Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elopak ASA (STU:9J7, Financial) reported a revenue growth of around 4% and an EBITDA increase to EUR44 million, up from the previous year's Q2.
- The company successfully introduced a bond of NOK2.5 billion, indicating strong financial health and investor confidence.
- Elopak ASA (STU:9J7) saw significant volume growth in core markets, including North Europe and the Americas.
- The company maintained a strong balance sheet with a leverage ratio of 1.9, even after a substantial dividend payout.
- Elopak ASA (STU:9J7) is progressing well with the construction of its new plant in Little Rock, Arkansas, which is expected to enhance production capacity.
Negative Points
- The company faced an IFRS 15 effect due to the build-down of finished goods inventories, impacting reported growth figures.
- An incident with a supplier in the US caused significant operational disruptions and is expected to have a financial impact in the coming quarters.
- The economic climate in Southern Europe led to dampened consumption and down-trading to lower-cost packaging, affecting sales.
- The aseptic business, particularly in the juice segment, is experiencing difficulties in terms of consumption across Europe and the US.
- Elopak ASA (STU:9J7) is dealing with increased fixed costs driven by inflation and strategic initiatives, impacting overall profitability.
Q & A Highlights
Q: How did the aseptic business develop in the second quarter?
A: The aseptic business, split into milk, UHT, and juice, showed mixed results. The juice market faced consumption difficulties across Europe and the US, leading to no growth in this segment. However, milk sales, particularly in North and South Europe, performed better. - Thomas Koermendi, CEO
Q: What is the long-term capacity expectation for the Little Rock investment?
A: Details on the long-term capacity expectations for the Little Rock plant will be discussed during the Capital Markets Day on September 4th. - Bent Axelsen, CFO
Q: Can you quantify the impact of the supply incident during the quarter?
A: The supply incident had a EUR1 million impact in Q2, primarily an accounting effect due to reduced finished goods inventory. The incident is expected to influence the current quarter, but precise numbers are not yet available. - Bent Axelsen, CFO
Q: What are the lower-cost packaging solutions that customers are down-trading to?
A: In South Europe, down-trading involves simpler packaging formats like roll-fed packaging and a shift towards more private label products versus branded ones. - Thomas Koermendi, CEO
Q: How can you add more resilience to your supply chain in the US given the significant ramp-up in production capacity?
A: We are qualifying more board suppliers to secure contingencies. Additionally, having more production capacity will improve our ability to catch up on backlogs quickly. - Thomas Koermendi, CEO and Bent Axelsen, CFO
Q: How are you planning for the ramp-up of the US plant, and what are the main challenges?
A: The first line of the US plant is sold out, so demand is not a limiting factor. The main challenges are technical ramp-up and recruiting staff. We expect to reach full capacity by the end of next year. - Bent Axelsen, CFO and Thomas Koermendi, CEO
Q: Can you quantify the negative Ramadan effect in Q2?
A: It's difficult to provide a precise quantitative impact of Ramadan on Q2 results. - Bent Axelsen, CFO
Q: Can you share any quantification of the potential EBITDA impact from the Americas?
A: The outlook statement incorporates our best estimate of the impact, but we cannot provide a precise number at this stage. - Bent Axelsen, CFO
Q: Where have you seen a buildup in filling machines inventory? Is this just a slight delay in placement?
A: The buildup is due to supply chain issues during the pandemic, leading to longer lead times. Delays in customer readiness have also contributed. The inventory buildup is evenly spread between Europe and America. - Bent Axelsen, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
