Innovation by tradition

HALF-YEAR

FINANCIAL

REPORT

2023

khd.com

ISIN: DE0006578008

GERMAN SECURITIES IDENTIFICATION NUMBER (WKN): 657800

Stock Exchange Symbol: KWG

www.khd.com

Summary of the First Half-Year 2023

  • KHD is consistently continuing on its path to sustainable profitability
  • Considerable improvement in gross profit - considerable improvement in gross profit margin
  • Positive operating result (EBIT) (€ 1.2 million)
  • Group earnings before taxes (EBT) of € 3.4 million - significantly better than earnings in the previous year (€ 0.6 million)

Key Figures at a Glance

Jan. 1 -

Jan. 1 -

Deviation

in € million

June 30, 2023

June 30, 2022

absolute

in %

Order intake

82.0

99.8

-17.8

-17.8

Revenue

104.7

93.1

11.6

12.5

Adjusted gross profit

16.7

12.2

4.5

36.9

Adjusted gross profit margin (in %)

15.9

13.1

2.8

Adjusted EBIT

1.6

-1.4

3.0

217.7

Adjusted EBIT margin (in %)

1.6

-1.5

3.1

EBT

3.4

0.6

2.8

461.6

Group net result for the period

2.3

-0.1

2.4

EPS (in €)

0.05

0.00

0.05

Operating cash flow

-3.9

-1.8

-2.1

Cash flow from investing activities

16.0

1.7

14.3

Cash flow from financing activities

-26.4

-1.2

-25.2

Deviation

in € million

Jun. 30, 2023

Dec. 31, 2022

absolute

in %

Equity

94.4

92.4

2.0

2.2

Equity ratio (in %)

41.4

36.4

5.0

Cash and intercompany loans *

85.8

137

-51.2

-37.3

Net working capital **

-10.9

-16.6

5.7

-34.4

Order backlog

228.1

254.6

-26.5

-10.4

Employees

800

791

9

1.1

  • Including intercompany loan of € 10 million (previous year: € 35 million) with entitlement to call for early repayment by giving 30 days' notice
  • Balance of current assets (less cash and cash equivalents, deposits and current loan receivables) and

current liabilities (less short-term bank loans)

Please note that rounding differences may result from the use of rounded amounts and percentages in accordance with commercial rounding practices.

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MANAGEMENT REPORT REGARDING THE INTERIM GROUP FINANCIAL STATEMENTS AS OF JUNE 30, 2023

Fundamental Group Principles

KHD Humboldt Wedag International AG (hereinafter also referred to as "KHD" or the "Group") made no fundamental changes to its business model, strategy, or management system (see combined management report of December 31, 2022, p. 13 et seq.) during the first half-year 2023. The strategic focus of KHD in 2023 is on implementing the six initiatives introduced during the Annual General Meeting:

  • Benefit from the "green transition";
  • Go China/India and improving the presence in markets;
  • EPC (Engineering, Procurement, Construction);
  • Expanding the service portfolio and digitalization;
  • Modernizing/upgrading of cement plants;
  • Increasing our competitiveness and operational excellence.

Fully decarbonizing the cement industry will be obligatory by 2030 at the latest. A commensurate conversion of the cement plants will require investments in the billions. For this reason, the further development of products and concepts to reduce CO2 emissions is of central importance to KHD with regards to innovation.

We are seeking to strengthen our Plant Services segment by integrating spare parts supply into expanded service concepts and improving customer loyalty. As in previous years, sales activities in the Capex segment will be implemented in a targeted manner with regard to projects where the position of KHD as a technology leader can be applied appropriately. Moreover, KHD is in a position to participate in EPC tenders together with strategic partners as part of a consortium.

Management, monitoring, and reporting within the Group continue to be based on the financial indicators listed below. With respect to the basic determination and calculation of these financial performance indicators, reference is made to the combined management report of December 31, 2022, page 18 et seq.

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The significant performance indicators of the Group are:

  • Order intake and order backlog;
  • Group revenue;
  • Adjusted Group earnings before interest and taxes (adjusted EBIT) as well as the ratio to revenue (adjusted EBIT margin);
  • Operating cash flow.

For Group management purposes, KHD adjusts EBIT as necessary with regard to special items. The adjusted EBIT for the reporting period is as follows:

Jan. 1-

Jan. 1-

in € thousand

June 30,2023

June 30,2022

EBIT prior to adjustments

1.2

-1.4

Deconsolidation result

0.4

0.0

Adjusted EBIT

1.6

-1.4

As the European Union's sanctions against Russia have tightened, the IFRS 10.7 criteria for control are no longer completely met regarding the Russian subsidiary KHD Humboldt Engineering OOO ("KHD OOO"), Moscow, Russia. Accordingly, since June 1, 2023 KHD OOO is no longer included in the consolidated financial statements by way of full consolidation, but as an associated company it is accounted for by using the equity method. The result from deconsolidation in accordance with IFRS 10.25-26 and B97-99 amounted to € -0.4 million.

Economic Report

Market Environment

Due to persistent inflation and turbulence in the financial sector, the hopes for a "soft landing" of the global economy that prevailed at the beginning of 2023 were not completely fulfilled. The International Monetary Fund (IMF) expects 2.8% growth in the global economic output for 2023 after 3.4% in 2022 (IMF World Economic Outlook April 2023). Besides Russia's ongoing war of aggression against Ukraine, China's faltering economic growth also impacts the global economy.

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Disclaimer

KHD Humboldt Wedag International AG published this content on 15 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 August 2023 12:43:03 UTC.