EuroGroup, profit falling but dividend immediately. Growth in 2024

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Net profit and revenues down, but operating profit and adjusted Ebitda (+11%) up. Dividend (the first, the company has been listed since February 2023) of 0.042 euros per share. And further growth and diversification of the order book to 6.4 billion, thanks to the electric vehicle and automotive market in general. With revenue growth prospects of around 15% for 2024. This is how 2023 closed for EuroGroup Laminations (EgLa), a world leader in the design, production and distribution of stators and rotors for electric motors and generators based in Baranzate, at doors of Milan.

Company founded in 1967 but global leader since 2016. An expansion – today EgLa has 13 production sites of which 7 in Italy – largely due to the transition towards electric cars. In more detail, the 2023 accounts say: profit of 38.6 million euros, down 11.8% compared to 43.8 million in 2022; revenues of 836 million, down 1.8%; Adjusted Ebitda of 116 million, up 11.6%; Ebit equal to 80 million (+4.1%). The profit pertaining to the Group is 34.1 million euros, down compared to 39.3 million in 2022.

The company’s Board of Directors approved the annual financial report and resolved to propose the distribution of a dividend of 0.042 euros per share, equal to approximately 6.8 million euros. Over the three-year period, the company plans to distribute a dividend of up to 20% of profits “compatibly with the growth needs of the group”. «Thanks to the performance of 2023 – commented the CEO of EuroGroup Laminations, Marco Arduini – we announce the first distribution of a dividend from a company listed on the stock exchange. In addition, the Board of Directors has approved a dividend policy that is flexible, sustainable, and consistent with our growth and investment plan. We confirm our commitment to creating value for shareholders and confidence in the company’s future prospects.”

How can the results be explained? EgLa’s EV & Automotive segment recorded revenues of 477.3 million, up 50.1% compared to 2022 (317.9 million), «mainly thanks to the increase in production volumes on new projects linked to the growing demand for EV products, consistently with the execution and expansion of the order portfolio, thus confirming the Group’s leadership in the reference markets”, reads the company note. The critical issues are due to the Industrial segment, which recorded revenues for 358.6 million, compared to 533.2 million in the same period of 2022 (-32.7%). A decline that can be explained mainly by the «continuing reduction in volumes following the ongoing de-stocking process of the Group’s customers, as well as the contraction in raw material prices, which intensified starting from the second quarter of the year, and regulatory uncertainty for some sub-segments (for example heat pumps)”. Net financial debt at 31 December 2023 decreased by 148.6 million compared to 31 December 2022, when it amounted to 259.4 million, reaching 110.8 million, with an improvement in financial leverage.

What remains is the prospect of a market, those of electric cars, which has just gone through a year defined by all the CEOs of the big “transition”. The market began to show signs since mid-2023, when the Automotive sector lost share and the EuroGroup stock also began a sudden decline, which is being followed by an adjustment phase. From an initial price of 5.50 euros, the stock (p/e 9.5) is now trading at 3.8 euros (-31% since its debut), after having reached the lows at the end of January below 3 euros.