Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bonava AB (FRA:66B, Financial) saw improvement in demand across the board, particularly in the Swedish and German markets.
- The company started 66 homes in the Seminariet project in Uppsala, attracting significant interest.
- Net debt was significantly reduced from SEK6.6 billion last year to SEK3.8 billion this year.
- The company has a strong pipeline of projects lined up for the second half of 2024.
- Operating cash flow improved significantly, amounting to SEK720 million compared to minus SEK34 million last year.
Negative Points
- Net sales decreased to SEK2.3 billion from SEK3.6 billion last year, impacted by lower business volumes.
- The operating EBIT margin was 4.5%, which is below the desired level.
- The gross margin was negatively impacted by selective price adjustments and indirect production costs.
- The Swedish and Finnish markets remain challenging, with lower margins and negative operating EBIT in Sweden.
- Financial expenses increased significantly from minus SEK116 million in Q1 to minus SEK184 million in Q2, partly due to negative currency impacts.
Q & A Highlights
Q: There's a solid quarter-over-quarter hike in financial expenses from minus SEK116 million in Q1 to minus SEK184 million in Q2. Can you give a detailed reason why they have increased?
A: Lars Ingman, Acting CFO: The increase includes costs for bank and guarantee fees, and there was also a negative currency impact. The pure interest cost did not increase significantly.
Q: We have seen investor sales recently done with a low EBIT margin. How do you look at the competitive landscape and the outlook for securing profitable deals?
A: Peter Wallin, CEO: The investor market has been suppressed due to higher production costs and reduced sales prices. However, we are seeing more traction in the Swedish market, and the German market remains stable. The deals lined up in Germany are profitable, adding business volumes and cash flow.
Q: Can you comment on the consumer market and the starting of projects across your business units?
A: Peter Wallin, CEO: We are seeing stable growth in Germany, the Baltics, and Sweden. Conditions have improved in these regions during the second quarter. Finland remains challenging, and we do not expect major volumes there until the end of the year.
Q: Are you selling completed units in all business units, or is there a particular region that stands out?
A: Lars Ingman, Acting CFO: We have been successful in reducing inventory, especially in Sweden, Germany, and Finland. The Baltic states present more of a challenge, but we see no problem in continuing to reduce inventory there.
Q: Can you elaborate on the selective price adjustments? Are they happening in all business units?
A: Peter Wallin, CEO: We are seeing reductions overall. In Germany, the status of completed unsold units is quite low. Sweden and Finland are trimming their stock, while in the Baltics, sales typically happen more at the end of the project.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
