Release Date: July 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Volati AB (FRA:VOG, Financial) reported a solid quarter with sales and EBITA in line with last year's figures despite challenging market conditions.
- Salix Group achieved a 6% sales growth and slightly improved margins, demonstrating effective cost management and long-term value creation.
- Ettiketto Group saw a 7% organic growth in sales and a 30% EBITA growth, driven by successful add-on acquisitions and efficiency improvements.
- Operational cash flow improved by 26% compared to last year, indicating strong cash management.
- The company is in a good financial position with a net debt-to-EBITDA ratio of 2.7 times, providing room for further acquisitions.
Negative Points
- Industry segment experienced a 12% decline in sales and a 19% decline in EBITA, primarily due to a slower 5G rollout.
- EBITA growth per common share was at minus 17%, significantly below the target of 15%, due to market headwinds.
- Return on adjusted equity came in at 17%, below the financial target of 20%, driven by lower EBITA growth.
- Salix Group has faced eight consecutive quarters of negative organic growth, reflecting ongoing challenges in the construction market.
- The company is still experiencing a challenging market environment with declining volumes in both the construction market and the 5G rollout.
Q & A Highlights
Highlights of Volati AB (FRA:VOG) Q2 2024 Earnings Call
Q: You mentioned some negative timing effects for Tornum. Can you give us some sense of how large these effects are and if they're going to affect Q3 in a positive way?
A: The timing effects for Tornum relate to the project-based nature of the business, with revenue recognition occurring upon project delivery. This year, more deliveries are expected in the second half, particularly in Q4, compared to the usual pre-summer deliveries.
Q: For Corroventa, which was positively affected by floods across Europe, do you expect this impact to continue into H2?
A: It's hard to predict, but current floodings are expected to have some effect in Q3. The main driver will be the occurrence of summer storms and rain throughout Europe in the coming months.
Q: How is communication working to compensate for the loss of the 5G rollout?
A: Communication is not solely dependent on the 5G rollout. Other segments have been stable or good over the last 12 months. The North American market has shown slight improvement, with a building order book, indicating potential positive signs on the horizon.
Q: For Salix, which has had eight quarters of negative organic growth, do you see any improvement in demand?
A: There are some positive signs. The overall market decline has slowed, and Salix is likely increasing its market share. External statistics suggest market growth may return in 2025, indicating gradually improving conditions.
Q: What are the main drivers behind Ettiketto Group's strong earnings growth and improved margins, and how sustainable are these rates?
A: The margin improvement is due to synergies and efficiency improvements from acquisitions. While future acquisitions may initially have lower margins, similar improvements are expected over time, making the growth sustainable.
Q: How do you balance the focus between short-term profitability and long-term value growth in such a challenging market?
A: The focus is on long-term value creation, even if it means sacrificing some short-term profitability. Cost measures are structural and aimed at efficiency improvements and synergies, which will benefit the company when market conditions improve.
Q: Can you elaborate on the cash flow development in Q2 compared to last year?
A: Cash flow improved by 26% due to reduced investments and better management of receivables and short-term liabilities. The cash generation rate of 103% reflects the positive results of these efforts.
Q: Do you have any concluding remarks?
A: Volati is in a strong position to capitalize on market recovery, with solid platforms, financial stability, and an active acquisition pipeline. The company is well-prepared for future growth and value creation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
