Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong recurring revenues of SEK 74 million, amounting to SEK 304 million by the end of the quarter.
- Continued growth in air cleaners and new cabin sales on track in Japan.
- Significant growth in the French market, with a 40% overall increase in the first half and close to 150% growth from air cleaners.
- Stable and strong cash flow despite lower operating profit.
- Successful launch of new solutions targeting secondary filtration of oil mist and measurement-led air cleaning projects.
Negative Points
- Sales declined by 14% compared to last year, with a 10% drop when currency-adjusted.
- Significant negative impact on gross margin and EBIT due to lower renewal sales in Japan and weak Japanese yen.
- Higher service costs in Germany, partly due to the return and refurbishment of units related to COVID-based school orders.
- Operating profit dropped significantly from SEK 21 million to SEK 2 million.
- Delay in a significant U.S. order from Curexa, with uncertain implications for future revenue.
Q & A Highlights
QleanAir AB (FRA:9ZJ, Financial) Q2 2024 Earnings Call Highlights
Q: Could you describe a little bit about the Japanese development? Are you losing any of the renewals when they are coming up for renewal?
A: No, we have a very good rate for renewals, and there is no change in that. We are continuing at the same level as in the past. New cabin sales and air cleaning sales are on par with last year, with air cleaning sales growing by 28% in the quarter. – Sebastian Lindström, CEO
Q: Is the trough level in Japan now in the second quarter, or will it be even worse in the second half?
A: We don't make forward-looking statements, but 2024 is a low point. We don't want to break it into quarters too much. – Sebastian Lindström, CEO
Q: How do you see the service costs in Germany? Are you stuck with those present contracts?
A: We have had to renew service contracts, which included cost inflation. We are working on mitigating increased service costs by consolidating production and supply chain on filters. – Sebastian Lindström, CEO
Q: How do you see the development of industrial sales of air cleaners in Europe and Germany specifically?
A: Despite the overall struggle in the German market, we are launching more application areas. We have reshaped the German sales organization, which is a short-term setback but supports medium-term growth. – Sebastian Lindström, CEO
Q: What is the status of the U.S. order that has been delayed?
A: We received information about the delay today and are working to understand the situation. The demand is still there, but it may be hard to mitigate the delay. – Sebastian Lindström, CEO
Q: What sort of equipment and clients are you targeting in Japan for industrial use?
A: Similar to Europe, we target manufacturing and food service industries. We also focus on office environments for air cleaners, addressing allergies and other issues. – Sebastian Lindström, CEO
Q: Were the German school orders terminated in the first or the second quarter?
A: It was a combination of both quarters. We dismantled several units in the second quarter, resulting in a lower installed base. – Henrik Resmark, CFO
Q: What are your communicated financial targets?
A: We aim for a 7% to 13% organic growth annually and an EBIT margin of 15% to 20% in the medium to long term. – Sebastian Lindström, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
