init innovation in traffic systems SE increases profit by 33 per cent

• Revenue grows by 8.3 per cent to EUR 191.3m (2021: EUR 176.7m)
• Operating result reaches EUR 21m
• Consolidated net profit and earnings per share up by 33 per cent
• Incoming orders jump by almost 20 per cent to EUR 214.1m

init innovation in traffic systems SE (ISIN DE 0005759807) has overcome the crises of 2022 and is forecasting double-digit growth in 2023. This is the conclusion of the annual report presented today at the annual press and analysts’ conference hosted by the world’s leading digitalisation specialist for buses and trains. According to the report, revenue rose by 8.3 per cent in 2022 to set a new record of EUR 191.3m (2021: EUR 176.7m). Of particular note is the fact that earnings before interest and tax (EBIT) increased by 19 per cent to EUR 21m (2021: EUR 17.6m), another record, despite price rises on procurements markets and supply chain problems. Growth in the next financial year is forecast to be 10 to 15 per cent, which is also in line with the company's long-term objective.

Record volume of incoming orders

The signs for the coming year and the future point towards another record: with new orders on the books of EUR 70m in the fourth quarter of 2022, incoming orders for the full year grew to EUR 214.1m. This represents another rise of 20 per cent on the last record set in 2021 (EUR 179.2m).

“With follow-up orders, contract extensions and maintenance and support, the business generated incoming orders of approximately EUR 100m in 2022. We recorded a significant increase in demand from our existing customer base. Ground-breaking solutions from our nextGen innovation campaign and the latest generation of vehicle appliances, in particular, have emerged as major growth drivers. Our subsidiaries, especially HanseCom GmbH (e-ticketing systems), have also developed extremely well and are making a substantial contribution to our excellent situation regarding orders.” These are the notable elements outlined by the init Managing Board in its management report.

“Since the company was founded, our objective has been to translate technical progress into tangible benefits for public transport, helping to increase efficiency whilst remaining attractive to passengers. Innovative solutions to future challenges are created, not least, through participation in numerous research projects with many partners,” states the init Managing Board.

In the 2022 financial year, the init group spent EUR 16.3m (previous year: EUR 12.6m) on the development of non-project specific new products and the refinement of existing products. This corresponds to 8.5 per cent (previous year: 7.1 per cent) of revenue. Included are EUR 2.8m of development expenses which were capitalised as intangible assets and which will be amortised over the coming years. These investments create the foundation for substantial and sustainable value-added potential. Project-financed new and further developments account for approximately three times the amount of the above-mentioned expenses.

Consolidated net profit and earnings per share rise by 33 per cent

Even though the group did not quite meet its sustainable strategic growth target for revenue in 2022 due to adverse conditions in the wider environment, the Managing Board is nevertheless satisfied with overall performance. In addition to the increase in the EBIT margin to 11.0 per cent (previous year: 9.9 per cent), the consolidated net profit displayed a very pleasing trend: at EUR 16.5m (previous year: EUR 12.4m) income has risen by 33.1 per cent on the previous year. Earnings per share therefore amount to EUR 1.66 (previous year: EUR 1.25).

To allow the shareholders to participate fairly in this success, the Managing Board and the Supervisory Board propose a dividend of EUR 0.60 per share for the financial year 2022 (previous year: EUR 0.55) and an additional one-off special dividend of EUR 0.10 per share to mark init’s 40-year anniversary. The corresponding proposal for the appropriation of unallocated income will be submitted to the Shareholders’ Meeting scheduled for 25 May 2023, which will be held as a face-to-face meeting.

Both the net working capital and the liquidity of the init Group continued to improve in 2022. Operating cash flow came to EUR 24.4m (previous year: EUR 16.0m), representing a rise of approximately 50 per cent. As a result, cash and cash equivalents, including highly liquid securities, came to EUR 40.1m at the end of December 2022 (previous year: EUR 28.2m).

Cautious planning, but further records possible

Based on the current industry trends, such as digitalisation, electromobility, Mobility as a Service (MaaS) and Ticketing as a Service (TaaS), coupled with the billion-dollar investment programmes that have been made available, the init Managing Board envisages positive opportunities to win additional market share with its new technologies and IT solutions in the future. The number of tenders for digitalisation projects will continue to increase in the coming years, against the backdrop of global efforts to restructure public transport.

Given the rise in geopolitical instability, the init Managing Board remains cautious in its planning for 2023, but anticipates that business will continue to develop positively. In this regard, it has set a revenue target for the group of approximately EUR 200 to 220m. Earnings before interest and taxes (EBIT) are forecast to reach approximately EUR 20 to 25m. “We assume that if global conditions continue to return to normal, we will again be able to achieve our long-term growth target of 10 to 15 per cent in the coming years. However, we are also equipped to exploit any additional potential if general conditions for our customers, the public transport operators, improve significantly,” the Managing Board emphasised in its outlook.

The Annual Report 2021 and the presentation of today’s press and analyst conference can be downloaded from the company’s website.