High-potential SMEs

Egm x-rayed: Nusco dodges superbonus crisis (ebitda +36.6%)

The Campania-based company, which produces doors and window frames, managed to increase margins, despite the stop on subsidies, in the first half of 2024

by Valeria Novellini

2 December 2024

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5' min read

Key points

The numbers
Debt down and at very low levels
For new investments obtained facilities from Mimit

5' min read

There is no more Superbonus and the other subsidies in the building renovation sector are not doing too well either. The companies belonging to the sectors linked to the various bonuses are thus going through a difficult period and not all of them have been able to react effectively to the shock, especially in terms of profit margins. There is one exception: Nusco.

The numbers

The Campania-based group active in the production of doors and windows closed the first nine months of 2024 with an increase in turnover of 6.5% to 37.8 million, also driven by the subsidiary Pinum Doors & Windows Srl, which contributed 14.9 million (+15.5%). But so far these are just revenues. It is more important to emphasise that Nusco, in the first half of 2024, against a 7.5% increase in turnover to 26.5 million (of which 9.7 million generated by Pinum, which recorded a real leap compared to the 5.7 million of the first half of 2023), saw ebitda rise by 36.6% to just under 4 million, ebit by 34.9% to 2.8 million and net profit by 52.3% to 1.6 million.

If one then considers the adjusted ebitda, the increase in the first half of 2024 would have been 42.1% to EUR 4.1 million (the company showed net contingent liabilities of approximately EUR 135,000 in the period). The leading sector in terms of both revenues and margins is the Window and Door sector, which saw revenues rise by 13.2% to EUR 12.2 million and ebitda by 40.5% to just under EUR 3 million in the first half of the year, but above all had an ebitda margin of 24.1% as at 30/6/2024. For Doors, the increase in revenue was 3.1% to 14.2 million and that of ebitda 26.3% to just over 1 million, with a much lower ebitda margin of 7.1%.

Debt down and at very low levels

As at 30/6/2024, net financial debt amounted to EUR 1.1m (down sharply from EUR 2.3m at the end of 2023), and gave rise to an almost irrelevant Debt/Equity ratio, given that shareholders' equity at the same date was EUR 27.4m. The company managed to reduce its bank debt, particularly in the medium/long-term. Prudently for the financial year 2023, no 'cash' dividends were paid out of the parent company's net profit (amounting to EUR 2m), but 1 free share for every 14 held was assigned to shareholders.

The group's backlog as at 30/9/2024 amounted to 18.2 million (+7.5% compared to the same date in 2023), of which 9.2 million related to Pinum (+33.3%). It is therefore clear that Nusco will clearly exceed the revenue trend forecast for the window and door and curtain wall sector in 2024 (-1.1% compared to 2023 according to the trade association Uncmi). And even for 2025 the premises are decidedly more favourable than the -0.5% estimated by the same association (-2.5% in the residential segment and +2% in the non-residential segment).

For new investments, Mimit grants

Nusco is making significant investments, and in particular the new Pinum plant in Moara Vlasei (Romania) of 20,000 square metres and dedicated to the production of both doors and window frames is under construction; the works should be completed by the first quarter of 2025. But the plants at home will not be neglected, since the company has been awarded the benefits provided by Mimit for the promotion of SMEs in the Southern Regions for a total of 3.65 million (of which 1.9 million in non-reimbursable plant grants and 1.7 as a subsidised loan to be repaid in 7 years).

The sum will cover 75 per cent of the planned investment of EUR 4.87 million in the Nola plant with the renovation of a production line for window frames, the automation of two vertical warehouses, the digitisation of the order management system, and the installation of 500 kWh of photovoltaic panels on the roof of the plant, which will make it completely energy self-sufficient. These activities will be implemented within 18 months and will, among other things, increase the plant's production capacity by 20%.

In addition to the aforementioned contributions and financing, Nusco could in 2025 and 2026 obtain new financial means from the exercise of warrants, the terms of which were extended to May 2024 and will now also be exercisable between the end of June and the beginning of July 2025 and 2026 at EUR 1.64 and EUR 1.8 per share, respectively. But as of today, the share price is just over EUR 0.9 per share.

Sales network expansion and new product launches planned

Quotations that do not seem to be congruent with the economic-financial trend and the prospects of the group, whose strategy envisages as a priority expansion in emerging markets (currently 64.51% of revenues are achieved in Italy, 33.79% in the EU area and only 1.7% in the rest of the world), but also the aforementioned streamlining of internal production processes, the development and integration of the Pinum business (which will obviously lead to a greater incidence of revenues from abroad), the strengthening of certification and technological development activities, and, from a commercial point of view, the increase in single-brand shops (in franchising), the diversification and customisation of the commercial offer, co-marketing initiatives with retailers, and production and commercial synergies with companies in complementary sectors.

In the meantime, Nusco has developed wood-aluminium window frames characterised by a 20 per cent improvement in thermal performance, 15 per cent improvement in acoustic insulation and 25 per cent improvement in service life compared to traditional wooden frames. Through process optimisation and the introduction of innovative technological solutions, the company has managed to reduce the production time, energy consumption and production costs of powder-coated window frames (for which environmentally friendly powder paints are now used). It will present at the 'Arkeda' building, architecture and design exhibition and conference in Naples the latest Sintesy W70 wood-aluminium window frames and the new products in the Doors range.

The production of wooden window frames will now be managed directly after the termination of the subcontracting contract with Modo Srl (which was owned by the Nusco family), in which the company had acquired 44.17% at the end of 2023 by subscribing a capital increase of 1.06 million euro for which no money was disbursed, but for which there was a credit of 600,000 euro to be paid in two tranches in 2024 and 2025. Nusco will absorb the 112 employees of Modo Srl (which has been placed in voluntary liquidation) and estimates annual cost savings of EUR 300,000 in addition to simplifying financial management.

Low flotation

As is often the case with Euronext Growth Milan companies, the free float is low and in this case amounts to 20.15% of the share capital. Exchanges on the stock are also, unfortunately, at a very low level, and all this probably explains to a large extent a quotation trend that is no different from that of companies operating in contiguous sectors but with sharply declining profit margins, unlike Nusco. From an ESG point of view, it should be remembered that the company, on a voluntary basis, has been drawing up a sustainability report since 2022; only since 2023 has it been included in the size requirements of the CSRD Directive on sustainability reports. It is also the official sponsor, since 2024, of Avellino Basket, which plays in the A2 Series.