adjusted operating profit margin of 5.4% and an operating profit margin of 4.6% including restructuring costs. In comparison, the adjusted operating profit margin in the first half of 2023 was 5.6% and an operating profit margin of 5.3% including restructuring costs. The margin decrease is due to low tooling activity. Gurit successfully reduced its net debt to CHF 63.4 million (~$73.2 million), compared to CHF 78.0 million (~$90.1 million) in the first half of 2023.

The half-year result was negatively impacted by an unfavorable financial result, mainly due to the EUR/CHF exchange rate, increasing financing costs and unrecognized tax losses. In the first half of 2024, Gurit’s earnings per share amounted to CHF -0.02, compared to CHF 1.54 in the same period last year.

Cash flow and balance sheet. Gurit generated net cash flow from operating activities of CHF 5.2 million (~USD 6 million) in the first half of 2024, compared to CHF 12.5 million (~USD 14.4 million) in the same period last year. This decrease is due to lower profit in the first half of 2024. In addition, changes in working capital negatively impacted cash flow, mainly due to stronger sales in the second quarter, resulting in higher accounts receivable and increased inventories.

Capital expenditures amounted to CHF 5.2 million in the first half of 2024, compared to CHF 5.5 million (~USD 6.4 million) in the first half of the previous year. Significant investments were made in Chennai, India, to increase production capacity.

Outlook. After an expected slow start to the year with low sales in the first quarter, Gurit reported a stronger second quarter driven by the ramp-up of new blades and higher demand in non-wind markets. Taking into account the latest customer forecasts for wind turbines for the remainder of the year, the company expects annual sales at the lower end of its guidance of CHF 435-485 million (~USD 503-560 million) and confirms the adjusted operating profit margin of 5-8%, assuming no further delays in orders for core materials and tools for wind turbines.

Gurit expects to maintain a strong market-leading position with Western wind energy customers despite dynamic, volatile and uncertain market conditions and increasing competition from Chinese suppliers. In parallel, accelerated product substitution and improved technical capabilities will support profitable growth in the marine and industrial sectors. Gurit will continue to adapt its global presence and capacities and maintain its advantageous position in the supply chain.

The 2024 half-year report can be found here.