Plant engineering companies: revenue down, margins stable

The sector of plant engineering companies serving the ceramic tile and slab industry, analysed through a sample of 105 companies consistently present over the three years considered, recorded a decline in revenue in 2024 compared to the previous two-year period, with a decrease of 9.6%.
This sharp slowdown in sales did not, however, have a significant impact on profitability. In fact, had personnel costs not increased (rising by more than three percentage points as a share of revenue), the EBITDA margin (which in the aggregated financial statements fell from 11.1% to 10.25%) would have actually improved relative to output value. This is the positive aspect. The negative aspect is that the gross margin level of the plant engineering sector is significantly lower than the average 15% threshold often referenced in discussions on tariffs on Italian exports to the United States (notwithstanding the many uncertainties surrounding their implementation).
Reliable and finalised data on this issue are not yet available. It is nevertheless a new factor that will need to be taken into account, particularly in light of its potential impact on the global economy and on the United States in particular. While tariffs may represent additional public revenue for that country, exporters will inevitably have to pass at least part of the cost onto prices, with consequences that remain to be assessed. Indeed, the latest data available at the end of 2025 suggest a worsening of the US trade deficit, although the situation remains highly fluid.
Returning to the aggregated financial statements of plant engineering companies, the relatively positive performance of EBITDA margins reflects the overall stability of added value, which, in absolute terms, is only slightly lower than in the previous year. This confirms the high quality of work in the sector, both in terms of customer appreciation and operational efficiency, particularly in the initial design phase, where cost control plays a crucial role.
EBIT, on the other hand, experienced a more pronounced decline, decreasing its contribution to revenue by almost two percentage points, from 7.69% to 5.85% of output value, due to higher depreciation charges. At the same time, investments increased significantly as a share of turnover, rising from 1.04% to 6.58%, indicating a forward-looking and optimistic outlook.
Subsequently, improvements in financial management, combined with certain revaluations and lower taxes, led to a slight increase in net profit as a percentage of revenue, from 6.8% to 7.05%, despite a decrease in absolute terms.

Financial Analysis (see attached PDF)Free cash flow from operations, shown at the bottom of the balance sheet summary, continues to improve, contributing to a reduction in the net financial position (NFP), which declined from 24.4% to 15.8% of turnover, as clearly illustrated by the pie charts on the right-hand side of the table. This level of financial indebtedness remains well within a manageable range.
The figures above the charts indicate that this improvement results from two opposing factors: on the one hand, the weight of the NFP increases (+2.58%) due to lower revenue (which serves as the calculation base), while on the other, it decreases (-11.2%) thanks to a reduction in the absolute value of debt.
The financial cycle relating to trade receivables and payables shows average collection periods of -90 days (negative because they represent delayed inflows) worsening, compared to average payment periods to suppliers of +131 days (positive because they represent delayed outflows), which have improved. Considering only these two elements, the cash conversion cycle is positive at 41 days (131 - 90).
However, when inventory is also included—turning over 2.1 times per year, i.e. remaining in stock for 171 days (360/2.1)—the overall cycle becomes negative at -130 days (41 - 171). This reflects the nature of plant engineering companies, which operate on large-scale projects with long production times. In financial terms, a negative cycle implies a cash absorption, while a positive cycle indicates cash generation.

Liquidity Analysis (see attached PDF)
As shown both in the net treasury chart and in the financial structure analysis within the full report, the treasury margin (effectively the company’s “current account”) remains negative, meaning that short-term non-trade liabilities exceed available liquidity. However, this negative balance has been significantly reduced compared to the previous year, falling from over €700 million to approximately €135 million.
A deeper analysis of liquidity requires examining the cash flow statement (page 9 of the sector report). This shows that liquidity was generated by operating activities (€446 million) and by a reduction in working capital (€247 million), while investments absorbed €190 million and financing activities used a further €75 million. These movements explain the improvement in the treasury margin observed earlier.
This analysis highlights the importance of not relying solely on the headline liquidity figure reported in the balance sheet. A comprehensive understanding requires examining both the financial structure and the cash flow statement.

Statistical forecast for the following year
For 2024, the highest probabilities derived from time-series analysis of EBITDA data pointed to a decline in EBITDA margins, which did indeed occur, albeit to a lesser extent than expected. For 2025, the outlook is more uncertain, with the most likely range placing EBITDA between 9.2% and 11.3% of output value, with a slight bias towards a decrease.
These probabilities reflect the concept of mean reversion, whereby values in a time series tend to move back towards their long-term average. The further values deviate from this average, the greater the likelihood of a return towards it; conversely, when values are close to the average, future behaviour becomes more uncertain.

Sector Rating
Summarising the economic and financial characteristics of this group of companies into a single rating, using the S&P scale but based on our own methodology, yields an indicative rating of AAA-, an improvement on the previous AA+.