Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- u-Blox Holding AG (UBLXF, Financial) reported half-year results at the higher end of their guidance.
- The company achieved CHF5 million in savings from their cost optimization program initiated at the beginning of the year.
- u-Blox Holding AG (UBLXF) maintained a resilient, positive free cash flow despite negative EBIT.
- The company secured significant business in the robotic lawnmower market, expected to generate over CHF100 million in revenue from 2024 onwards.
- u-Blox Holding AG (UBLXF) formed a strategic partnership with NVIDIA, enhancing their positioning technology's integration with AI platforms.
Negative Points
- Revenue for the first half dropped to CHF121 million, primarily due to customer inventory overstocking.
- The company's EBIT was negative, attributed to lower revenue and higher operational costs.
- Gross profit margin declined from 46.8% to 43.7% year-over-year.
- The cost optimization program's broader scope indicates ongoing financial challenges, targeting over CHF20 million in savings.
- The automotive segment experienced significant revenue drops due to overstocking, despite winning more projects compared to the previous year.
Q & A Highlights
Q: What are the drivers behind the significant drop in the automotive segment, and has there been any loss of market share?
A: The main driver is overstocking, which has heavily impacted revenue. Despite this, we have won more automotive projects in the first half of 2024 compared to the previous year, indicating no loss of market share. (Stephan Zizala, CEO)
Q: Can you provide more details on the cost optimization plan and its focus areas?
A: The plan will protect core growth areas while reducing costs and complexity in other functions. The initial soft cost-cutting measures have been expanded due to a more gradual market recovery. We expect to see the first savings in the second half of 2024, with full effects in 2025. (Stephan Zizala, CEO; Camila Japur, CFO)
Q: What is the expected impact of the cost savings on future growth plans?
A: We are committed to protecting our core growth areas while optimizing other functions. The cost savings plan is designed to ensure that we can manage a lower business volume without compromising future growth. (Stephan Zizala, CEO)
Q: Can you provide a rough average selling price for the robotic lawnmower market?
A: The range is quite wide, but on average, it is in the lower double-digit range. (Stephan Zizala, CEO)
Q: What was the initial cost savings target before the recent increase, and how much has been achieved so far?
A: The initial target was a double-digit cost savings, and we have already achieved around CHF5 million in the first half of the year. The expanded plan now targets over CHF20 million in savings. (Stephan Zizala, CEO)
Q: What are the expectations for working capital improvements and free cash flow in the second half of the year?
A: Inventory management is a top priority, and we expect a gradual improvement in the second half. Despite restructuring costs, we aim to partially offset these through working capital actions, leading to a low negative cash flow from the business in Q3. (Camila Japur, CFO)
Q: Are there any positive effects from geopolitical uncertainties, particularly in the US market?
A: We see more opportunities and are winning business in this area, particularly against Chinese competitors. This is part of our connectivity business turnaround assumptions. (Stephan Zizala, CEO)
Q: What is the current number of full-time employees, and how will headcount develop going forward?
A: The current number of employees is slightly below 490. The cost savings plan includes measures to reduce personnel costs, but we have not disclosed a specific target number. (Stephan Zizala, CEO)
Q: Can you provide more details on the expected revenue from the robotic lawnmower market?
A: The expected revenue of CHF100 million from the robotic lawnmower market is in addition to previously disclosed orders in the automotive business. These are separate market segments with no overlap. (Stephan Zizala, CEO)
Q: How do you view the risk of new competition in the unmanned aerial vehicle market due to geopolitical factors?
A: We are confident in our positioning technology, which is based on decades of expertise. While new competitors may enter the market, replicating our accuracy and affordability is challenging. (Stephan Zizala, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
