Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Inwido AB (FRA:5IW, Financial) reported a 3% growth in order intake and a 9% increase in order backlog for Q3 2024, indicating strong demand.
- The company's operating EBITA margin improved to 13.4% from 13.2% in Q3 2023, showcasing enhanced operational efficiency.
- E-commerce business area showed robust growth, with a 7% increase in sales and improved margins, highlighting successful strategic initiatives.
- Western Europe saw a significant margin uplift, driven by improved efficiency and market share gains, particularly in challenging markets like England.
- Inwido AB (FRA:5IW) continues to invest in sustainability, with initiatives like the new paint line in Poland saving 23,000 liters of paint annually, reflecting a commitment to environmental responsibility.
Negative Points
- Net sales declined by 3% quarter-on-quarter, with an organic decline of 1%, reflecting challenging market conditions.
- Eastern Europe experienced a 15% drop in sales, indicating ongoing struggles in this region despite improved order intake.
- The company's return on operating capital decreased to 13.1% from 16.2% in 2023, primarily due to lower sales volumes.
- Net debt in relation to operating EBITDA increased from 1.1 times last year to 1.2 times, indicating a slight rise in leverage.
- Scandinavia's market remains mixed, with Norway still facing challenges in both consumer and industry sales, impacting overall regional performance.
Q & A Highlights
Q: Can you break down the factors driving the strong gross margin this quarter, considering the mix effects and price pressures in some markets?
A: We have a positive mix development with a higher degree of consumer sales compared to industry sales. Some of our most profitable business units have experienced higher growth. We've maintained pricing despite some material cost increases and improved efficiency through increased capex investments. This combination has positively impacted the gross margin. - Peter Welin, CFO and Deputy CEO
Q: In Eastern Europe, costs seem to be down significantly. Is there further room to reduce costs in Finland, or will it require more market-driven volume increases to improve margins?
A: It's a balancing act. We've managed well given the circumstances, and while some competitors are struggling, our order intake has improved. We aim to maintain our cost levels to preserve competence and capacity, hoping to turn the situation around soon. - Peter Welin, CFO and Deputy CEO
Q: The Scandinavian segment shows strong margins. Does the current order backlog have similar profitability, and how do you view future margins in this region?
A: Denmark is performing strongly, while Sweden shows stabilization in the consumer market but challenges in the industry market. Norway remains challenging. Efficiency improvements are ongoing, which should enhance margins as volumes increase, likely in 2025. - Fredrik Meuller, President and CEO
Q: Given the solid margins in a tough market, have you created a more cost-efficient platform that could push margins higher when volumes return?
A: Yes, we have created a more cost-efficient platform. We have invested in efficiency improvements and project management, which should enhance margins as volumes return. We are well-positioned for future growth. - Peter Welin, CFO and Deputy CEO
Q: Can you comment on the M&A pipeline and any specific geographic markets of interest?
A: We are interested in expanding into Central Europe, including France, Germany, Austria, and Switzerland. The M&A activity level has increased, and we have a solid pipeline. We aim for both new markets and existing ones, looking for strategic acquisitions that provide a strong foothold. - Peter Welin, CFO and Deputy CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
