Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net turnover increased organically by 8%, driven by higher deliveries of used cars and growth in the service business.
- Strong demand in the service business across all countries, with an organic growth of 8% and profitability of SEK292 million.
- Improved earnings in Norway, with a 15% growth in the service business and better efficiency in workshops.
- Generated a strong operating cash flow of around SEK420 million in Q2, totaling over SEK800 million for the first half of the year.
- Acquisition of a Volkswagen dealer in Stockholm, doubling market share for the Volkswagen brand in Sweden.
Negative Points
- Lower demand and activities for all brands in Western Europe, impacting overall performance.
- Weaker earnings in the car business in Sweden, contributing to a lower overall result.
- Lower profitability in the used car business, with a result of SEK90 million compared to SEK101 million last year.
- Net debt increased to SEK2.7 billion, higher than the SEK2.4 billion in December 2023.
- Challenging market situation for smaller dealers with brands that have a low market share, leading to bankruptcies.
Q & A Highlights
Q: Can you provide an overview of the current market situation in the car industry?
A: The service business is experiencing strong demand with long booking times. Fleet business demand for new cars in Sweden remains stable, while private consumers are more inclined to buy used cars. In Norway, the business climate is improving with growing demand for new cars and good booking times in workshops. However, the market situation is challenging for smaller dealers with low market share brands.
Q: What were the key financial highlights for Q2 2024?
A: Net turnover increased organically by 8%, driven by higher deliveries of used cars and growth in the service business. The company reported a result of SEK410 million with a margin of 3.9%. Norway showed better earnings, while Sweden and Western Europe remained stable.
Q: How did the service business perform in Q2 2024?
A: The service business saw an organic growth of 8%, reporting profitability of SEK292 million compared to SEK275 million in Q2 last year. The growth was attributed to better efficiency in Norwegian workshops and an additional working day in the quarter.
Q: What were the results for the new and used car business?
A: Deliveries of new and used cars adjusted for acquired operations were up by 2% for new cars and 13% for used cars compared to Q2 last year. The new and used car business reported a result of SEK155 million, down from SEK198 million last year, due to facility costs and new brand efforts.
Q: Can you elaborate on the financial position and cash flow for the quarter?
A: The company generated a strong operating cash flow of around SEK420 million in Q2, totaling over SEK800 million for the first half of the year. Cash flow management remains a focus area, with efforts on inventory management and working capital efficiency. The net debt at the end of the quarter was SEK2.7 billion, with a net debt to EBITDA ratio of 1.6 times.
Q: What acquisitions were made during the quarter?
A: Bilia acquired a Volkswagen dealer with five facilities in Stockholm, doubling its market share for the Volkswagen brand in Sweden. The company also took over the importing operations for Jaguar and Land Rover in Sweden and Norway through a joint venture.
Q: What is the outlook for Q3 and the rest of the year?
A: The service business is expected to maintain stable demand with good booking times. Used car activity is anticipated to remain strong with stable prices. There is cautious optimism for new car sales in Q4 2024, driven by improved private customer activity and potential rate cuts.
Q: How is Bilia planning to improve profitability and customer satisfaction?
A: Bilia is working with its business excellence team to enhance profitability and customer satisfaction across all operations. The focus is on improving newly acquired businesses and existing operations that are lagging behind Bilia's standards.
Q: Are there any upcoming events for investors and analysts?
A: Bilia is arranging a Capital Markets Day on November 8, 2024, with invitations to be sent out after the summer. The event will focus on strategies, the service business, circularity, and showcasing core brands with test drives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
