Yesterday, Einhell released final Q2 results with sales amounting to € 307m or +11.1% yoy, implying a stronger Q2 performance than initially expected by management after releasing preliminary Q2 results in June (sales of € 295m or  vs. eNuW: € 292m). Once again the satisfactory sales development was driven by an ongoing strong demand for the company's Power X-Change products (H1'24: 51% PXC share; +5ppts yoy). Q2 sales in DACH came in at € 135m (+6.3% yoy), still making up the bulk of overall revenue with c. 43% of Group sales. Western Europe grew by 6.2% yoy to € 57m, while Eastern Europe performed strongly, growing 30% yoy to € 35m as a result of stronger demand in Turkey, Croatia, and Poland. Overseas and Other Countries grew 13.7% to € 65m, driven by solid performance of Einhell Australia (formerly Ozito), offset by top-line challenges in both Canada and South Africa.

EBT for Q2'24 was € 27.5m (+14.6% yoy) with an EBT margin of 9% (+0.3ppts yoy), mainly due to operating leverage, offset by PPA effects with regards to the acquisitions in Thailand and Vietnam. While the gross margin was roughly on par with last year's figure due to easing but still noticeable cost inflation (41.4% or +1ppts yoy), personnel expenses grew 9% yoy to € 35m (11.5% of sales) as an increased employee base in combination with the acquisitions in Thailand and Vietnam weighed on operating profitability. Other operating expenses also increased markedly by 11.8% to € 59m (19.2% of sales) as the revenue share expended on marketing and advertising increased by 1.7ppts to 7.4% of sales in H1.

Einhell confirmed its FY24e guidance of 6% sales growth yoy to around € 1,030m (eNuW: € 1,035m) and sees its EBT margin at the upper end (8%) of the 7.5-8% guidance corridor (eNuW: 7.6%). In our view, this continues to look achievable as the healthy sales growth and solid EBT profitability in Q1 and Q2 should provide confidence, aided by a less challenging H2’23 comparable base. Given that Einhell has a sound track record of expanding internationally via M&A, a targeted US market entry should provide the company access to the largest DIY market globally and help with rolling-out its leading Power X-Change platform there.

Due to a 1:3 stock split and the increased share count we have adjusted our model and PT accordingly and reiterate our BUY rating post-split with a PT of € 84 (pre-split: € 227), based on DCF.