• Revenue: EUR312.9 million, a decrease of 9.5% compared to the first half of 2023.
• EBIT: EUR34.1 million, down 12% from 2023, with an EBIT margin close to 11%.
• Net Income: EUR27.4 million, surpassing 2023 figures.
• Gross Margin: Improved to 41.2% from 38% in the first half of 2023.
• EBITDA: EUR41.4 million, down 9.3% from EUR45.7 million in the first half of 2023.
• Net Financial Position: Increased to EUR68.6 million from EUR54.6 million at the end of 2023.
• Medical Sector Revenue: Declined by 1.7%, with a stronger performance in Q2 2024.
• Industrial Sector Revenue: Decreased by 19.9%, with a significant decline in the cutting division.
• Operating Expenses: Increased, with sales and marketing expenses impacting sales from 8.9% to 10%.
• Staff Costs: Increased by EUR0.8 million, with an impact on sales from 16% to 17.9%.
• Number of Employees: Decreased to 2,030 from 2,082 as of December 2023.
• Cash Flow: Net financial position increased by EUR40 million during the period.

• Warning! GuruFocus has detected 6 Warning Signs with WAR:ATT.

Release Date: September 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• El.En. SpA (FRA:EE5) achieved a strong EBIT margin of close to 11% despite a decline in revenues.
• The medical sector showed good performance in Q2, with results in line with the same period in 2023.
• The company reported an excellent net income of EUR27.4 million, surpassing 2023 on this metric.
• Innovative processes and product offerings in areas like urology and aesthetic medicine registered excellent performances.
• The company maintained a strong position in international markets, recognized as a leader in several application segments.

Negative Points

• Group revenues declined by approximately 9% compared to the corresponding period of 2023.
• The industrial sector, especially in cutting, faced significant challenges, causing a decline in revenue and profit.
• The Chinese market continues to suffer from a structural crisis, impacting domestic demand and pricing.
• The US market for specific medical applications did not maintain previous years' revenue levels.
• The IPO process for the laser cutting division in China was interrupted due to inadequate financial results and market weakness.

Q & A Highlights

Q: Industrial revenues in Europe are up 40% in Q2. Are margins higher abroad compared to domestic sales? Also, any updates on the industry 5.0 guidelines and their impact? A: Sales in Europe, excluding China and Italy, are increasing and generally have higher margins. This supports our guidance for improved margins despite a decline in sales. The industry 5.0 guidelines have positively impacted order bookings in Italy, and we are optimistic about future growth.

Q: With the IPO off the table, is the industrial division still for sale? Also, any updates on the lawsuit involving Penta Shangdong? A: The IPO cancellation was a strategic decision to maintain operational independence. This does not rule out future opportunities for the industrial division. Regarding the lawsuit, we are confident in the technical appraisal of our system, but the customer is seeking an excuse not to pay due to decreased market demand.

Q: How did China perform in Q2, and are cost optimization measures effective? Also, any updates on hair removal market trends and cash generation? A: Q2 sales in China were weak, but cost reductions have lessened losses. The hair removal market is performing well with new product launches, though reliance on this segment is decreasing. Cash generation was strong in Q2, aided by nonrecurring inflows, and we expect continued improvement.

Q: The industrial business shows improved profitability despite sales decline. Is this due to cost reduction or a better mix? Will the medical sector see positive growth in H2? A: Improved profitability is due to cost reductions in China, higher-margin international sales, and favorable market conditions. We expect the medical sector to surpass 2023 performance in H2, supporting our annual guidance.

Q: Can you quantify the loss in China for Q2, and why was the minority interest lower? A: The loss in China for H1 2024 was EUR 4.2 million. The lower minority interest is due to reduced profits in China and Japan, as well as in ASA, which impacted overall minority contributions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.