Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Introduction of Domenico Iacovelli as the new CEO, bringing extensive industry experience.
- Bystronic AG (XSWX:BYS, Financial) maintains a strong balance sheet with an equity ratio of about 70%.
- Launch of new products such as ByCut Eco and ByCut Nova to cater to lower segments.
- Continued focus on becoming an end-to-end solution provider, which is seen as a key future strategy.
- Despite challenges, the company has a resilient service business, contributing CHF111 million in net sales.
Negative Points
- Significant decline in order intake, down to CHF305 million, CHF160 million less than the previous year.
- Sales declined to CHF330 million, leading to an EBIT loss of CHF23 million, the lowest in the company's history.
- Weak market conditions in key sectors like agriculture and automotive, impacting overall performance.
- Increased cancellations of orders, adding to the financial strain.
- High operational expenses relative to net sales, indicating inefficiencies that need addressing.
Q & A Highlights
Q: Can you elaborate on the statement about increasing exposure to fast-growing end markets?
A: Chop shops will remain our main customers. We need to move towards end-to-end solutions and new markets without neglecting our existing customer base. For example, we are working on projects with automotive OEMs, which is a new market for us.
Q: Does entering new markets require changes to your products?
A: We already have a wide product range that can attract these new markets. It will require a change in our market approach and exposure, but not necessarily in the products themselves.
Q: What was the error in the big projects that seem to have gone out of control, and how can you fix it?
A: The projects are not out of control but are experiencing iterations. We are learning from these iterations and improving. For example, installation times have improved significantly, indicating better control over new projects.
Q: You mentioned some recovery in order intake. Can you clarify this?
A: EMEA showed slight improvement in Q2 compared to Q1, but other regions were weaker. We expect this dynamic to continue, balancing out over the year.
Q: Should we expect a similar loss in the second half as in the first half?
A: Market visibility is limited, and the order backlog is not increasing. Without a market recovery, it is fair to assume similar losses. However, we are analyzing how much to invest for the future versus reducing costs.
Q: Can you elaborate on the differentiating factors of your equipment compared to competitors?
A: We are market leaders in quality, functionality, and software. We are launching new products like ByCut Nova and ByCut Eco to enter lower price segments while maintaining our promise of quality and reliability.
Q: What has changed since last year when you mentioned signs of market stabilization?
A: The decline is mainly in the Americas, particularly the US. Order intake has been lower compared to previous quarters, impacting overall performance.
Q: Do you expect cautious order momentum from clients due to upcoming innovations at EuroBLECH?
A: We do not expect lower order levels. EuroBLECH usually positively impacts order intake, and we are launching new products during the event.
Q: What are your expectations for cost savings from the optimization program?
A: We are on track to execute both structural and volume-related cost savings. We need to further analyze and potentially go beyond the current optimization program.
Q: How significant is the price competition in China?
A: We face a price deterioration of around 20% in China. Despite this, we maintain volume with our second brand. The Bystronic brand is less affected in China for export business.
Q: What is the reason for the 2% market share loss?
A: The main driver is our resilience on pricing. We kept our prices, which is a strategy to maintain value during an upswing. However, this has led to a loss in market share during the downturn.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
