Semperit earnings decline amid high inflation, weak economy

Vienna – Semperit Group has reported weak results for 2023 reflecting a "challenging market environment characterised by high inflation and weak economy".

The group, which shed its medical gloves business last year to strengthen focus on industrial elastomers, reported a 7.5% year-on-year decline in sales to €721 million for continuing operations.

Adjusted earnings (EBITDA), fell 14.7% to €82 million, said Semperit 19 March, noting that the group was “still burdened” by the divested medical unit.

Commenting on the performance of its continuing operations, Semperit said its two new divisions, in which the former industrial sector has been reorganised, developed differently in 2023.

“Difficult economic market environment” led to a decline in sales volumes and a 26.5% decline in revenue to €331 million in the Semperit Industrial Applications division.

The SIA division includes Semperit’s operations for the production of hoses and profiles.

Meanwhile, the Semperit Engineered Applications division (SEA), which includes form, belting and and the newly acquired liquid silicone specialist Rico, benefited from "ongoing strong demand".

Demand, Semperit said, was particularly strong for mining products and the associated conveyor belts as well as “special products” from formed parts.

Revenue in the SEA division, therefore, increased 23.7% year-on-year to €351 million, of which €37.2 million was attributable to Rico (for the months of August to December 2023).

In surgical operations, which involves contract manufacturing of surgical gloves in Wimpassing, revenue fell “as expected” by 23.3% to €42.1 million.

In terms of earnings, Semperit said the acquisition of the Rico Group contributed €7.6 million to earnings.

However, the profits recognised in advance of €3.0 million as part of the purchase price allocation and transaction costs of €3.3 million initially reduced the contribution to around €1.2 million.

Semperit also said that it was implementing a cost-cutting programme with a run rate of more than €10 million per annum.

The programme, Semperit said, already contributed €5.8 million to 2023 earnings, of which 85% was attributable to “personnel expenses” and the remainder to other operating expenses.

Overall, the Vienna-based group said its expenses fell by 7.7% year-on-year to €649.2 million.

These included 19.4% year-on-year savings in cost of materials, primarily as a result of lower production volumes.

The savings were, however, partly offset by 11.7% higher personnel expenses and 2.8% “other operating expenses” such as transaction costs of the Rico acquisition and higher IT-related expenses.

"The economic environment was challenging in 2023, but our cost-cutting measures are taking effect,” said CEO Karl Haider.

In addition to those measures, Haider said Semperit had invested in “organic growth projects” including the construction of a new hydraulic hose production at its site in Odry in the Czech Republic.

In the liquid silicone sector, he added, the group is investing in additional capacities in Thalheim, Germany, as well as in injection moulding tools and automation.

Therefore, he concluded, the group is poised to “further expand its position as a leading provider of advanced and sustainable elastomer products and solutions.”