IBU-tec advanced materials (ETR:IBU) Is Carrying A Fair Bit Of Debt

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We note that IBU-tec advanced materials AG (ETR:IBU) does have debt on its balance sheet. But should shareholders be worried about its use of debt?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is IBU-tec advanced materials's Debt?

You can click the graphic below for the historical numbers, but it shows that IBU-tec advanced materials had €8.39m of debt in June 2025, down from €10.9m, one year before. However, it does have €1.06m in cash offsetting this, leading to net debt of about €7.33m.

A Look At IBU-tec advanced materials' Liabilities

We can see from the most recent balance sheet that IBU-tec advanced materials had liabilities of €2.77m falling due within a year, and liabilities of €15.5m due beyond that. Offsetting these obligations, it had cash of €1.06m as well as receivables valued at €7.10m due within 12 months. So its liabilities total €10.1m more than the combination of its cash and short-term receivables.

Since publicly traded IBU-tec advanced materials shares are worth a total of €101.2m, it seems unlikely that this level of liabilities would be a major threat. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if IBU-tec advanced materials can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for IBU-tec advanced materials

In the last year IBU-tec advanced materials had a loss before interest and tax, and actually shrunk its revenue by 4.9%, to €46m. We would much prefer see growth.

Caveat Emptor

Importantly, IBU-tec advanced materials had an earnings before interest and tax (EBIT) loss over the last year. Indeed, it lost €1.8m at the EBIT level. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. We would feel better if it turned its trailing twelve month loss of €2.8m into a profit. So we do think this stock is quite risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. For instance, we've identified 1 warning sign for IBU-tec advanced materials that you should be aware of.

Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.