Release Date: July 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales increased by 11% with 6% organic growth.
- EBITA improved by 12%, adjusted for the positive calendar effect.
- Margin improvement increased to 9.8%.
- Six out of eight business areas reported organic growth and EBITA improvements.
- Two new acquisitions in Germany and the Netherlands, adding expertise in water treatment and technical installations for sustainability.
Negative Points
- Restructuring costs of SEK58 million impacted the results.
- Weak demand in traditional industry services and residential and commercial real estate segments.
- Negative growth in the UK and Finland markets.
- Significant restructuring actions required in the UK, Sweden, and Finland.
- Higher personnel expenses, including restructuring costs, had a negative impact on EBITA.
Q & A Highlights
Q: It's encouraging to see the billing ratio improving this quarter. Did you see most of the positive impact from the efficiency measures already now in Q2? Or is there more to come?
A: (Olof Stalnacke, CFO) It will be a gradual impact. The actions taken have not all happened at the start of the quarter but gradually, so the improvement should continue.
Q: Regarding the weak demand in residential and commercial real estate, are you starting to see more projects coming in now, perhaps starting in H2?
A: (Asa Bergman, CEO) There is no change in those segments; they are still weak. We will report when we see effects in our orders received and order book related to those segments.
Q: How do you ensure controlled expansion in Germany to avoid previous challenges?
A: (Asa Bergman, CEO) We work with a very strict due diligence process and are selective in our acquisitions. We focus on the right areas and competencies needed for growth in Germany.
Q: Is the UK market a good platform for bolt-on acquisitions, or do you need to restart given current challenges?
A: (Asa Bergman, CEO) We are focusing on more stable growth areas in the UK. With the measures and redundancies taken, we foresee a more stable performance going forward.
Q: Regarding Finland, is the weak performance mainly due to market conditions or internal issues?
A: (Asa Bergman, CEO) It has been mainly a market situation. With the measures and redundancies taken, we are well-positioned in the Finnish market.
Q: Can you quantify or give direction on how the order book has developed quarter-on-quarter?
A: (Olof Stalnacke, CFO) The order book has continued to grow in absolute terms. It is slightly down in relation to LTM net sales growth but still shows a good order inflow.
Q: What triggered the strong working capital release in Q2?
A: (Olof Stalnacke, CFO) We took action on working capital, and part of that is what we are seeing now. We have made a reduction and are back to levels seen in '21 and '22 before the acceleration of growth.
Q: What is the M&A outlook, particularly in Germany?
A: (Asa Bergman, CEO) We are focusing on areas related to the green transition, such as water, infrastructure, and sustainability services. We are working with a broad portfolio and are selective in our acquisitions.
Q: Do you see a diminishing effect from prices versus wages on earnings?
A: (Olof Stalnacke, CFO) There are always fluctuations between quarters. Q2 is challenging due to salary revisions, but we see no general change in the trend and are confident in balancing prices and salary increases.
Q: Will restructuring efforts continue to be a recurring event to drive efficiency?
A: (Olof Stalnacke, CFO) The recent high number of FTE reductions is likely a peak. We will take necessary measures to improve efficiency but have no major plans for further restructuring right now.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
