Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Netel Holding AB (LTS:0AAB, Financial) reported a strong organic growth of 7.7% across all divisions.
- The company has a growing order backlog of SEK4.2 billion, indicating future revenue potential.
- Infraservices division showed significant growth with a 12.8% increase in organic growth and an EBITDA margin of 7.6%.
- Netel Holding AB (LTS:0AAB) signed a new three-year frame agreement with Telenor, expanding their telecom operations in Norway.
- The company is focusing on sustainability initiatives, including submitting an application for SBTi targets, which could enhance their market position.
Negative Points
- Adjusted EBITDA was impacted by low volumes in the telecom sector in the UK, Germany, and Sweden.
- The company experienced a slow start in the beginning of the quarter, affecting overall performance.
- Telecom division's EBITDA margin was lower at 2.2%, indicating room for improvement.
- The leverage ratio is slightly above the target level, standing at 2.8 times compared to the target of below 2.5.
- Seasonality affects cash flow, with significant capital needed in the operations during ramp-up periods, impacting liquidity.
Q & A Highlights
Q: How much of the current order backlog is expected to be delivered this year?
A: Around SEK1.5 billion of the SEK4.2 billion order backlog is expected to be delivered this year. - Jeanette Reuterskiold, CEO
Q: Do you foresee 2024 being a growth year for Netel?
A: While we don't provide full-year estimates, we are working on strategic initiatives to improve financial performance and have seen good development in the first half of the year. - Jeanette Reuterskiold, CEO
Q: What progress do you expect in releasing working capital during the second half of the year?
A: We continue to work on improving cash flow and working capital, expecting positive cash flow in the fourth quarter due to seasonality and focused efforts on receiving due payments. - Fredrik Helenius, CFO
Q: Where do you see the biggest growth opportunities given the current market outlook?
A: Growth opportunities lie in maintaining talent, enhancing collaboration with suppliers and subcontractors, and focusing on organic growth in telecom, infraservices, and power segments. - Jeanette Reuterskiold, CEO
Q: Why was the telecom segment in Finland particularly strong in Q2?
A: The significant improvement was due to nearly 100% higher revenue from fiber rollout projects that started last year, ramping up volumes significantly. - Jeanette Reuterskiold, CEO
Q: Can you provide an update on the telecom segment in Germany and the UK?
A: We have secured a new customer, UGG, in Germany and are working to increase volumes in the UK with several clients. - Jeanette Reuterskiold, CEO
Q: Should telecom margins be expected to remain lower than infra and power in the medium to long term?
A: We are working on margin-enhancing activities in telecom to align with our midterm financial targets. - Jeanette Reuterskiold, CEO
Q: How important is sustainability in winning new deals?
A: Sustainability is increasingly important, with clients asking how we can help them achieve their SBTi goals. We aim to be a professional partner in this area. - Jeanette Reuterskiold, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
