IFBC Sector Report 2022 – Industrials

Industrial companies were able to emerge from the global COVID-19 pandemic with corresponding momentum buoyed by bulging order books. However, they are now confronted with a far-reaching need to scrutinize their business model. The uncertain short-term outlook regarding geopolitics, the economy in general, the financing environment, supply chains and price developments, paired with the rapid technological advances, poses new challenges for the sector worldwide.

Against this backdrop, we are pleased to provide you with an up-to-date insight into recent sector trends, share price development, valuation level and operating performance based on selected subsectors. In addition, we also shed light on the corresponding M&A environment of the last twelve months. On the one hand, we dissect current buyer and investor patterns and, on the other hand, we cover the most exciting deal stories and rationales.

Our analyses are based on the most recent data on European industrial equipment manufacturers and construction firms. We expand on these selected subsectors with more detailed analyses by looking at machining solution providers and construction suppliers, respectively.

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The momentum that industrials were able to gain while coming out of the COVID-19 pandemic is also reflected in their relative outperformance compared to the overall stock market. However, during the last twelve months share prices among industrials fell noticeably.

Valuation levels have recently declined significantly. Following the record chase on the stock markets until the end of 2021, the growing uncertainty is clearly reflected in the current and expected EBITDA multiples.

In order to secure operating margins in the medium term, industrial companies need to embrace digital transformation and reassess existing business models. Operational excellence under all aspects moves further into focus.

The number of completed transactions is still rather stable over the last few quarters, particularly in the industrial manufacturing sector. Nevertheless, the number of big-ticket deals as well as the general deal volume is tending to decline. Despite the changing market environment, both strategic buyers and financial investors are finding interesting buying opportunities, among others, due to decreasing valuation levels.

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IFBC Sector Report 2022 - Industrials (publication in German)