Letter from the Management Board

Changes were made to NORMA Group’s Management Board right at the beginning of the year: From January to the end of May 2023, Miguel Ángel López Borrego held the position of interim CEO following the departure of Dr. Schneider at the end of 2022. His office as a member of the Supervisory Board was suspended during this time. In June 2023, Guido Grandi seamlessly took over as CEO of NORMA Group SE. Dr. Daniel Heymann had previously joined the Management Board of NORMA Group as COO. He succeeded Dr. Friedrich Klein, who left the Management Board of NORMA Group at his own request on April 30, 2023. The Supervisory Board also extended the contract with CFO Annette Stieve until September 2026.

NORMA Group’s new Management Board team is working consistently to optimize NORMA Group’s efficiency and productivity and to further align the company strategically and operationally for the future. With this in mind, 2023 was a year characterized by numerous geopolitical, economic and climate-related challenges. This had a negative impact on the development of markets, companies and NORMA Group’s business opportunities. Additional pressure arose in the second half of the year due to strikes, particularly in the US automotive industry, as well as noticeable reductions in order call-offs, meaning that we had to revise our expectations for the development of organic Group sales growth at the beginning of November 2023. Despite the lower sales forecast, we were able to maintain our guidance for the adjusted EBIT margin for the year 2023.

In this challenging market environment, we achieved a slight organic Group sales growth of 0.7% and a sales volume of EUR 1,222.8 million. This development was in line with our adjusted expectations. This was supported in particular by improved price quality in response to the inflationary environment. While business in the EMEA region grew, the Americas region recorded a decline due to external factors and the Asia-Pacific region due to negative currency effects in particular.

In terms of the operating earnings indicators, we have achieved solid profitability. At 8.0%, the adjusted EBIT margin was in line with expectations, due in particular to a strong final quarter. At EUR 87.3 million, the net operating cash flow even exceeded the target figure of “around EUR 70 million”. The fact that our financial leverage decreased at the end of the year, compared to the end of the third  quarter is also positive. This creates further financial scope for investments and possible acquisitions.

These positive developments underline: Our “Step Up” growth and efficiency program initiated in mid-2023 is showing initial positive effects. In the area of operational efficiency, we optimized supply chain management in the EMEA region last year, increased the availability of our products for even better sales in the future and expanded production capacities in the Americas and Asia-Pacific. In addition, production processes were also improved and in some cases fully automated. We also reached important milestones last year with our Growth initiatives. In the Water Management strategic business unit, we have “grown” in the truest sense of the word. With the acquisition of Teco Srl, an Italian specialist for irrigation products, we created a “nucleus” in Europe in December 2023, which we will gradually expand with our in-depth expertise from the US water business. At the same time, our new water management production site in the USA will further improve our product range in the US market, enabling us to better serve customers on the East Coast. As part of “Step Up”, customers and their specific needs are becoming even more central to our activities. The focus is even more on knowledge transfer and synergies. We are committed to always offering our customers innovative solutions tailored to their needs.

In line with the motto of this annual report – “Creating sustainable connections” – we opened up new markets and areas of application for established products with our strategic business units in 2023. For example, valve boxes from the Water Management division are used as maintenance boxes for telecommunications networks in Industry Applications. We have also transferred existing products from the Mobility & New Energy segment to alternative fields of application for Industry Applications. One particular example is an order from a leading German heat pump manufacturer. These successes underline the further potential for our innovative and sustainable solutions. This is one of our core competencies. In addition, we aim to develop further in the markets of the future that are relevant to us. In the Mobility & New Energy division, we are focusing on expanding our e-mobility footprint. In this context, we acquired new customers in the Asia-Pacific region in 2023 as well as several projects in various regions.

The progress achieved is based on efficient cooperation between our three strategic business units. We have a dedicated team. We proved this once again last year. We would like to thank our approximately 8,000 employees. You have done a great job! We want to build on the successes of 2023, because the key premise for long-term competitiveness is continuous development and improvement. “Step Up” is therefore not just a temporary program, but rather our “Kaizen”: We are working on changing for the better, step by step. With “Step Up”, we also want to “Create sustainable connections” between our daily actions and our mindset, which will contribute to our company's success in the long term.

We would also like to thank you, our shareholders, for following NORMA Group closely and, in some cases, accompanying us loyally for many years. We also want you to participate appropriately in the company’s success, based on our sustainable dividend strategy. The Management Board and Supervisory Board plan to propose the payment of a dividend of EUR 0.45 per dividend-bearing share for 2023 to the Annual General Meeting on May 16, 2024. This corresponds to a payout ratio of around 32.7% of the adjusted profit for the period in 2023.

We expect the environment to remain characterized by increased uncertainty in the coming months. We are therefore looking ahead to 2024 with the necessary caution. It is therefore all the more important that we continue to focus our strengths on high-margin business and promising growth prospects in our three strategic business units Water Management, Industry Applications and Mobility & New Energy. We are convinced that we are on the right path towards a sustainable and profitable orientation of NORMA Group. We look forward to having you all at our side as we continue on our path towards a sustainably profitable future.

Sincerely,

Guido Grandi

Chief Executive Officer (CEO)

 

Annette Stieve

Member of the Management Board (CFO)

 

Dr. Daniel Heymann

Member of the Management Board (COO)