Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aalberts NV (AALBF, Financial) achieved a 15% EBITDA margin despite challenging market conditions.
- The company reported an EPS of EUR 1.61, demonstrating resilience in profitability.
- Strong performance in the Industrial Technology segment, with improved profitability and high order book levels.
- Continued investment in long-term growth, with CapEx plans aligned with the previous year.
- Positive trends in specific product lines such as Grooved technologies, water treatment offerings, and safety valves, outperforming market trends.
Negative Points
- Organic growth declined by 3.9%, with significant challenges in the Building Technology segment.
- Lower activity in Europe, particularly in Germany, affecting the eco-friendly building sector.
- Decreased end-user demand in new builds and renovations, leading to softer market conditions.
- Inventory levels at wholesalers remained low, impacting sales performance.
- The EBITDA margin for Building Technology decreased from 14% to 13%, reflecting ongoing market pressures.
Q & A Highlights
Q: Can you explain the deterioration in organic revenues in the month of May and June?
A: The decline in industrial technology was due to customers, particularly in Germany, managing their half-year results by postponing services to the second half. This short-term issue led to a challenging June.
Q: What is the impact of weakening incentives to move towards heat pumps?
A: The reduced incentives for heat pumps have led to high stock levels at customers. However, for Aalberts, this is neutral to slightly positive as we see unit growth in gas boilers, which require more expansion vessels.
Q: Do you see signs of inventory restocking in the second half of the year?
A: We expect inventory levels to remain low at our customers, with strong demand continuing in the second half. We do not anticipate significant restocking before next year.
Q: Why is the EBITDA margin down in building technology despite improved value add?
A: The decline in EBITDA margin is due to higher operating expenses and negative volume impacts. Structural cost-saving actions will have more impact in the second half.
Q: Is the mid-single-digit growth guidance for semicon still applicable for 2024?
A: Yes, the guidance remains unchanged despite strong first-half performance. We anticipate continued volatility in the short term.
Q: Why hold a Capital Markets Day in a challenging year like 2024?
A: It has been three years since the last Capital Markets Day, and significant changes have occurred. We believe it is time to update stakeholders on our strategy and outlook as we approach 2026.
Q: What is included in the EUR18 million other income?
A: The main difference from last year is insurance income due to damage we faced. This income has been allocated to extraordinary expenses, including restructuring programs.
Q: What can we expect in terms of net working capital and inventory towards the end of the year?
A: We remain confident in improving our days inventory outstanding by the end of the year, despite the challenges posed by a declining top line.
Q: What is the potential impact of US tariffs on your business?
A: We produce locally where we sell, so we are well-prepared for such trends due to our local footprints.
Q: Can you elaborate on the structural cost savings and their impact?
A: Structural cost-saving actions are already in progress, with more impact expected in the second half. These actions will improve our fixed cost base, preparing us for better performance in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
