Release Date: October 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dustin Group AB (LTS:0R5W, Financial) has launched a new IT platform in the Benelux, which is expected to enhance customer focus and increase efficiency.
- The company is seeing strong demand for its circularity offerings, with takeback volumes increasing by almost 50% year-over-year.
- Dustin Group AB (LTS:0R5W) is implementing a new organizational structure aimed at saving SEK150 million to SEK200 million annually by 2025-2026.
- The company has a high ambition within ESG, aiming for a 25% reduction in CO2 emissions per SEK1 million revenue over the next three years.
- Dustin Group AB (LTS:0R5W) is experiencing positive trends in contracted recurring services in the Nordics, contributing to an increase in the share of software and services sales.
Negative Points
- Sales in Q4 were SEK4,988 million, 2% below the previous year, with SMB organic growth at negative 9.6%.
- Gross profit decreased by SEK101 million or 16%, with gross margin dropping from 14.6% to 12.9%.
- Adjusted EBITA fell significantly to SEK28 million from last year's SEK142 million, with the EBITA margin decreasing from 2.8% to 0.6%.
- Cash flow from operating activities was negative SEK355 million, primarily due to a seasonal high working capital.
- The company announced that no dividend will be paid for the financial year due to the challenging market conditions.
Q & A Highlights
Q: Can you talk about the interest in AI-enabled PCs and their price points compared to previous products? Also, what do you see in terms of the replacement cycle driven by Windows 11?
A: The market for AI PCs has developed recently, with new models priced about 10% higher than previous versions. These are typically purchased for specific roles within companies. Demand is still low overall, but we see some activity. Regarding Windows 11, larger corporates and public institutions are beginning to plan for upgrades, and we are working to inform smaller companies about the need to upgrade to avoid security issues.
Q: Why haven't you adjusted the SEK34 million negative specific item effect in adjusted EBITA? Should we consider the underlying adjusted EBITA to be SEK62 million instead of SEK28 million?
A: We do not expect these costs to recur in future quarters. The adjustment was made compared to previous periods, which is why it wasn't included as an adjusted item. It would be reasonable to consider the underlying adjusted EBITA as SEK62 million.
Q: Is the timing of the new organizational changes related to the tough market conditions, or was it planned earlier? How does this relate to your financial targets?
A: It's a combination. We have been working on the IT platform for some time, knowing we needed to adjust for efficiency gains. The weak market has accelerated the need for these changes to create short-term actions for long-term success. This was anticipated, but the current market conditions have prompted us to act sooner.
Q: Can you provide more details on the restructuring and its impact on the LCP and SMB segments?
A: It's early to specify details, but there will be effects on relation sales in both SMB and LCP as we reduce management layers and decomplexify certain assortments. This will affect specialists more in LCP and simplify the services structure, mainly impacting SMB in terms of cost reduction.
Q: Regarding the SEK150 million to SEK200 million annual savings, is this related to lower OpEx, or does it involve increasing sales or reducing COGS?
A: The majority of the savings will come from OpEx reductions. There may be some reduction in COGS complexity, leading to better margins, but the primary focus is on reducing operational expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
