Gurit releases half-year 2024 report, adapts to supply chain dynamics

On Aug. 18, Gurit (Zurich, Switzerland) reported unaudited net sales for the first half of 2024 at CHF 213.5 million (~$246.7 million), which is a decrease of -8.8% at constant exchange rates or -12.7% in reported CHF compared to the first half of 2023. Gurit reached an adjusted operating profit of CHF 11.6 million (~$13.4 million) with an adjusted operating profit margin of 5.4%. This compares to CHF 13.6 million (~$15.8 million) or 5.6% in the first half of the prior year. After restructuring charges, the operating profit is CHF 9.9 million (~$11.4 million) with an operating profit margin of 4.6%.

For the first half of 2024, the company reports no major changes in the markets where Gurit operates:

• In western countries, the wind market remains short-term flat and “cautious,” with positive news coming from strong permitting and auctions improvements in Germany, renewed interest for onshore wind in the U.K. and the IRA-linked restart of many production sites in the U.S.
• In China, wind installations remain at a high level, though still significantly lower than built capacities, leading to continuous price pressure on turbines, turbine components and materials.
• After some weakness at the beginning of 2024, marine markets resumed their growth, and industrial markets continue to offer multiple opportunities.

In this context, Gurit is continuing its path to:

• Adapt to customer demand, selecting profitable opportunities only and decreasing costs in the wind market segments. Notably the structural profiles business is almost at break-even.
• Extend technical capabilities in the marine and industrial markets, at the company’s Canadian Corecell site and with the successful integration of the newly acquired FX Composites in the U.S.
• Deleverage the company, with net debt down to CHF 63 million (~$72.8 million) at the end of June.

Wind materials achieved net sales of CHF 141.0 million (~$169.9 million) for the first half of 2024. This represents a decrease of -7.6% at constant exchange rates compared to the first half of 2023. Short-term market issues remain, as several OEMs need time to solve quality issues and stopped or reduced production until root causes are clear and inventories are inspected. Gurit reports that OEMs are trending below their yearly forecast, so its wind order intake is still subdued. Plants activity is flat year on year, higher in pultruded sheets with positive developments in India and somewhat lower in core kits, nevertheless helped by the integrated core supply strategy, with Gurit sourcing at its own plants most of the kitted core materials.

Manufacturing solutions saw sales levels similar to the second half of 2023, at CHF 21.0 million (~$24.3 million). Still, this is a decrease in the first half of 2024 net sales by -27.0% at constant exchange rates compared to the prior year at CHF 30.7 million (~$35.5 million). Western OEMs slowed down the introduction of new turbine platforms and increased the lifetime of existing turbines, which has led to a shift in orders, even though otherwise anticipated. Thanks to the extension of Gurit’s footprint to build blade molds in Chennai, the company strengthened its local market presence in India while simultaneously safeguarding its position against Chinese competitors. Having a local presence in India further strengthens Gurit’s ability to attract new global business, by ensuring supply security and mitigating geopolitical concerns.

Marine and industrial reported net sales of CHF 51.5 million (~$59.5 million) in the first half of 2024. This represents a decrease of -1.9% at constant exchange rates compared to the previous half-year. After some weakness at the beginning of the year, the marine markets have resumed their growth, and industrial markets continue to offer multiple opportunities. Overall, the marine and industrial business is performing in 2024 as expected.

On Aug. 15, Gurit decided to close its Structural Profile production site in Middelfart, Denmark. The production volumes will gradually be shifted to Gurit sites in Chennai, India and Tianjin, China. There, Gurit already has the full range of the group’s wind market offerings and can fully capitalize on its production capabilities.

Gurit expects the relocation to be finalized by July 2025 and to incur total impairment charges, restructuring and relocation expenses in the amount of approximately CHF 10 million (~$11.5 million) primarily in the second half of 2024. The total cashout is estimated at approximately CHF 6 million (~$6.9 million). Thereof, less than CHF 1 million (~$1.2 million) is expected to be incurred in 2024.

Profitability. In the first half-year of 2024, Gurit achieved an adjusted operating profit margin of 5.4% and including restructuring charges, an operating profit margin of 4.6%. In comparison, the first half of 2023 saw an adjusted operating profit margin of 5.6% and an operating profit margin of 5.3% including restructuring costs. The margin decrease is attributable to low tooling activity. Gurit successfully reduced its net debt to CHF 63.4 million (~$73.2 million), compared to CHF 78.0 million (~$90.1 million) in the first half-year of 2023.

The half-year result was negatively impacted by an unfavorable financial result, mainly due to the EUR/CHF exchange rate, increasing financing costs, and unrecognized tax losses. In the first half of 2024, Gurit’s earnings per share were CHF -0.02, compared to CHF 1.54 in the same period last year.

Cash flow and balance sheet. Gurit generated a net cash flow from operating activities of CHF 5.2 million (~$6 million) in the first half-year of 2024, compared to CHF 12.5 million (~$14.4 million) in the same period of the previous year. This decrease is caused by the lower profit in the first half-year 2024. Additionally, changes in the working capital negatively impacted the cash flow primarily due to stronger sales in the second quarter, leading to higher receivables and increased stock levels.

Capital expenditure reached CHF 5.2 million during the first half-year 2024, compared to CHF 5.5 million (~$6.4 million) in the first half of the previous year. Significant investments were made in Chennai, India, to ramp up production capacity. 

Outlook. After the expected slow start to the year with low sales in the first quarter, Gurit saw a stronger second quarter driven by ramp up of new wind blades and higher demand in the non-wind markets. Considering the latest wind customer forecasts for the remaining year, the company expects full-year sales to be around the lower end of its guidance of CHF 435-485 million (~$503-$560 million) and confirm the 5-8% adjusted operating profit margin. This considers that no further delays will intervene in wind core materials and tooling orders.

Gurit anticipates maintaining a strong market-leading position with western wind customers, despite the dynamic, volatile and uncertain market conditions and increased competition from Chinese suppliers. In parallel, accelerating product substitution and improved technical capabilities will support profitable growth in marine and industry. Gurit will continue to adapt its global footprint and capacities and maintain its advantageous position in the supply chain.

The half-year report 2024 is available here.