Release Date: September 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adjusted EBITDA increased by 37.4% year-on-year to EUR37.7 million.
- Free cash flow improved significantly by EUR26.1 million compared to H1 last year.
- Germany showed strong growth with a 25.1% increase in revenue and positive margin contributions.
- Energy segment grew by 28.7%, driven by diversification efforts and renewable energy installations.
- Financial structure remains sound with a 1.3 times net debt-to-EBITDA ratio.
Negative Points
- Net income group share remained negative at minus EUR5.9 million.
- Revenue in France experienced a 6.4% organic decline due to reduced exposure to less profitable telecom contracts.
- Italy and Spain showed significant declines, impacting overall performance.
- Operational costs, while reduced, still accounted for 83.4% of revenue.
- EBITDA margin decreased from 8.8% to 7.3% in H1 2024 due to delays in fiber deployment in Belgium.
Q & A Highlights
Q: The EBITDA margin decreased from 8.8% to 7.3% in H1 2024. Shall we expect an increase of the margin in H2 2024 back to the H2 '23 margins or higher?
A: (Amaury Boilot, CFO) Overall, at group level, we are definitely working on an improvement of the EBITDA margin in absolute number on the full year basis. But we remain cautious given the situation in Benelux. (Gianbeppi Fortis, CEO) We have some uncertainty in Benelux. Other than that, the rest should improve the margins.
Q: Do we have visibility on the negotiations between Belgium fiber clients on possible streamlining of deployment operations?
A: (Gianbeppi Fortis, CEO) The outlook of the Belgium market remains pretty good. We signed a new contract with Wyre, and we are working with all the operators deploying fiber. It's a temporary hiccup expected to finish around the end of the year.
Q: What growth shall we expect on the German market in H2 '24?
A: (Gianbeppi Fortis, CEO) Good growth. Germany is performing well with a good ramp-up. We expect double-digit growth and good performance on margins.
Q: Will the amortization of intangibles still be high in H2 '24? Will the non-recurring items still be high in H2 2024?
A: (Amaury Boilot, CFO) The amortization of intangibles, related to past acquisitions, will remain stable. Nonrecurring items have decreased significantly and should remain at a very low level in H2.
Q: When will you reach a positive net income?
A: (Gianbeppi Fortis, CEO) We are not far from breakeven. Margins are improving in all other geographies. We are progressing and expect to be back on track soon, likely next year.
Q: You have been quite successful on floating solar farms in France. Are you bidding for other projects?
A: (Gianbeppi Fortis, CEO) Yes, we have won a second large project and have a strong pipeline of solar projects. (Amaury Boilot, CFO) The solar activity has increased by 165% in H1 2024, and we have good visibility on activity levels for 2025.
Q: How will Italy impact the second half?
A: (Gianbeppi Fortis, CEO) Italy is not losing money anymore but is not yet contributing to group margins. We will decide next year if we stay or exit the market.
Q: Do you think photovoltaic will also be a new driver of growth in Germany as it is in France? Are you well positioned on this topic in Germany?
A: (Gianbeppi Fortis, CEO) Yes, solar will be a driver in Germany. We have begun doing solar in Germany, and we will develop this business further. However, we are currently focusing on fiber.
Q: Selectivity in telecoms in France. Have you exited some suboptimal contracts? Can there be more? What impact on margins?
A: (Amaury Boilot, CFO) We have reduced exposure to less profitable contracts. This decision is done, and the impact on profitability should be limited, with a positive impact on margins.
Q: Your net financial charges were very high in H2 last year, minus EUR10 million. How should we think about financial results for H2 and over the full year 2024?
A: (Amaury Boilot, CFO) The increase in financial charges is mostly related to higher interest rates. We expect these expenses to remain stable short-term and decrease over time due to debt repayment and expected decreases in Euribor rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
