HOMAG Group: Strategies for resilience in a difficult year for the timber industry

In a year marked by global economic uncertainty, the world leader in woodworking equipment, the HOMAG Group, is demonstrating how strategic management and operational flexibility can maintain business stability even in unfavorable market conditions. Results in 2024 offers valuable lessons for the whole wood industry about adaptability in the face of challenges.

Performing in a difficult economic environment

Preliminary figures for fiscal year 2024 show that HOMAG has succeeded in stabilizing its position in the market, recording orders of €1,357 million, very close to the previous year's level (€1,395 million). This stabilization is remarkable in a context where overall market demand showed no signs of significant improvement.

The sectoral analysis reveals an interesting disparity: the individual machinery segment continued to be affected by investment reluctance in the furniture industry, while project-related business, particularly in timber construction, developed positively. This contrast points to a potential recalibration of the market, with increased interest in integrated solutions for timber construction - a trend that could define the direction of the sector in the coming years.

Post-pandemic management: from boom to reality

After the period of accelerated growth during the pandemic, which generated an impressive volume of orders in the furniture industry, HOMAG is now going through a phase of normalization. Turnover decreased by 131TPTP3T to €1,413m (previous year: €1,625m) and the order backlog shrank to €781m (compared to €841m at the end of 2023).

For companies in the B2B sector of the timber industry, this development provides an important perspective on post-pandemic business cycles and the need for long-term planning beyond temporary market fluctuations.

Efficiency strategies with concrete results

In the face of declining demand, HOMAG implemented a comprehensive package of efficiency measures initiated in the last quarter of 2023. It included:

• Reducing the workforce by around 600 positions globally (no economic layoffs in Germany)
• Implementation of reduced work programs
• Optimizing production capacities
• Streamlining operational processes

The results of these measures are reflected in the maintenance of an EBIT of €50.8 million, which, although significantly lower than the previous year (€129.7 million), is still above the company's forecasts.

This proactive approach to cost management provides an example of best practice for other companies in the industry, demonstrating the importance of operational agility in times of market contraction.

Services - the pillar of stability in uncertain times

One of the most relevant lessons from the HOMAG results is the strategic importance of diversifying the business model. While equipment sales have been affected by reduced investment, the service segment has seen slight growth, providing an anchor of stability despite difficult market conditions.

For companies in the woodworking industry, this underlines the value of developing a strong portfolio of after-sales, maintenance, consultancy and technical support services that can ensure more stable revenue streams and long-term customer relationships.

Outlook for 2025: prudence and calibrated optimism

HOMAG forecasts for 2025 reflect a balanced approach between caution and optimism. The company anticipates:

• A possible revival in demand in the second half of 2025
• Maintain turnover at 2024 level
• Orders at previous year's level or slightly up
• Improved financial results supported by full implementation of cost reduction measures
• Continued growth in service revenues

A potential catalyst for the market could be the international LIGNA fair in May 2025 (Hannover), which could generate a new wave of orders and revitalize interest in investing in new technologies.

Digitization and the tapio ecosystem - long-term growth drivers

Beyond the financial figures, HOMAG's strategy continues to focus on digitization, offering its customers integrated solutions with digital continuity from the point of sale to the entire production process, supported by a complete software suite.

The "tapio" ecosystem, an open IoT platform that facilitates the flow of data along the entire value chain of the wood industry, is a strategic direction that can differentiate the company in the long term and create new growth opportunities, even in a challenging economic context.

Implications for the timber industry

HOMAG's strategy to meet market challenges provides valuable insights for the entire woodworking industry:

1. Strategic diversification - Balancing different product and service segments can mitigate the impact of market fluctuations.
2. Operational flexibility - The ability to quickly adjust resources and costs according to demand is key to maintaining profitability.
3. Innovation orientation - Even in difficult times, investment in digitization and the development of new solutions remain critical factors for competitiveness.
4. Focus on services - Developing a strong portfolio of services can provide financial stability and long-term client relationships.
5. Prudent planning - Realistically assessing market trends and adapting strategies accordingly are essential to navigate through uncertainty.

In conclusion, HOMAG's 2024 results and its adaptation strategies represent a relevant case study for the entire timber industry, providing valuable insights into how current economic challenges can be managed while maintaining strategic positioning for future growth.