GERMANY - In response to a significant decrease in order intake at Homag, coupled with reduced gross margins in new business and a projected 15% drop in sales for 2024, the company is experiencing capacity underutilization.

To address this situation, Homag is currently developing a set of measures to safeguard the EBIT margin before extraordinary effects from falling below 2% in 2024. These measures include the increased utilization of flexible working time arrangements and a planned reduction in capacity. Discussions with employee representatives are scheduled to take place in the coming weeks, with specific details to be communicated shortly.

The objective of these measures is to enhance Homag's earnings resilience, realign the cost structure to accommodate the reduced volume and cyclicality of the business, and facilitate future profitable growth. As of the current perspective, there is an anticipation of increased demand starting at the end of 2024. Based on the implementation of these measures, the Board of Management still envisions a potential EBIT margin of 10% for Homag in a stable market environment.

Dr. Daniel Schmitt, CEO of Homag Group AG, said: “We deliberately increased the workforce only moderately during the boom, as it was clear that a slowdown would follow. However, the decline in orders goes far beyond the expected level. That’s why capacity reductions are unavoidable if we are to keep Homag in safe waters.” It is possible that the end of 2024 could see an initial market recovery. “We are confident that the need for woodworking machinery will grow in the mid and long term. But demand will not return to the previous years’ peak in the short term. That’s why we must now align Homag in such a way that we can get through 2024 on an even keel and then return to profitable growth with a competitive cost structure.”