Explanations on sales and earnings development

 

Preliminary remarks

The following statements explaining the development of sales and earnings refer to continuing operations. Further information on this can be found in the section IMPACT OF THE DIVESTMENT OF WATER MANAGEMENT ON FINANCIAL REPORTING FOR THE THIRD QUARTER OF 2025.

 

Order backlog

As of September 30, 2025, NORMA Group’s order backlog amounted to EUR 419.1 million, 11.3% lower than the previous year’s reporting date (September 30, 2024: EUR 472.6 million).

 

Development of Group sales

In the nine-month period of 2025, Group sales amounted to EUR 631.8 million, down 6.7% from the prior-year period (Q1–Q3 2024: EUR 676.9 million). This includes a negative currency effect of 1.5%. Adjusted, NORMA Group recorded a decline in sales of 5.1% in the first nine months of 2025. This was primarily due to a decline in sales volume and slightly negative pricing effects.

In the third quarter of 2025, sales amounted to EUR 197.5 million. Compared to the same quarter of the previous year (Q3 2024: EUR 206.5 million), this represents a decrease of 4.3%, primarily due to negative effects from currency translation (-3.2%), including those related to the USD. Adjusted, the decline in the third quarter of 2025 was 1.1% and resulted mainly from a lower realized price level compared to the previous year.

 

Sales development of the strategic business units

 

Industry Applications: Revenue increases by 9.2% in the nine-month period of 2025 due to reallocations

Sales in the Industry Applications business unit amounted to EUR 195.1 million in the first nine months of 2025, exceeding the figure for the same period of the previous year (Q1-Q3 2024: EUR 178.7 million) by a total of 9.2%. This also includes the positive contribution from the reclassification of customer business in the first quarter of 2025, which was previously allocated to the Mobility & New Energy strategic business unit. This particularly affected sales in the customer application areas of construction and agricultural machinery as well as stationary energy storage. In addition, against the background of the signing of the contract for the divestment of the Water Management business, the business in Australia, which will not be disposed of as part of the disposal assets, was also allocated to the Industry Applications business unit as of September 30. This primarily concerns business with joining technologies for industrial applications that remained within the NORMA Group⁶. Adjusted for reallocations, as well as currency effects (-1.9%), the first nine months of 2025 saw a decline of 4.0%. This was due to lower sales volumes in the EMEA region resulting from market-related weak demand. In addition, sales development was impacted by logistics delays at the beginning of the year related to the implementation of an ERP system at a site in Germany. In contrast, the Industry Applications business unit in the Asia-Pacific region showed encouraging volume growth.

6 For further information, please see section IMPACT OF THE DIVESTMENT OF WATER MANAGEMENT ON FINANCIAL REPORTING FOR THE THIRD QUARTER OF 2025.

 

Mobility & New Energy: Sales below previous year due to market uncertainties and volatile customer demand

In the period from January to September 2025, the Mobility & New Energy business unit generated sales of EUR 436.7 million – a decrease of 12.3% compared to the previous year (Q1–Q3 2024: EUR 498.2 million). This development can be attributed to the following effects: On the one hand, weak global demand in all three regional segments resulted in a salses volume decline, which, coupled with a slight decrease in the price level achieved, reduced sales (-5.5%). Negative factors included persistently volatile market conditions and uncertainties – for example, in connection with the effects of global trade tariff policy – as well as special issues on the customer side. The latter resulted, for example, in a temporary decline in demand due to a customer halting purchases as a result of a cyberattack. On the other hand, the revenue base of Mobility & New Energy was reduced by EUR 26.8 million due to the reallocation of customer business with construction and agricultural machinery and stationary energy storage to the Industry Applications business area at the beginning of 2025. Currency effects also had a slightly negative impact of 1.4%.

 

Adjusted cost of materials ratio

Cost of materials decreased by 7.9% year-on-year, thus increasing disproportionately to revenue. They amounted to EUR 288.0 million in the nine-month period of 2025 (Q1–Q3 2024: EUR 312.8 million), resulting in an improvement in the cost of materials ratio to 45.6% in the first nine months of 2025 (Q1–Q3 2024: 46.2%).

In the third quarter of 2025, cost of materials amounted to EUR 88.3 million (Q3 2024: EUR 92.5 million) and the cost of materials was 44.7%, slightly below the figure for the same quarter of the previous year (Q3 2024: 44.8%).

