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Turbon: Market for remanufactured consumables, difficult

August 18, 2023

Is the Turbon Group charting a new course as they report that the market for remanufactured toner cartridges, once a growth driver, is now deemed unsuitable for sustaining their expansion strategy and is redirecting their focus towards emerging prospects in Electronic Manufacturing Services (EMS) and cable assembly, showcasing their adaptability and forward-looking approach?

In the challenging economic climate, Turbon Group reported sales of €29.7 million / $30.1 million in H1 2023, a 5.6% increase from H1 2022. Despite the difficult economic situation, earnings before taxes (EBT) reached €1.2 million ($1.3 million), lower than expected due to the impact of the economic conditions. Strategic diversification into Electronic Manufacturing Services (EMS) and cable assembly proved successful, countering the decline in the remanufactured printer consumables market. Turbon’s Dubai subsidiary experienced significant growth in a dynamic region, engaging in electronic-to-physical transitions and digitisation trends.

In the Turbon Printing segment, H1 2023 sales were €17.8 million ($19.3 million), slightly lower than H1 2022. Earnings before taxes in this segment were €100K / $109K, reflecting a decrease from the previous year, partly due to a large one-time order in H1 2022. The decline in laser cartridge usage impacted the segment’s sales across regions except the Middle East and Africa.

Turbon Electric achieved substantial organic growth with sales of €11.9 million ($12.9 million), up 24% from H1 2022. The segment’s earnings before taxes increased by 20%. Expanded customer relationships and new EMS and cable assembly partnerships drove this growth. Turbon is establishing an EMS production site in Romania, aiming to launch production by Q4 2023, enhancing assembly services and expanding capabilities.

While optimization measures and complementary services were implemented to counter market trends, the overall decline in the remanufactured toner cartridge market persisted. Turbon’s UAE subsidiary witnessed growth in paper product sales and solutions development. However, the focus will shift away from the remanufactured toner cartridge market for future growth.

The Holding and Other segment’s external sales decreased, resulting in negative earnings before taxes of 0.7 million euros in H1 2023. The consolidated results showed sales of €29.7 million ($30.1 million), with a gross margin of 24.3%. Selling expenses decreased slightly, while general administrative expenses increased due to resource additions and salary raises.

Cash flow from operating activities improved to €1.3 million ($1.4 million) in H1 2023, compared to a negative flow in H1 2022. Cash flow from investing activities decreased to -0.9 million euros, and cash flow from financing activities showed a cash outflow of 1.6 million euros. The financial position remained stable, with equity rising slightly to €27.7 million ($30.1 million) and the equity ratio increasing to 59.7%. Turbon Group continues to manage risks systematically through its risk management strategy.

Looking forward, Turbon Group maintains its sales forecast of €57 to €59 million  / $62 to $64 million and earnings before taxes of €3.0 to €3.5 million ($3.3 to $3.8 million) for the full 2023 fiscal year. The uncertain macroeconomic environment, including ongoing geopolitical tensions and inflation, may impact the company’s performance, particularly in non-euro countries and its Turbon Printing segment.

Note: The results were translated from German to English using AI and dollar exchange rates were from xe.com.

Our take on this: Slowly, but clearly surely, Turbon is navigating away from print remanufacturing as they see printing won’t sustain their growth model.  The challenge is how do they prevent the decline in print becoming a self-fulfilling prophecy?

Categories : World Focus

Tags : Business Financials H1 2023 Remanufacturing Turbon

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