Comparison of target and actual values

NORMA Group issued a forecast on the development of the Group’s key performance indicators in fiscal year 2023 when it published its Annual Report 2022 on March 28, 2023. ANNUAL REPORT 2022

NORMA Group’s performance was influenced by a number of factors over the course of fiscal year 2023. These included the continued high level of inflation. This was partly reflected in continued higher prices for energy and selected commodities and (input) materials compared to the period before the Russian war of aggression against Ukraine. Uncertainties in connection with the further development of geopolitical and economic conditions and a tense interest rate environment also had a negative impact. Taking this into account, the Management Board of NORMA Group had made more precise assumptions regarding the financial result in fiscal year 2023 with the publication of the half-year report on August 8, 2023, and since then has expected a financial result of up to EUR -15 million (previously: “of up to EUR -12 million”). In addition, the corridor for the adjusted tax rate was anticipated in a range of 33% to 37% for the fiscal year (previously: “between 28% and 30%”). The other key financial figures, which are not presented in detail here, did not deviate from the figures forecast in the Annual Report 2022.

In the further course of the current reporting year, the development of NORMA Group’s operating earnings figures was additionally negatively impacted by the occurrence of strikes at US vehicle manufacturers. In this context, no further sales-relevant catch-up effects were expected in the remainder of the fiscal year. Due to the general market weakness in the EMEA and Asia-Pacific regions, NORMA Group’s management had also no longer expected any compensation in the remaining weeks of 2023. Against this backdrop, the Management Board announced an adjustment to the sales forecast for the fiscal year 2023 in an ad hoc announcement on November 2, 2023. Based on preliminary sales figures for October, reduced call-offs from automotive and supplier customers and expectations for the remainder of the fiscal year 2023, management since forecast organic Group sales growth in the range of around 0% to 1% compared to the previous year (previously: “mid-single-digit organic Group sales growth”). With regard to the existing forecasts for the adjusted EBIT margin of around 8% and the net operating cash flow of around EUR 70 million, the Management Board kept to the estimate published in the Annual Report 2022. However, the following elements of the Company forecast were also specified in the ad hoc announcement: The Management Board expected the cost of materials ratio to improve in the fiscal year 2023 compared to the previous year (previously: “stable cost of materials ratio compared to previous year”). With regard to the personnel cost ratio, management has since forecast an increase for 2023 as a whole (previously: “stable personnel cost ratio compared to the previous year”) and also expected the financial result to be up to EUR -22 million (previously: “up to EUR -15 million”) due to the further increase in interest rates in the meantime. The adjusted tax rate for the fiscal year was also defined more precisely with an updated range of between 35% and 39% (previously: “between 33% and 37%”). For adjusted earnings per share, management anticipated a year-on-year decrease since August 8, 2023 (previously: “moderate year-on-year increase”) and for NORMA Value Added a value in the range between EUR -45 million and EUR -30 million (previously: “between EUR -10 million and EUR 10 million”).

With the publication of the interim statement for the 3rd quarter on November 7, 2023, the management also specified the expected development of organic sales growth in the regions and distribution channels based on the sales forecast adjusted at the beginning of November. Since then, the Management Board assumed low to mid single-digit organic sales growth for the EMEA region (previously: “mid single-digit organic sales growth”) and low to mid single-digit organic sales growth for the Asia-Pacific region (previously: “organic sales growth in the low double-digit range”). In contrast, the Management Board forecast a low to mid-single-digit decline in organic sales for the Americas region (previously: “low single-digit organic sales growth”) due to the developments outlined above in connection with the labor strikes in the USA. For the SJT segment – with the associated strategic business units Water Management and Industry Applications – the Management Board then expected a low single-digit organic sales decline for the full year 2023 (previously: “mid single-digit organic sales growth”), while the management in the EJT business (the strategic business unit Mobility & New

Energy) had updated its assumption of low single-digit organic sales growth for the full year 2023 (previously: “mid single-digit organic sales growth”).

TABLE T027: COMPARISON OF TARGET AND ACTUAL VALUES provides an overview of the target and actual values as well as the forecast adjustments during the year.

Explanations of the deviations from the target values

With organic sales growth of 0.7%, NORMA Group is in line with the forecast of organic Group sales growth in the range of around 0% to 1%, which was adjusted in November 2023. Organic sales growth was also achieved in the Americas, EMEA and Asia-Pacific regions, as outlined above.

The cost figures also developed as most recently anticipated for 2023: NORMA Group achieved an improvement in the cost of materials ratio compared to the previous year (2023: 45.0%; 2022: 48.0%) and the personnel cost ratio increased compared to the previous year (2023: 26.3%; 2022: 24.9%).

The adjusted EBIT margin was 8.0% in fiscal year 2023 and thus developed in line with the expected target of “around 8%”.

NORMA Value Added (NOVA) was also in line with the updated range of “between EUR -45 million and EUR -30 million” in the fiscal year. It amounted to EUR -43.6 million.

Net operating cash flow reached EUR 87.3 million, exceeding the target of “around EUR 70 million” expected for fiscal year 2023. The main driver of the positive development was, among other things, optimized working capital management, which was partly due to further improved inventory management and good receivables management.

In 2023, the financial result amounted to EUR -22.7 million due to the increase in net interest expenses and was therefore slightly above the forecast target value of “up to EUR -22 million.” In this context, the adjusted tax rate of 41.3% in fiscal year 2023 was also slightly higher than the most recently assumed (“between 35% and 39%”). Two effects in particular had an impact on this: On the one hand, earnings before taxes fell significantly due to the deterioration in the financial result compared to the previous year. On the other hand, the adjusted tax rate was negatively impacted by non-creditable withholding taxes, non-deductible expenses and unrecognized deferred tax assets on losses.

The investment ratio in fiscal year 2023 amounted to 5.0% and was therefore at the lower end of the forecast range of “between 5% and 6%” of Group sales. At 3.6%, the R&D investment ratio exceeded the expected target value of “around 3% of sales.”

In fiscal year 2023, CO₂ emissions totaled 5,064 tons of CO₂-equivalents¹¹ and thus remained well below the target value of “below 9,800 tons of CO₂-equivalents.”

All key figures not mentioned here have developed in line with NORMA Group’s forecast.

¹¹ Since January 2022, NORMA Group has purchased electricity from renewable energy sources at all production sites. NORMA Group purchases "Energy Attribute Certificates" for this purpose. CO₂ emissions are reported in accordance with the GHG Protocol (market-based, Scope 1 and Scope 2). Scope 1 includes only emissions from natural gas and LPG and Scope 2 emissions from purchased electricity and district heating. When recording emissions, only emissions relating to the production sites are taken into account. Further information can be found in the   CR REPORT.