E-mobility And Automation Will Unlock Future Value

Key Takeaways

• Pent-up demand from delayed projects and expansion into new tech-driven sectors position Dürr for revenue growth once market uncertainty subsides.
  
• Process streamlining, cost savings, and focus on high-value solutions are set to enhance margins and reduce reliance on traditional automotive markets.
  
• Weak demand in core segments, divestitures, and growing competition threaten Dürr's revenue stability and margin growth, especially as one-off gains fade and customer hesitance persists.

Catalysts

Operates as a mechanical and plant engineering company worldwide.

• Delays in customer investment due to geopolitical and regulatory uncertainty, particularly in e-mobility and automotive, have caused a temporary dip in order intake; however, management emphasizes that projects have been postponed-not canceled-creating pent-up demand that could drive a sharp recovery in future revenues and earnings once clarity returns to the market.
  
• Dürr's strategic focus on automation and digitalization, as well as its ongoing investments in process streamlining and leaner operations (e.g., reducing divisions, cutting 500 admin jobs for €50m in annual savings), are expected to structurally enhance net margins and earnings, particularly as the business mix shifts toward higher-value, tech-driven solutions.
  
• The global drive for resource efficiency and sustainability in manufacturing remains intact, as evidenced by persistent customer interest in plant modernization for energy efficiency and productivity; this trend should accelerate capital expenditures for Dürr's solutions as economic and regulatory conditions normalize, supporting a multi-year revenue tailwind.
  
• Expansion into adjacent growth areas such as Medtech automation and sustained advancement in battery production and electrode coating technology position Dürr to diversify its revenue base, reducing automotive sector reliance and providing new earnings streams with potentially higher margins.
  
• The sale of the Environmental Technology business increases balance sheet strength through significant deleveraging, freeing up capital for future investments and improving financial flexibility, while focusing management on core growth areas with greater long-term profitability and stability.

Dürr Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Dürr's revenue will grow by 4.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.5% today to 4.9% in 3 years time.
• Analysts expect earnings to reach €237.8 million (and earnings per share of €2.78) by about July 2028, up from €66.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.9x on those 2028 earnings, down from 23.7x today. This future PE is lower than the current PE for the GB Machinery industry at 19.3x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.57%, as per the Simply Wall St company report.

Dürr Future Earnings Per Share Growth

Risks

• Persistent geopolitical and trade policy uncertainties are causing significant investment hesitation among Dürr's core customers, leading to weak order intake, especially in key automotive and industrial automation segments; this increases the risk of ongoing revenue volatility and potential topline contraction if uncertainty persists.
  
• The slower-than-expected progress in the e-mobility sector, especially in Europe due to expiring subsidies and slowing OEM investment, has resulted in a major impairment in Dürr's automation business, highlighting both declining near-term demand and heightened exposure to further weakness in EV/powertrain capital expenditure-which may pressure earnings and margins if the trend continues.
  
• Dürr's recent divestiture of the Environmental Technology business will reduce annual sales by approximately 10%, narrowing revenue diversification; if the remaining core businesses (Automotive, Industrial Automation, Woodworking) struggle to grow or recover, there is increased risk of prolonged revenue stagnation or decline.
  
• Margin improvements in H1 2025 have been supported by cost-cutting, restructuring, and a high book gain from asset sales, but continued weakness in order intake and pressure on service revenues-exacerbated by clients' cost-saving measures-could threaten Dürr's ability to maintain or expand margins organically over the longer term once one-off gains dissipate.
  
• Intensifying competition (particularly from Asia and lower-cost providers), customer project cancellations or postponements, and cyclical slowdowns (notably in automotive and furniture-related sectors) together risk extended delays in the conversion of pent-up demand, jeopardizing Dürr's medium-term growth ambitions and targets for sales and adjusted EBIT margin improvement.

Valuation

• The analysts have a consensus price target of €30.278 for Dürr based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €41.0, and the most bearish reporting a price target of just €22.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €4.9 billion, earnings will come to €237.8 million, and it would be trading on a PE ratio of 10.9x, assuming you use a discount rate of 7.6%.
  
• Given the current share price of €22.7, the analyst price target of €30.28 is 25.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.