Augsburg, September 01, 2023 – RENK Group, a leading global manufacturer of mission-critical drive technologies, continued its growth path in the first half of 2023. Revenues increased by 7.9 percent year-on-year to EUR 410 million (H1-22: EUR 380 million).
Adjusted EBIT grew by 5.5 percent to EUR 63 million, with a stable margin of 15.4 percent (H1-22: 15.7%). The Vehicle Mobility Solutions segment in particular contributed to this, recording robust organic growth by expanding revenue and margin. This was achieved primarily through an increasing aftermarket business. The acquisition of General Kinetics, which closed in January 2023 additionally contributed almost 45 percent to the segment’s growth. Investments such as this acquisition are made possible by RENK Group’s strong operating cash flow.
The fixed order backlog grew significantly by 21 percent in the first half of the year to approximately EUR 1.7 billion (financial year-end 2022: EUR 1.4 billion). This peak was already reached at the end of the first quarter and remained almost unchanged in the second quarter, despite the conversion of fixed order backlog into revenue growth. This was due to the strong order intake of major projects in the second quarter, including an additional order for the US Army's THOR III AMPV, the Norwegian Armed Forces’ WiSENT multi-purpose platform and the South Korean Navy’s KDX destroyer. In the Marine & Industry segment, RENK has also been able to win substantial orders. These include among others the reference project Global Hydro for a hydropower power station in Austria as well as turbo transmissions for Siemens compressors as part of the SALCOS project of Salzgitter AG for the production of ‘green steel’. For an EXMAR order, two LNG vessels will be fitted with emissions-reducing propulsion systems. These orders underline that mission-critical RENK technologies are highly trusted worldwide and are used in state-of-the-art platforms.
“The revenue growth in the first half of the year and our strong order intake reflect the high demand for our products,” said Susanne Wiegand, CEO of RENK Group. “The global need for technological renewal of armed forces as a result of the Zeitenwende, the recent turning point in defense policy, will remain a growth driver for us in the future. These developments encourage us to stay the course of sustainable and efficient growth. We have built the foundation for it in recent months.”
High visibility for future orders
Based on its long-term customer relationships, supply contracts and aftermarket services, RENK has a high visibility regarding future orders.
“As a ‘trusted partner’, we stand by our customers’ sides along the entire product life cycle. Land and naval platforms in the defense sector are highly complex and recognized in particular for their longevity. The life cycle of such a platform can stretch up to 40 years or longer. Incidentally, this does not differ significantly in energy generation or heavy industry plants in the civil sector,” says Susanne Wiegand.
Supported by profitable growth, RENK Group was also able to reduce leverage again in the first half of 2023 despite the successful acquisition of General Kinetics: The leverage ratio, i.e., the ratio of net debt [3] to adjusted EBITDA [4], now stands at 2.1x (financial year-end 2022: 2.2x).
Sustainability risk assessed by Sustainalytics
In the second quarter, RENK Group published its first sustainability report, outlining its sustainability strategy, with which the company addresses several focus and action areas. In addition to increasing energy efficiency and supporting customers’ energy transition through its products, RENK focuses on operating sustainably, being an employer of choice, protecting human rights in its value chain and acting responsibly. This includes pursuing the clear goal of becoming net climate neutral (Scope 1 and 2) in Europe by 2030 and globally by 2040. The company’s sustainability risks were assessed with an ESG risk rating of 22.6 (medium risk) by Sustainalytics in June 2023. This places RENK Group within the top 15 percent of the Sustainalytics machinery universe peer group.
[1] Adjusted EBIT is defined as operating profit before the effects from purchase price allocations and adjusted for certain items which management considers to be exceptional or non-recurring in nature. Adjusted EBIT Margin is defined as Adjusted EBIT, as applicable, divided by revenue.
[2] Fixed Order Backlog represents, with respect to binding customer contracts and purchase orders concluded and/or received, the portion of the associated transaction price for which the amount of revenue has not yet been recognized in accordance with IFRS.
[3] Net Debt is defined as the sum of the carrying amounts of bond (for the periods shown relating to our senior secured notes) and lease liabilities less cash and cash equivalents.
[4] Adjusted EBITDA is defined as operating profit before depreciation, amortization and impairment losses on intangible assets and property, plant and equipment and adjusted for certain items which management considers to be exceptional or non-recurring in nature.
About RENK Group
Headquartered in Augsburg, Germany, RENK Group is a globally leading manufacturer of mission-critical drive solutions across diverse civil and military end markets. Our product portfolio includes gear units, transmissions, power-packs, hybrid propulsion systems, suspension systems, slide bearings, couplings & clutches and test systems. RENK particularly serves customers active in industries for military vehicles, naval and civil marine, cement and plastics production, oil & gas, as well as customers in hydrogen, CCUS and industrial heat pump applications. In the fiscal year 2022, RENK generated revenue of EUR 849 million.
Disclaimer
This release contains forward-looking statements. These statements are based on the current views, expectations, assumptions, and information of the management of RENK Holding GmbH (the “Company”). Forward-looking statements should not be construed as a promise of future results and developments and involve known and unknown risks and uncertainties. Various factors could cause actual future results, performance, or events to differ materially from those described in these statements, and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions expressed in this release or the underlying assumptions. The Company does not assume any obligations to update any forward-looking statements. Moreover, it should be noted that all forward-looking statements only speak as of the date of this release and that the Company assumes no obligation, except as required by law, to update any forward-looking statement or to conform any such statement to actual events or developments.
The Company expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this release, whether as a result of new information, future developments or otherwise.
Get in touch with us in case of any questions and requests.