Steady execution amid uncertainty: Reaffirming BUY. 

Solid 2024. Despite intensifying geopolitical tensions, Bauer AG reported a strong revenue of EUR 2.18bn (+19% yoy), largely driven by the Geotechnical Solutions (GS) and boosted by the completion of a major project in Hungary (EUR 318m). Despite the significant top-line growth, EBIT remained flat yoy at EUR 89.1m, weighted down by provisions related to the Hungary project (triggered by sanctions on Russia), inventories write-off, and higher material cost. Nevertheless, Bauer successfully reduced net debt by 8.6% to EUR 375m and achieved a record-low net debt/ EBITDA of 1.68x (2023: 2x), highlighting continued financial discipline and successful execution. Moreover, total assets slightly declined yoy, despite higher revenues, suggesting better capital efficiency. 

Strengths in construction and mining. GS delivered robust revenue growth (+31.8%), though earnings were dampened by risk provisions. Operational performance was strong across most regions, supported by ongoing restructuring efforts and selective subsidiary closures aimed at improving cost efficiency. In Asia, where macroeconomic softness persisted, Bauer initiated further measures to streamline operations and align resources with market realities. The Equipment segment showed stable business trends, particularly in Europe and the Middle East, although structural headwinds in China and deferred investments in the U.S. limited earnings and upside. Notably, Resources continued its positive trajectory, with strong mining results and order backlog growth offsetting softness in Germany’s environmental sector, which reflects weak domestic construction activity and rising competitive pressure. 

Strategic execution and innovation continue. Bauer remains firmly on its transformation path, optimizing its global footprint and continuing to exit non-performing subsidiaries. Investments in innovation accelerated in 2024, with EUR 40m spent on R&D — including technologies like hydrogen-powered rigs, electric soil mixing, and offshore wind foundation solutions. Management is actively driving supply chain efficiency, strengthening its international production network (including the completion of a new facility at subsidiary Klemm in Drolshagen), and increasing product-customer alignment. These initiatives position Bauer for margin uplift and further differentiation from global peers in the upcoming years.

Further improvement in profitability in 2025. Order backlog declined 21.6% to EUR 1.22bn, mainly due to the completion of the Hungary mega-project and softer demand in Equipment amid headwinds in China and the U.S. With this project winding down, revenue is expected to contract meaningfully in 2025. Still, management guides for a modest improvement of EBIT, staying focused on its profitability-before-growth strategy. Over time, long-cycle tailwinds such as EU infrastructure programs, German energy investments, and global electrification should support demand across Bauer’s core markets, though we see these drivers materializing gradually, likely not before H2 2026. With a reinforced balance sheet, streamlined operations, and a sharpened focus on performance and technology leadership, Bauer is structurally stronger than in prior cycles. We reiterate our BUY with a revised price target of EUR 13.00, underpinned by improving margin quality, accelerating innovation, and strategic discipline, that positions the Group to outperform as infrastructure tailwinds build.