Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bilia AB (FRA:BHJC, Financial) reported a 3% organic increase in net turnover, driven by higher deliveries of used cars and growth in the service business.
- The service business demonstrated strong demand and resilience, contributing 74% of the group's earnings with a profitability of SEK221 million, which is SEK60 million higher than last year.
- Operational cash flow for the third quarter was SEK480 million, contributing to a total of SEK1.3 billion for the first nine months, significantly higher than the previous year.
- The order intake for new cars increased by 11% compared to the previous year, indicating improved activity in all countries.
- Bilia AB (FRA:BHJC) maintained a stable net debt to EBITDA ratio of 1.5 times, well below their target of 2.0 times, reflecting strong financial management.
Negative Points
- Profitability from new car sales was lower compared to the previous year, primarily due to reduced turnover.
- The stock of fully electric vehicles experienced price instability, impacting the used car market segment.
- The Swedish market delivered lower earnings due to challenges in the new car business.
- Higher interest costs led to an increased financial net of SEK83 million for the quarter, compared to the previous year.
- Start-up expenses related to the Jaguar Land Rover joint venture impacted financial results and are expected to continue into the fourth quarter.
Q & A Highlights
Q: Can you provide insights on the campaign activity in Norway and its impact on earnings?
A: Per Avander, CEO, explained that improved campaigns in Norway, such as those for BMW and the launch of XPENG, have positively impacted order intake. The market for fully electric vehicles is strong, with 88% of sales being electric this year. Campaigns started in Q2 and are expected to continue into Q4, contributing to a better market outlook for new cars in Norway.
Q: There seems to be a discrepancy in the report regarding new order intake. Can you clarify?
A: Kristina Franzen, CFO, confirmed that the new order intake was indeed 11% higher than the previous year, correcting any typographical errors in the report.
Q: How does the shift away from the agency model by Volvo impact Bilia?
A: Per Avander, CEO, noted that Volvo's move back to traditional business models from the agency model does not significantly impact Bilia. The company is adaptable to both models, but prefers consistency to maintain efficiency. The change might bring more customers to their service shops in the long run.
Q: How do campaign activities affect the profitability of new car sales?
A: Per Avander, CEO, mentioned that campaign costs are sometimes shared with manufacturers, affecting margins differently across brands. Campaigns are beneficial as they increase car sales, which eventually boosts service business profitability.
Q: Are there any structural changes planned to improve cash flow and working capital?
A: Kristina Franzen, CFO, stated that there are no major structural changes planned. The focus remains on optimizing existing operations and improving turnover rates, especially in newly acquired businesses, to enhance cash flow efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
