Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bravida Holding AB (FRA:BV0, Financial) reported a total growth of 5% for the second quarter of 2024, with organic growth at 1% and service sales growth at 8%.
- The company has a strong order backlog of SEK17.6 billion, one of the highest ever, providing visibility and comfort for future operations.
- Norway showed significant improvement with a 22% growth in sales and a 10% organic growth, indicating strong performance in this region.
- The company achieved a strong operating cash flow of SEK548 million, a significant increase from SEK134 million last year, with a cash conversion rate of 112%.
- Bravida Holding AB (FRA:BV0) continues to see good opportunities for growth through acquisitions, having completed eight acquisitions in 2024, adding around SEK400 million in sales.
Negative Points
- The EBITDA margin decreased to 4.5% from 5.6% last year, primarily due to operational challenges in three regions in Denmark and a weak market in South Sweden.
- The market in the southern part of Sweden remains challenging, with a negative impact on the company's overall performance in this region.
- Denmark's performance was notably weak, with an EBITDA margin of just 0.1% compared to 4% last year, due to ongoing challenges in three regions.
- Order intake in Denmark decreased by 32%, reflecting the selective approach to new projects in response to market conditions.
- The company faced extra costs related to audits and investigations, amounting to SEK4-5 million, impacting the financial performance in the Swedish segment.
Q & A Highlights
Highlights from Bravida Holding AB (FRA:BV0) Q2 2024 Earnings Call
Q: The Denmark market margin sequentially worsened. Is this just quarterly volatility or are there bigger issues? Has this changed your Q4 margin guidance?
A: No specific reasons for the change. We haven't altered our guidance and still expect normal margins in Q4. The current low margins are due to timing effects and project execution. We remain confident in Denmark's future performance. (Mattias Johansson, CEO)
Q: Can you provide an update on the accounting and project completion in Denmark? Have sufficient write-downs been taken?
A: The percentage of completion (PoC) in Denmark is improving. We expect Q3 to be weak, but Q4 should see improvements. New projects have better payment plans and terms. (Mattias Johansson, CEO; Asa Neving, CFO)
Q: How is the order intake in Sweden, particularly in the southern region?
A: The order intake is better in the northern part of Sweden. The southern part remains challenging, but we see signs of it bottoming out. We expect a challenging two quarters ahead in the south. (Mattias Johansson, CEO; Asa Neving, CFO)
Q: Are we past the low point of the down cycle, and can we expect a recovery in 2025-2026?
A: We believe we are nearing the low point. The market is late-cyclical, and while confidence is improving, it will take time for investments to translate into projects. We expect a gradual recovery starting in 2025. (Mattias Johansson, CEO)
Q: Have you implemented any new internal systems to catch issues early, following the over-invoicing incident?
A: We have improved our systems and controls, including automating processes and educating staff. We have also updated our code of conduct and added it to employment contracts. (Mattias Johansson, CEO; Asa Neving, CFO)
Q: Have there been any extra costs related to audits and investigations in the second quarter?
A: Yes, we incurred approximately SEK4-5 million in extra costs related to audits and investigations in the Swedish segment. (Asa Neving, CFO)
Q: What are your expectations for working capital going forward?
A: We expect working capital to improve slightly but not to stay at extremely low levels. Around 3% is a reasonable expectation. (Asa Neving, CFO)
Q: Have you done enough to adjust costs in Southern Sweden, and what will this mean for margins in H2?
A: We continue to adjust resources based on local demand. We are working on resizing in about 25 different places, which should help improve margins. (Mattias Johansson, CEO; Asa Neving, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
