Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bergman & Beving AB (FRA:BLRB, Financial) reported a 12% increase in EBITA and a 12% rise in earnings per share, reversing a previous trend of stagnant EPS growth.
- The company successfully maintained a strong gross margin and reduced inventory levels by SEK180 million organically compared to the previous year.
- All three divisions of the company reported increased profits, indicating a broad-based improvement across the group.
- The acquisition strategy is on track, with three acquisitions contributing positively to EBITA growth, including the highly profitable Spraylat and Levypinta.
- The company has achieved 19 consecutive quarters of profit growth, demonstrating resilience despite challenging market conditions.
Negative Points
- The market remains tough, particularly in the construction and industrial sectors, with a 3.4% decrease in the number of employees in these sectors in the Nordics.
- Organic revenue decreased by 3%, and there was a small negative currency effect of 1%, indicating challenges in achieving organic growth.
- The Safety Technology division, although improved, still operates below the desired EBITA margin of 10%, currently at 8%.
- The company faces uncertainties in the industrial sector, with no immediate signs of market improvement, impacting future growth prospects.
- Net debt levels are expected to increase due to acquisitions, with a long-term target of maintaining a net debt-to-EBITDA ratio between 2 and 3.
Q & A Highlights
Q: How sustainable are the improvements in the Safety Technology segment?
A: Magnus Soderlind, CEO, stated that the improvements are more about returning to expected performance levels rather than exceeding them. The segment was underperforming last year, and there are still opportunities for further improvement.
Q: Can you elaborate on the cost measures implemented and their expected impact?
A: Magnus Soderlind, CEO, explained that efficiency activities have been ongoing for two years, focusing on various cost elements, including employee numbers. While the full impact is not yet realized, several million in cost savings are expected in the coming quarters.
Q: Does the current economic outlook affect your acquisition strategy?
A: Magnus Soderlind, CEO, acknowledged that economic uncertainties have led to delays in some acquisition discussions. However, they continue to pursue acquisitions where companies show good demand and traction, having completed three acquisitions so far this year.
Q: Are there any plans to increase costs to capitalize on an improved economic situation?
A: Magnus Soderlind, CEO, confirmed that investments are being made in companies within the "green zone" of their Focus Model, which are encouraged to grow their top line, especially those not facing weaker markets.
Q: What are the key drivers for potential improvements in gross margin?
A: Magnus Soderlind, CEO, indicated that future gross margin improvements will primarily come from acquisitions, as the company has nearly completed phasing out low-margin, high-volume products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
