Steico: Significant decline in sales and earnings in 2023

Last Updated: 20. Februar 2024By

In the past year, the construction industry in Germany has collapsed. According to current figures from the German Construction Industry Association, in the period from January to November 2023, exactly 28.7% fewer building permits were issued for residential buildings than in the same period of the previous year.

The construction suppliers are also suffering from this industry downturn, as shown by the preliminary financial results for 2023 of the Steico SE, based in Feldkirchen near Munich, which have just been published. Before delving into the preliminary figures of the Bavarian construction supplier, let me briefly introduce the company to you.

Steico in a nutshell: Founded in 1986, Steico SE develops, produces and distributes ecological building products made from renewable raw materials. According to its own statements, Steico is even the world market leader in the segment of wood fiber insulation materials.

Steico operates as a system provider in the field of ecological house construction and is the only manufacturer in the industry to offer an integrated wood construction system in which innovative wood structures and ecological insulation materials complement each other. Production takes place at four locations in Poland and France.

The company’s products are used in new construction and renovation of roofs, walls, ceilings, floors, and facades. The customers of the internationally active Steico Group come from the fields of timber and building material trade, timber construction companies, prefabricated housing industry, laminate and parquet flooring production, and DIY stores.

Since 2007, the Bavarian construction supplier, which currently employs around 2,000 people, has been listed on the stock exchange. The shares of Steico SE are traded on the Munich Stock Exchange’s open market and are listed in the m:access segment.

Since the beginning of 2024, Steico has been majority-owned by the Irish construction supplier Kingspan Group PLC. The company had acquired 51.0% of Steico’s shares from company founder Udo Schramek in the summer of last year. Since Steico is not listed in the Prime Standard, the new major shareholder did not have to make a takeover offer to all Steico shareholders.

Significant decrease in sales and earnings The preliminary financial results of Steico SE, published yesterday, reflect the declining European construction industry. The company achieved a turnover of 365.3 million euros in 2023, which is 17.9% less than in the previous year. Total revenue was 356.9 million euros, a decrease of 23.7% compared to 2022.

The decline on the earnings side was even more significant. According to preliminary calculations, Steico achieved an operating profit (EBIT) of 30.1 million euros in the past year. This represented a decrease of 53.8% compared to the previous year. According to preliminary calculations, the EBIT margin (in relation to total revenue) in 2023 was 8.4%. In 2022, the margin had been 14%.

Expected stabilization of demand For 2024, Steico expects a continued stabilization of demand, as long as the economic environment does not change. The company is therefore aiming for a turnover at the previous year’s level and an EBIT margin between 9 and 11% (in relation to total revenue).

My conclusion: Steico is a solid company with in-demand ecological products and should also grow again in the medium term. However, I do not see a reason to buy at the moment, as 2024 should not bring a major turnaround in operations.