Financial performance
Financial performance
Operating income
The consolidated revenues of Royal Ahrend ended at €273,7mln (2023: €294,8mln), which is 7% lower than the previous year. Sales decreases are observed across all regions as a result of both changes in the economic climate as well as our strategic direction, focusing on integral result improvement through core activities, increasing our own product share and choice of market approach.
Direct margin on cost of raw materials and consumables improved from 48,3% in 2023 to 50,5% in 2024 through the aforementioned strategic focus and optimisation of the worldwide integrated Supply Chain, including the new wood hub facility in Prague.
Wage expenses including social security charges remained stable around €76,5mln. Other operating expenses were lower than in 2023 by €3,7mln. Primarily attributable to decreased transportation, installation and housing costs, following lower gas and electricity prices. IT-expenses increased in order to further strengthen the digital part of the organisation, including preparations for the new ERP-system.
Total expenses include non-recurring expenses for an amount of €3,3mln, compared to €2,4mln in 2023. Non-recurring expenses in 2024 are, amongst others, related to the new ERP-system.
Recurring EBITDA
Despite the lower volume, recurring EBITDA was exceptionally strong at €26,4mln (2023: €25,6mln), due to strong margin performance and cost control.
Financial expenses and taxes
Financial expenses increased compared to 2023 by €0,6mln, primarily as a result of fluctuations in foreign exchange rates. In addition, the interest expenses on leases increased substantially following renewals and extensions for a number of significant real estate contracts at higher interest rates than in the past.
The 2024 effective tax rate was lower than in 2023, primarily explained by usage of deductible tax losses in Royal Ahrend.
Net result
The net result of 2024 ended at €4,8mln (2023: €6,0mln).
Solid financial base
The solvency ratio remained stable at 44,1% ultimo 2024 (2023: 44,2%). The net cash position improved from €12,3mln to €20,2mln by the end of 2024, explained by a positive result and a further improvement of working capital positions, resulting in a positive cashflow from operations. At the same time, significant investments were made in (in)tangible fixed assets, such as new software, the building of the new wood hub facility in Prague, investments in the lease asset portfolio of Circular Interiors B.V. and a new production line in Arnhem.
The balance sheet total increased from €189,4mln ultimo 2023 to €201,8mln ultimo 2024, primarily due to the improved cash balance and growth of tangible and right-of-use fixed assets.
Outlook 2025 and beyond
The Royal Ahrend mid-term plan for the period 2024-2027 contains a strategic path to increase performance year-over-year by focusing on selling the right product to the right markets via the right channels through an effective and efficient organisation. In 2025, the focus will be growing in volume through our mid-term plan initiatives, although the market is challenging, while at the same time keeping costs under control and further integrating the supply chain as well as further optimising the portfolio. Equally important in 2025 will be the next steps in the transition towards a new ERP-system for the coming years. Significant software and hardware investments have been planned.
In 2025, Royal Ahrend will keep investing in enhancing the efficiency of its organisation and the optimisation of its product range and services offerings towards its customers. It is expected that, as a result of the abovementioned structural changes and investments, Royal Ahrend is well-positioned for the future and the performance and profitability of Royal Ahrend will increase in the coming years.
The existing credit facility is expected to be sufficient to fund daily operations and planned projects.
Management closely monitors developments in the global market and proactively responds to changes therein.