HGears AG Group Faces Headwinds in 2023: Focuses on Operational Flexibility Amid Industry Challenges

hGears AG revealed its full-year 2023 financial outcomes on March 27, 2024, highlighting the influence of industry-wide destocking and other challenges on its operational performance. The company, known for high-precision gears and components, mostly for e-mobility, reported that its group revenues decreased by 16.9% year-on-year to EUR 112.5 million, with a sharp fall in adjusted EBITDA by 63.3% to EUR 5.6 million. These results come amid a backdrop of reduced end-market demand, slower destocking rates than anticipated, and adverse weather impacting specific sectors.

Despite the downturn, hGears has maintained a focus on internal efficiencies and cash preservation. The company also reported a significant improvement in free cash flow in the second half of 2023, reducing its negative free cash flow to EUR 3.1 million, bettering the anticipated negative bandwidth of EUR 9 - 12 million. As of year-end, hGears posted a net debt position of EUR 3.4 million with cash reserves of EUR 26.6 million.

CEO Sven Arend expressed that while the market conditions in 2023 were challenging, the company is confident about the long-term prospects of its markets. hGears plans to enhance its operational flexibility and streamline processes to stay resilient. For FY 2024, the company is setting cautious revenue targets of EUR 100 – 110 million and an adjusted EBITDA of EUR 1 – 3 million, reflecting ongoing market uncertainties.

hGears continues to emphasize operational efficiency and agility to navigate the persisting challenging environment, aiming to safeguard its foundational business and prepare for growth once market conditions improve.