Release Date: July 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales levels remained strong in Q2 2024, maintaining the momentum from previous quarters.
- EBIT margin improved compared to the same quarter last year.
- The acquisition of distributor Exim has shown a positive contribution and is expanding its business.
- TensionCam, a startup majority-owned by Bulten AB (LTS:0P49, Financial), secured its first business win, indicating demand for technological advancements in the fastener industry.
- A new agreement with FNsteel will provide access to high-quality scrap-based steel, aiding in achieving sustainability targets.
Negative Points
- Volatile demand from European vehicle OEMs has impacted manufacturing stability.
- Q2 2024 operating results were not as strong as Q1 2024 and did not meet company ambitions.
- Delays in ramping up major customers in the US have affected North American operations.
- Challenges in agreeing on price increases with customers to offset higher costs.
- The transition to a new regional organization involves significant changes and requires time for new leaders to adapt.
Q & A Highlights
Q: Can you provide more details on the performance of Exim and its integration into Bulten?
A: (Christina Hallin, Interim President and CEO) Exim, which we acquired almost a year ago, has shown a good contribution and is expanding its business. We are in the process of setting up a sales office in Europe, moving into the distribution business there. Exim will also distribute TensionCam products, showcasing a good crossover between our business lines.
Q: What are the main challenges Bulten is facing in the current market environment?
A: (Christina Hallin, Interim President and CEO) We face volatile demand from European vehicle OEMs, impacting our manufacturing stability. Additionally, we have challenges in agreeing on price increases with some customers to meet higher cost levels. The heat treatment failure in Poland also negatively affected our manufacturing processes and financials.
Q: How is Bulten addressing sustainability and reducing emissions?
A: (Christina Hallin, Interim President and CEO) We signed an agreement with FNsteel for access to the best scrap-based steel, enabling us to offer greener products. This agreement will significantly impact our Scope 3 emission target, aiming to reduce emissions from suppliers by 25% per ton sold by 2013.
Q: What are the key financial highlights for the second quarter?
A: (Anna Akerblad, CFO) Sales volumes increased by 3.5% compared to the same period last year, with strong sales in automotive suppliers and other industries. The EBIT margin improved to 5.1%, although it is still lower than our first quarter and full-year target. Adjusted earnings per share for the second quarter were SEK1.64, down from SEK1.82 last year due to interest expenses from the Exim acquisition.
Q: How is the new regional organization performing?
A: (Christina Hallin, Interim President and CEO) The new regional organization is progressing well, with delegated responsibilities and higher accountability leading to operational improvements. However, it involves significant changes and requires time to train the new organization. We are seeing positive effects but need more time to fully realize them.
Q: What are Bulten's priorities for the upcoming period?
A: (Christina Hallin, Interim President and CEO) Our top priority is to improve profitability, especially in the European automotive industry. We aim to stabilize and enhance our margins through operational improvements and commercial strategies. Additionally, we will continue to streamline the organization for higher efficiency and effectiveness.
Q: Can you elaborate on the new bank agreement?
A: (Anna Akerblad, CFO) We signed a new bank agreement with Danske Bank, Citibank, and SEK, securing a credit facility of SEK1,710 million. The agreement is valid for three years with additional one plus one extension options. This new agreement strengthens our financial position.
Q: How is Bulten's performance in different regions?
A: (Christina Hallin, Interim President and CEO) In Europe, the new management team is improving operations with a focus on safety and quality. In Asia, the new President is focusing on quality and setting up a plant in India for micro screws. In North America, we are focusing on organic growth within automotive, despite delays in major customer ramp-ups.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
