Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Studsvik AB (FRA:SUD, Financial) reported higher sales, operating profit, and margins compared to the same period in 2023.
- The acquisition of Extrem Borr och SÃ¥gteknik is expected to positively impact earnings and complements Studsvik's decommissioning services.
- The inDRUM demonstration facility is a significant investment that has led to a partnership agreement with Uniper, enhancing Studsvik's waste management technology offerings.
- Studsvik's participation in international forums and conferences strengthens its position and supports new nuclear initiatives.
- The SCIP and SMILE projects have gained international recognition and expanded membership, highlighting Studsvik's role in reactor technology and safety development.
Negative Points
- Free cash flow for the half year is negative at SEK40.9 million, primarily due to higher investment levels and increased capital tied up in customer projects.
- Higher replacement investments in the fuels and material technology business area have negatively impacted cash flow.
- Delays in regulatory permits for fuel transport in Europe have affected production output and delivery schedules.
- Customer delays connected to license agreements have postponed engineering services in the waste management technology business area.
- The need to onboard new personnel in the German market to support growth in the decommissioning area indicates a resource constraint.
Q & A Highlights
Q: Can you provide more details on the acquisition of Extrem Borr och SÃ¥gteknik and its expected impact?
A: (Peter Teske, CFO) The acquisition of Extrem Borr och SÃ¥gteknik, effective from July 1, 2024, is expected to positively impact earnings in 2024. The company specializes in segmentation within the nuclear power industry and complements our decommissioning and radiation protection services. We anticipate synergies and enhanced service offerings both in Sweden and internationally.
Q: What are the main reasons behind the negative cash flow for the half year?
A: (Peter Teske, CFO) The negative cash flow of SEK40.9 million is primarily due to higher investment levels, particularly in the inDRUM demonstration facility, which accounts for about 25% of our total investments. Additionally, there are higher replacement investments in the fuels and material technology business area and increased capital tied up in customer projects, especially in China.
Q: How is the progress on the inDRUM demonstration facility and its significance?
A: (Camilla Hoflund, CEO) The inDRUM demonstration facility is a strategic investment to support our market and sales efforts for inDRUM license business. We plan to start customer projects to test nonradioactive materials after commissioning in September. This facility will allow potential customers to see the technology in operation, which is crucial for securing future contracts.
Q: Can you elaborate on the partnership with Uniper and its expected benefits?
A: (Camilla Hoflund, CEO) The partnership with Uniper covers waste consulting and inDRUM technology. By combining our strengths, we aim to provide a complete value chain for the decommissioning of nuclear facilities, focusing on safety, efficiency, and quality. This collaboration is expected to enhance our service offerings and market reach.
Q: What are the current challenges and focus areas in the fuels and materials technology business?
A: (Camilla Hoflund, CEO) We are working on improving production output and speeding up the delayed regulatory permits for fuel transport in Europe. Additionally, we are focusing on material transport to secure deliveries to the site. The OECD Nuclear Energy Agency's projects, SCIP and SMILE, continue to be significant, with international collaboration and increased interest in lifetime extension.
Q: How is the Scandpower software business performing, and what are the future prospects?
A: (Camilla Hoflund, CEO) Scandpower's software is installed in about 50% of the wide light water reactors in operation today. We expect a positive impact from license sales later this year, particularly from a recent agreement with a leading US energy company. The upcoming user group meeting in the US and the early launch of our new Monte Carlo tool are key focus areas.
Q: What are the strategic initiatives for new nuclear power projects?
A: (Camilla Hoflund, CEO) We are exploring new nuclear power at specific sites, including small modular reactors and conventional large reactors. Key conditions include financing and political support. Our site has the infrastructure and license to operate nuclear facilities, attracting early interest in areas like waste conditioning and services.
Q: How is Studsvik addressing the lack of resources in the German market?
A: (Camilla Hoflund, CEO) We are onboarding new personnel to support growth in the decommissioning area in Germany, Switzerland, and other countries. Additionally, we are pursuing partnership approaches to offer more complete and competitive services to our customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