The encouraging development of the cost of materials ratio is primarily due to a mix of further optimizations in the area of material and energy costs.

The cost of materials ratio relative to total output (sales revenue plus changes in inventories and other own work capitalized) was 45.2% in the first nine months of the current fiscal year (Q1–Q3 2024: 45.8%). The build-up in inventories of finished goods and work in progress of EUR 2.7 million from January to September 2025 (Q1–Q3 2024: build-up in inventories of EUR 2.9 million) had a positive impact on the cost of materials ratio.

 

Adjusted gross profit and adjusted gross margin

In the first nine months of 2025, gross profit (revenue less cost of materials plus changes in inventories and other own work capitalized) amounted to EUR 349.5 million, down 5.5% from the previous year (Q1–Q3 2024: EUR 370.0 million). Nevertheless, the gross margin improved significantly to 55.3% (Q1–Q3 2024: 54.7%). The margin increase was primarily due to the disproportionately lower cost of materials relative to revenue. In addition, the build-up in inventories of finished goods and work in progress of EUR 2.7 million (Q1–Q3 2024: EUR 2.9 million) contributed slightly to the gross margin improvement.

In the third quarter of 2025, gross profit fell 1.8% short of the previous year’s figure at EUR 111.6 million (Q3 2024: EUR 113.7 million). The gross margin in the third quarter of 2025 was 56.5%, compared to 55.0% in the same quarter of the previous year. In the third quarter of 2025, an increase in finished goods and work in progress of EUR 1.6 million supported the gross margin (Q3 2024: reduction in inventories of EUR 1.6 million).

 

Number of employees by region

As of September 30, 2025, NORMA Group employed 6,094 people worldwide, including temporary workers (September 30, 2024: 6,411). Of these, 4,800 employees are part of the permanent workforce (September 30, 2024: 5,047).

 

Adjusted personnel cost ratio

Adjusted expenses for employee benefits amounted to EUR 207.2 million in the first nine months of 2025. This represents an increase of 0.9% compared to the previous year (Q1-Q3 2024: EUR 205.3 million), contrary to the development of sales. The adjusted personnel cost ratio in the first nine months of 2025 was 32.8%, compared to 30.3% in the same period of the previous year. Although wage inflation was lower, resulting in only a moderate increase in personnel costs, the decline in sales still had a negative impact on the personnel cost ratio. Temporary inefficiencies at certain locations in Europe also contributed to personnel expenses remaining at a higher level. Furthermore, the figures for the first nine months of 2025 include expenses related to the early departure of former CEO Guido Grandi, announced on February 17, 2025. 

In the third quarter of 2025, adjusted personnel expenses amounted to EUR 62.9 million. Although they decreased slightly by 1.9% compared to the corresponding quarter of the previous year (Q3 2024: EUR 64.1 million), the personnel cost ratio of 31.8% was nevertheless higher than in the same quarter of the previous year (Q3 2024: 31.1%) due to the disproportionate decline in revenue.

 

Other operating income and expenses

The adjusted balance of other operating income and expenses amounted to EUR -102.1 million in the first nine months of the current fiscal year (Q1–Q3 2024: EUR -101.5 million). The ratio of other operating income and expenses to revenue in the period January to September 2025 was 16.2% (Q1–Q3 2024: 15.0%).

Other operating income totaled EUR 10.9 million in the current reporting period (Q1-Q3 2024: EUR 13.1 million). This primarily includes currency gains from operating activities amounting to EUR 2.6 million (Q1-Q3 2024: EUR 5.1 million) as well as income from the reversal of liabilities and unused provisions amounting to EUR 2.3 million (Q1-Q3 2024: EUR 2.6 million).

Adjusted other operating expenses amounted to EUR 113.1 million in the first nine months of 2025 (Q1-Q3 2024: EUR 114.6 million). Adjusted costs in the nine-month period included costs related to the sale of Water Management and expenses related to the transformation that began in 2025. Other operating expenses in the current reporting period primarily include expenses for temporary staff and other personnel-related expenses (Q1-Q3 2025: EUR 27.3 million; Q1-Q3 2024: EUR 30.9 million). A large portion of other operating expenses also related to consulting and marketing (Q1-Q3 2025: EUR 14.8 million; Q1-Q3 2024: EUR 10.4 million). Other large portions of other operating expenses in the nine-month period of 2025 were expenses for IT and telecommunications (Q1–Q3 2025: EUR 18.9 million; Q1–Q3 2024: EUR 19.5 million) and for freight (Q1–Q3 2025: EUR 15.8 million; Q1–Q3 2024: EUR 12.4 million). While special freight costs increased compared to the same period of the previous year due to temporary additional expenses following the implementation of a new ERP system at the Maintal site at the beginning of the year (+ EUR 4.1 million), expenses for regular freight were slightly below the previous year’s level (- EUR 0.7 million).

