Dräger on track to meet annual forecast after a solid first half-year – Biotech Investments

Dräger on track to meet annual forecast after a solid first half-year

• Order intake slightly above the high prior-year level
• Net sales still slightly down so far
• EBIT around 17 percent above the prior-year figure
• Annual forecast confirmed

Lübeck – Drägerwerk AG & Co. KGaA increased its order intake in the first half of 2024 thanks to good overall demand. At around EUR 1,604 million, order intake was around EUR 8 million above the high prior-year figure. Net sales decreased by 0.3 percent (net of currency effects) to EUR 1,520.5 million (6 months 2023: EUR 1,532.4 million) after Dräger had benefited from strong catch-up effects in the same period of the prior year as a result of the noticeable improvement in delivery capacity and a surge in demand for ventilators in China. Earnings before interest and taxes (EBIT) amounted to EUR 55.8 million (6 months 2023: EUR 47.7 million). The EBIT margin amounted to 3.7 percent (6 months 2023: 3.1 percent). In addition to the solid operating business performance, several one-time effects recognized in profit or loss contributed around EUR 20 million to EBIT. These included the sale of a non-core local business activity and the sale of a plot of land that was not required.

“Our business performed solidly overall in the first half of 2024,” says Stefan Dräger, Chairman of the Board of Drägerwerk Verwaltungs AG. “Demand for our Technology for Life continued unabated and net sales were almost on a par with the prior year despite the challenging comparative figures. On the earnings side, we continued to improve, making up for the shortfall in earnings from the first quarter in the second quarter.”

Continued strong demand in safety business
In the first half of 2024, the Group’s order intake increased by 0.9 percent (net of currency effects) to EUR 1,604.3 million (6 months 2023: EUR 1,596.6 million). This was due in particular to the significant growth in the Americas region and the positive development in the Germany region.

In the safety division, order intake rose by 4.1 percent (net of currency effects) to EUR 704.3 million (6 months 2023: EUR 679.1 million). Almost all product categories recorded higher demand. The biggest growth driver was our occupational health and safety equipment.

In the medical division, order intake fell by 1.5 percent (net of currency effects) to EUR 900.1 million (6 months 2023: EUR 917.5 million). This is due in particular to the significantly lower demand for ventilators, which had been supported by an extraordinary surge in demand from China in the same period of the prior year. The significant increase in order volumes for anesthesia, thermoregulation and patient monitoring devices in particular had a positive effect.

Safety business continues to grow – medical business burdened by base effects
The safety division recorded an increase in net sales of 8.8 percent (net of currency effects) to EUR 674.2 million in the first half of 2024 (6 months 2023: EUR 621.6 million), due in particular to the good order situation.

In the medical division, net sales fell by 6.5 percent (net of currency effects) to EUR 846.3 million (6 months 2023: EUR 910.7 million). This was due in particular to the China effect described above. In the same period of the prior year, the division had also benefited from catch-up effects as a result of the noticeable improvement in delivery capacity.

Earnings benefit from one-time effects
In the first half of 2024, we sold our fire alarm systems business in the Netherlands. In the 2023 fiscal year, the business field’s net sales amounted to around EUR 20 million. However, there were only a few synergies with Dräger’s core business. We have therefore exited this business. We also sold a plot of land in the USA that was not required. Overall, the one-time effects contributed around EUR 20 million to EBIT of EUR 55.8 million (6 months 2023: EUR 47.7 million).

The gross margin rose to 44.8 percent (6 months 2023: 44.0 percent) as a result of the increased share of net sales and the improved gross margin for the safety business. Our functional costs increased by 2.3 percent (net of currency effects). Earnings after taxes amounted to EUR 34.1 million (6 months 2023: EUR 28.6 million).

Business development in the second quarter
In the second quarter, order intake increased by 0.3 percent (net of currency effects) to EUR 793.5 million (Q2 2023: EUR 792.9 million). In the safety division, order intake rose by 2.0 percent (net of currency effects) to EUR 347.1 million (Q2 2023: EUR 340.7 million). In the medical division, it decreased by 1.0 percent (net of currency effects) to EUR 446.4 million (Q2 2023: EUR 452.2 million).

Dräger’s net sales increased by 2.0 percent (net of currency effects) to EUR 784.7 million (Q2 2023: EUR 771.3 million). The gross margin increased to 44.3 percent (Q2 2023: 43.1 percent). EBIT amounted to EUR 40.7 million (Q2 2023: EUR 18.7 million). The EBIT margin amounted to 5.2 percent (Q2 2023: 2.4 percent).

Annual forecast confirmed
Dräger confirms its outlook for the current fiscal year and expects net sales growth of 1.0 to 5.0 percent (net of currency effects) and an EBIT margin of 2.5 to 5.5 percent.

“Due to the continued moderate demand in the medical business, we now tend to expect net sales growth in the lower half of the forecast range. However, we have become more optimistic with regard to our profitability. We now believe that an EBIT margin in the upper half of the forecast range is more likely,” says Stefan Dräger.

Further information is available in the financial report at www.draeger.com.

Disclaimer
This press release contains statements on the future development of Dräger Group. These forward-looking statements are based on the current expectations, presumptions, and forecasts of the Executive Board as well as the information available to date. They were compiled to the best of the company’s knowledge. Dräger does not provide any warranty nor assume any responsibility for the future developments and results described above. These are dependent on a number of factors. They entail various risks and contingencies outside of the company’s influence and are based on assumptions which could prove to be incorrect. Dräger does not assume any responsibility for updating the forward-looking statements contained in this report. This does not infringe any legal stipulations on the adjustment of forecasts. Information on the financial indicators used (incl. alternative performance measures) can be found on our corporate website www.draeger.com in our Investor Relations section.