Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stable earnings and EBITDA with a slight increase in profitability.
- Significant growth in the Environment & Energy segment, with a 38% increase in order intake in the first half.
- Strong performance in the service business, contributing to stable revenue.
- Successful acquisition of Procemex, enhancing automation and digitalization capabilities.
- Confirmed guidance for 2024, with expectations of stable revenues and continued growth in service and green products.
Negative Points
- Order intake dropped by 18% to EUR3.8 billion in the first half.
- Decline in revenue by 9% in Pulp & Paper and 7% in hydropower.
- Severe decline in order intake in the Metals segment, with a drop in EBITA margin to 4.5%.
- Order backlog decreased to EUR9.7 billion, reflecting a 3% drop.
- Negative financial results in the first half due to valuation effects and restructuring costs.
Q & A Highlights
Q: Does the increased project activity mean you are more optimistic about second-half order intake recovery compared to Q1? How do you feel about the bigger Pulp projects on the greenfield side?
A: We have seen increased project activities, indicating that customers are seriously considering investments. However, the timing of order intake depends on our customers' schedules. This increased activity is a positive sign, but exact timing remains uncertain. (Joachim Schoenbeck, CEO)
Q: Are you seeing increased project activities across all divisions except for metals?
A: We are seeing increased project activities in Pulp, Paper, automotive, and steel sectors. This indicates a broader market reorientation, particularly in the automotive industry, which is now clearer on where and what to invest in. (Joachim Schoenbeck, CEO)
Q: What are the current trends in input costs, and do you foresee any price increases in tenders?
A: Input costs have stabilized, and we currently have some pricing power with suppliers. General trends in base materials are returning to pre-COVID levels, slightly above. These costs are not the decisive factors for customers' purchasing decisions at the moment. (Norbert Nettesheim, CFO)
Q: Can you provide more details on the carbon capture plant project? What is the technology behind it, and what is the potential market opportunity?
A: The recent publication refers to a Feed study for a carbon capture plant, not an order. The target is to produce synthetic fuels, and the technology details can be provided later. The project is expected to be awarded in 2025. (Joachim Schoenbeck, CEO)
Q: What is your outlook for the metals processing sector? Do you expect bigger orders as customer restraint is overcome?
A: We see increased project activities across regions, driven by e-mobility and the need for steel industry updates. We expect a positive market development in the second half. (Joachim Schoenbeck, CEO)
Q: Given the low order intake in hydropower in the first half, do you expect bigger orders in the second half?
A: The first half order intake in hydropower was almost EUR800 million, which is a good level historically. We expect a stronger second half. (Joachim Schoenbeck, CEO)
Q: Do you see any capacity limitations in the Environment & Energy segment, and what are your margin targets?
A: We are building up capacity cautiously and do not foresee capacity constraints in the near term. We aim to increase profitability, and while the service share dropped, we are not unhappy with the current profitability. (Joachim Schoenbeck, CEO)
Q: How is the M&A landscape developing, and are there more targets currently?
A: There is no significant change in the M&A landscape. We continue to focus on services, digitalization, and complementary technologies for green transformation. (Joachim Schoenbeck, CEO)
Q: What is the potential for increasing the share of green revenues, and how do you plan to achieve this?
A: We aim to exceed 50% green revenues by 2025, primarily through growing new green products rather than reclassifying existing revenues. We see strong demand for these technologies. (Joachim Schoenbeck, CEO)
Q: What is the addressable market for the craft lignin production solution, and what are the typical order values and payback periods?
A: The typical order value for lignin separation is mid to high double digits. The payback period depends on market prices for sustainable chemicals and e-fuels. Our solution is proprietary and based on advanced technology. (Joachim Schoenbeck, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
