Financial Data

                                                

We have closed another year of growth, bolstering our volumes and, most importantly, achieving a substantial improvement in our margins. This success was attained despite a complex global environment, marked by an ever-evolving geopolitical landscape that impacts our key markets and all international supply chains.

In addition to the war in neighbouring Ukraine, which in the last couple of years caused a strong increase in energy and raw material prices, the conflict in the Middle East came to further complicate the economic situation by bringing logistical dysfunctions in the Suez Canal area. 

Both situations have unclear contours and continue to cause anxiety within our reference sectors. Such instability is also having a major effect on the growth of interest rates. Clearly, these are external factors over which we have limited control; all we can do is monitor the situation and stay on full alert so as to mitigate any potential impacts on our business. 

Despite the above, 2023 proved to be highly successful, with turnover surpassing 845 million Euros and, more importantly, with a remarkable improvement in profitability, as demonstrated by an EBITDA of 81 million Euros – a 43% increase on the previous year. These results are down to strong teamwork that has allowed our Group to expand its market share through a product range offer that met customers’ expectations. 

Thanks to strategic investments in recent years, we have strengthened our industrial capabilities, attaining a level of profitability that represents a notable improvement compared to previous years. Building on these successes, we plan to keep a high level of investments into 2024, committing an additional 50 million Euros to enhance our production capabilities and foster technological innovation. This will increase the Group’s total investment to 185 million Euros for the four-year period from 2021 to 2024.

Delving into the specifics of the financial year just completed, in this letter I would like to concentrate on three crucial factors in our success. 

First, the relation with our customers remain paramount. Even during the most challenging years, we were always able to preserve and enhance the relationship with our partners, working by their side to create solutions more and more tailored on their needs. And today we are harvesting the fruits of years of hard work. 

This is reflected in several prestigious awards we received in recent months. These included the Caterpillar Supplier Excellence Recognition given to both Carraro India and Carraro China, and the Mahindra & Mahindra Superior Performance Award obtained by Carraro India. Additionally, Carraro Drive Tech was honoured with the Manitou Ecoboost Gold Award for its low-impact technological innovations, and Carraro India received dual commendations from Escorts Kubota, marking 40 Years of Partnership and the honour of Best Spare Parts Supplier. 

During our meetings at last Agritechnica, the premier global event for agricultural mechanisation, taking place in Hanover, we recorded a significant surge of interest in Carraro’s solutions, spanning both our established products and the innovative electric drive systems we’ve recently introduced. Out of all of them, I would like to mention the new “THE” line of transmissions, designed to respond to the various requirements of a broad spectrum of applications, including telehandlers, backhoe loaders, skid steer loaders and wheeled excavators. This line had already garnered positive feedback at prior international events focusing on the construction equipment sector too. At Agritechnica, we also had the chance to showcase the latest updates to our agricultural transmission line, which now offers increased power capacity and incorporates cutting-edge efficiency and sustainability principles through the use of the most advanced technologies in the industry (AG+ Line). We proved to have established a clear position of leadership within an increasingly competitive market. And most notably, we have shone a light on the results of our rapid advancement towards sophisticated technologies tailored for newly developed applications.

The second aspect I wish to emphasise is the substantial drive we have been maintaining, already for several years, towards a complete digital transformation of our Group. The aim is to accelerate change throughout the company, from management processes to production.

In this context, the new frontier we are moving towards is understanding and maximising the potential of Artificial Intelligence (AI). Recognising the significant opportunities that arise from AI for a more efficient process management and a faster product development, we are collaborating with key competence centres and universities, securing targeting public and private funding to supplement the investments already made by our Group that will enable us to speed our progress along this journey. 

Artificial intelligence will allow us to use technology in our day-to-day activities, as we focus on boosting the skills of Carraro staff while simultaneously enhancing the quality and efficiency with which we can meet stakeholders’ needs.

This can only occur alongside the simultaneous development of “digital and technological literacy” at every level of Carraro’s workforce, with staff to be gradually enrolled in specialised training programmes to allow a new digital culture to take root and flourish. 

Human capital is, without doubt, the cornerstone of our Group. It is, and always will be, our people who make the difference: so was in the past, is at present and will be in the future. 

Since last year, and increasingly in 2024, we have positioned the individual at the heart of a developmental journey. This is down to a broad and ambitious Human Capital Management project, which will enable us to really foster the development of our Carraro employees through a modern and systematic approach, while also increasing the appeal of our Group to the new generations of talents who will become part of our team. In demonstration of this, in 2023 we invested over 35,000 hours in training our staff through the newly established Academy for Professionals and the Carraro Business School. 

As we move forward, we will remain committed to our core values, which have served as the guiding principles throughout every stage of our Group’s history – both in periods of growth and, most importantly, when confronting the challenges we have faced. 

Carraro’s values are intrinsically linked to another transformation we are undergoing: the move towards a fully sustainable business model. Today, sustainability is increasingly being integrated into all our activities and processes, within a coherent vision of development that positions us alongside our partners. This is a shared endeavour, to which we can all contribute. Whether it’s cutting CO₂ emissions, championing gender equality in the workplace, or aiding in the creation of sustainable communities, each action we take moves us closer to a better world. Our dedication in this area is intensifying, and a detailed account of it can be found in our Sustainability Report. This is released alongside the Annual Report, enabling a full evaluation of all our Group’s activities, going beyond economic factors. 

In closing this letter, I am looking at the current financial year with optimism. 

In 2024, despite a slowdown in our principal markets, we are already making strides in targeted geographic regions and with new product lines, while also acquiring new customers in our traditional sectors. 

Notwithstanding the complexity of the current scenario, we expect an increase in the Group’s operating margin, which will lay the foundation for a new phase of growth supported by the substantial long-term investments we have made over the years.