In the third quarter of 2025, the balance of other operating income and expenses amounted to EUR 33.4 million (Q3 2024: EUR -30.9 million). The ratio to revenue increased to 16.9% in the third quarter of 2025 (Q3 2024: 14.9%).

 

Operating profit

Adjusted EBIT reached EUR 5.9 million in the period from January to September 2025, representing a decrease of 79.9% compared to the same period of the previous year (Q1–Q3 2024: EUR 29.3 million). Adjusted for the first nine months were: Amortization of tangible and intangible assets from purchase price allocations. This includes a non-cash effective goodwill impairment in the EMEA region as of September 30, 2025. Costs for initiating the global transformation planned from 2025 onwards, were also adjusted.

The development of adjusted EBIT was primarily impacted by the decline in sales. Slightly higher personnel expenses – partly due to global wage inflation – also had a negative impact. In contrast, significantly reduced cost of materials and lower other operating expenses – including, in particular, significantly lower expenses for temporary staff and other personnel-related expenses – supported the development of adjusted EBIT in the first nine months of 2025. Taking these factors into account, the adjusted EBIT margin reached 0.9% in the period from January to September 2025 (Q1–Q3 2024: 4.3%).

In the third quarter of 2025, adjusted EBIT amounted to EUR 3.8 million, compared to EUR 7.5 million in the same quarter of the previous year. This represents a decrease of 49.4%. Thus, the adjusted EBIT margin was 1.9%, below the figure for the same quarter of the previous year (Q3 2024: 3.6%) due to the significant decline in revenue.

 

Financial result

The financial result amounted to EUR -13.3 million in the period from January to September 2025, thus improving compared to the previous year (Q1–Q3 2024: EUR -17.5 million). The significantly lower net interest expense (Q1–Q3 2025: EUR 11.7 million; Q1–Q3 2024: EUR 15.7 million) made a significant contribution to the improvement in the financial result. This decrease was primarily due to lower interest expenses for liabilities to banks and in the area of hedging derivatives. This was due to the lower interest rate level compared to the previous year, which was particularly evident in variable-rate loans. Currency effects also had a slightly positive effect. Further positive effects resulted from the scheduled repayment of promissory note loans and the unscheduled repayment of syndicated loans, which had already been made in the 2024 fiscal year. In addition, net currency losses from financing activities were lower compared to the previous year (Q1–Q3 2025: EUR -0.7 million; Q1–Q3 2024: EUR -0.8 million). Overall, this development had a positive impact on the financial result for the first nine months of 2025.

In the third quarter of 2025, the financial result was EUR -4.3 million (Q3 2024: EUR -5.0 million).

 

Adjusted income taxes and tax rate

Adjusted income taxes totaled EUR 11.0 million in the period from January to September 2025 (Q1–Q3 2024: EUR 12.7 million). Based on an adjusted pre-tax result of EUR -7.4 million (Q1–Q3 2024: EUR 11.8 million), this results in an adjusted tax rate of 148.5% for the nine-month period of 2025 (Q1–Q3 2024: 107.8%). The reason for the persistently high tax rate is the non-recognition of deferred tax assets on current losses within the Group, in particular the German tax group, as well as a high ratio of total tax expense to taxable income.

 

Adjusted net profit for the period and adjusted earnings per share

The adjusted net profit for the period (after taxes) for the period January to September 2025 was negative at EUR -18.5 million (Q1–Q3 2024: EUR -0.9 million). Based on an unchanged number of 31,862,400 shares, adjusted earnings per share for the first nine months of 2025 amounted to EUR -0.58 (Q1–Q3 2024: EUR -0.03).

In the third quarter of 2025, the adjusted net profit for the period decreased significantly to EUR 1.5 million compared to the corresponding quarter of the previous year (Q3 2024: EUR 5.4 million). The resulting adjusted earnings per share for the period from July to September 2025 reached EUR 0.05 (Q3 2024: EUR 0.17).