3U Group delivers sound uptrend in Q1 2024, as expected

• 3U continues its growth trajectory in the reporting period with revenue growth of 3.4 %
• Segment development attests to resilient business model
• Operating results in line with expectations
• Management Board affirms guidance for the financial year 2024

3U HOLDING AG (ISIN DE0005167902; identifier: UUU) has made a sound start to the new financial year 2024 and continues on its growth trajectory, in line with expectations. In the first quarter of 2024, consolidated revenue rose by 3.4 % to EUR 13.7 million a year-on-year comparison (Q1 2023: EUR 13.3 million). The development of the ITC segment (Information and Telecommunications Technology) and the SHAC segment (Sanitary, Heating and Air Conditioning Technology) both made key contributions to the positive development.

Having increased its revenue by more than 50 %, the ITC segment was the strongest driver of growth. Following weak construction activity in the previous year, the SHAC segment reported a slight upturn in revenue in the first months of 2024. Lower selling prices and outages in the wind farms resulted in the Renewable Energies segment being unable to match its good year-earlier performance in the first quarter of 2024. A technical defect in the Langendorf Wind Farm’s substation in particular prevented virtually any electricity being fed into the grid in January. This defect had nevertheless been eliminated by the start of February.

Above all, the increase in personnel expenses attributable to acquisitions, higher other operating expenses due in particular to maintenance costs and repairs on the wind energy facilities, and the rise in the cost of materials resulted in lower EBITDA, as anticipated. The Group’s earnings before interest, taxes, depreciation and amortisation came in at EUR 0.7 million in the reporting period, down from EUR 1.9 in the first three months of 2023. This result corresponds to an EBITDA margin of 5.5 % (Q1 2023: 14.0 %).

Depreciation and amortisation totalled EUR 1.0 million in the first quarter of 2024 (Q1 2023: EUR 0.9 million). During the period under review, 3U continued to report a positive financial result of EUR 0.3 million (Q1 2023: EUR 0.8 million), along with tax income of EUR 0.1 million (Q1 2023: tax expenses of EUR 0.2 million).

The proportion of the consolidated result attributable to the shareholders of the parent company amounted to EUR 0.1 million (Q1 2023: EUR 1.4 million).

Well-balanced business model promotes growth

In the first quarter of 2024, the ITC segment lifted its revenue by 53.1 % in a year-on-year comparison, from EUR 3.1 million to EUR 4.8 million. The decline anticipated in the Voice Retail business was offset by notable growth in Managed Services and Voice Business. Segment EBITDA advanced to EUR 1.2 million (Q1 2023: EUR 0.9 million). The EBITDA margin stood at 24.7 % in the reporting period compared with 29.7 % the year before.

Due to the weather, and first and foremost because of a technical defect in the Langendorf Wind Farm’s substation in January, the Renewable Energies segment’s energy yield fell considerably short of the strong first quarter of 2023. Segment revenue dropped by 54.6 % as a consequence of considerably lower monthly market values and settled at a level of EUR 1.2 million (Q1 2023: EUR 2.5 million). The results generated in the period under review were burdened by the aforementioned unscheduled repair costs. Segment EBITDA declined by 64.7 % to EUR 0.7 million (Q1 2023: EUR 1.9 million).

The SHAC segment’s revenue increased by 2.9 % to EUR 8.0 million in the first three months of 2024 (Q1 2023: EUR 7.8 million). Growing demand for photovoltaic modules, inverters and electricity storage right through to full-scale PV plants was especially evident in the upturn in e-commerce operations during the reporting period. Against the backdrop of a slight increase in operating expenses, EBITDA stood at EUR –0.2 million (Q1 2023: EUR –0.1 million).

Sound balance sheet ratios as a foundation for future growth

As of 31 March 2024, total assets amounted to EUR 119.3 million, thus remaining at the level posted on 31 December 2023 (EUR 119.3 million). On the assets side, the increase in inventories of EUR 2.6 million to EUR 16.3 million is mainly attributable to higher stock levels in the SHAC segment. The decline of EUR 4.2 million in the Group’s cash and cash equivalents is largely to be seen in the context of this development.

Compared with year-end 2023, the equity ratio remained virtually unchanged at 75.2 % as of 31 March 2024. Total liabilities were pared down marginally, from EUR 29.8 million to EUR 29.6 million, resulting in an improvement in the debt-to-equity ratio of 33.1 % (31 December 2023: 33.2 %). Despite the reduced level of financial liabilities, the net cash position declined and, at the end of the reporting period, posted EUR 35.9 million (31 December 2023: EUR 39.8 million).

Outlook: rigorous implementation of the profitable growth strategy – affirmation of positive guidance for 2024

The company anticipates further profitable growth over the course of 2024. The Management Board assumes that the ITC segment will continue to perform well. At the same time, as part of its MISSION 2026 growth strategy, the Board will continue to concertedly implement the measures necessary to strengthen its competitiveness in its SHAC e-commerce operations. These measures include the realignment of the range on offer, flanked by expanding the proportion of profitable products and services. Concerning the Renewable Energies segment, 3U is opting for extensive investments to expand its own power generating capacities. Having obtained approval for the Langendorf Wind Farm repowering project, the Group can move ahead in realising the project in the coming quarters with the aim of raising installed capacity in Langendorf from 22.5 MW to 43 MW as planned over the period through to the end of 2025. Depending on the general conditions in the construction industry, the Group is anticipating further growth in the SHAC segment later on in the year.

Accordingly, 3U expects overall revenue for 2024 – without acquisitions – to settle in a range of between EUR 58 million and EUR 62 million, which would correspond to a year-on-year increase of around 10 % and 18 % respectively. Owing to the necessary upfront investments in 3U’s future competitiveness, and in conjunction with repowering measures commencing at the Langendorf location, the EBITDA margin is anticipated between approximately 7 % to 8 % in 2024. Net of these one-off effects, the return would improve further in 2024 compared with 2023.

“The start to the year affirms our confidence of achieving notable growth in 2024. Our expansion strategy in the ITC segment in particular is bearing fruit, with double-digit growth rates in revenue and profit. We also derive confidence from the slight improvement in the economic environment which works in favour of demand in SHAC, the Group’s largest segment, although business with heat generators is currently still very sluggish. The focus in the Renewable Energies segment has been clearly placed on expanding our capacities, above all in the Langendorf Wind Farm,” states Uwe Knoke, Board member of 3U Holding AG, commenting on the performance in the first three months.