Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nederman Holding AB (OSTO:NMAN, Financial) reported the second most profitable quarter in its history.
- The company saw improved profitability with an adjusted EBITA margin of 12.8%, up from 12.0% in the same quarter last year.
- Service business growth contributed significantly to the higher profitability.
- The company launched several new products, including energy-efficient filters and digital solutions, which have been well-received in the market.
- Strong performance in the EMEA region with growth in orders and sales, particularly in the extraction and filtration technology division.
Negative Points
- Orders received for the group as a whole were down, particularly in the process technology division.
- Sales decreased during the quarter, with a notable drop in the process technology division.
- Currency neutral order intake was down 8.9% year-over-year for the quarter.
- The company faced one-off costs related to the relocation of RoboVent operations, impacting profitability.
- Economic uncertainty and geopolitical risks pose potential challenges to future growth and investment decisions.
Q & A Highlights
Q: What is your view of the orders received in the quarter? Are there currently sufficient order backlogs to support good growth in the coming quarters, or how should we interpret this?
A: The backlog overall is largely the same level as it was at this point last year, indicating a strong position. There is a higher portion of the backlog in extraction and filtration technology and monitoring and control technology, which are typically more profitable. While huge growth figures may not be expected in the coming quarters, the strong backlog supports a stable outlook.
Q: It's good to see that you were able to keep profitability at a higher level during the quarter. Could you give some color on what is the main contributor to this development?
A: The main contributors to higher profitability include growth in the service business, a higher portion of monitoring and control technology, and investments in production efficiency. For example, in the Thomasville plant, 50% of the electricity used in the first six months came from solar panels.
Q: Regarding the process technology division and the profitability reported there, would you say that it would be able to maintain a higher margin also when volume comes back?
A: The division is significantly different from a few years ago. While higher project business might lead to a slight decrease in EBITA margin from the current 12%, the division aims to maintain an 8% to 10% margin even during periods of heavy solution sales.
Q: You reported higher order received from textile and fiber industries, although from low levels. Are you expecting this positive trend to continue going forward in these more traditional industries?
A: There is a slightly favorable trend, and we feel the bottom has been reached with some improvement expected. While the peak levels of 2021-2022 are a long way off, the market is heading in the right direction.
Q: The Nordfab Now concept contributed a lot to the division in the quarter. Is this concept already at full capacity, or is there room for improvement?
A: Nordfab Now is driving order intake and improving production efficiency. There is still room for improvement, and we aim to expand this concept further. The increased inventory and automated order handling are expected to drive growth and improve margins.
Q: I sense in the report that you are slightly more optimistic about the development in EMEA compared to earlier. Is that correct?
A: EMEA is still behind the USA in terms of positivity. While there have been more larger orders, there is still hesitancy to invest, particularly in mid-size orders. The overall outlook remains cautious.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
