Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ITAB Shop Concept AB (FRA:29I0, Financial) reported an increase in EBIT margin to 8.5% over the last 12 months, despite a weaker third quarter.
- Sales increased despite delays in customer projects, with a notable growth in the grocery and fashion sectors.
- The company has a strong operating cash flow with a cash conversion rate of 87%, indicating a solid financial position.
- The intended acquisition of HMY is expected to double the company's size and create a European leader in the market.
- The company has successfully implemented the One ITAB Strategy, improving financials and profitability despite a challenging market environment.
Negative Points
- The third quarter experienced lower margins due to a decrease in sales of technical solutions, particularly in loss prevention.
- There were delays in customer projects, impacting the product mix negatively in Q3.
- The macroeconomic climate remains challenging, with some customers cautious about investment decisions.
- The acquisition of HMY is still pending regulatory approvals and other closing conditions, creating uncertainty.
- The company's operations are project-based, leading to potential volatility in quarterly results due to timing of customer investments.
Q & A Highlights
Q: Could you elaborate on the gross margin headwind in the quarter? Is it primarily due to the mix effect, or are there other factors at play?
A: The gross margin headwind is mainly due to the mix effect, including customer mix. Europe is performing well, but the main deviation compared to last year is outside Europe, particularly in the UK.
Q: Can you update us on the timeline for the HMY acquisition, including meetings with French Union representatives and filings with competitive authorities?
A: The timeline is progressing as expected. All necessary filings have been made, and the works council process is underway. We are currently waiting for replies and do not foresee any major risks or hiccups.
Q: What kind of feedback have you received from customers regarding the HMY acquisition?
A: The feedback has been overwhelmingly positive from both customers and co-workers. There were initial concerns from a few customers, but they have since expressed positive reactions. The acquisition is seen as complementary, enhancing our strengths in various regions.
Q: How do you see the impact of the product and customer mix changing once the HMY deal is finalized?
A: The acquisition will bring significant synergies, driving margins positively. It will provide more volume and stability, making us more predictable and mature. The combined entity will be more relevant to customers, enhancing our ability to fulfill their plans efficiently.
Q: Can you comment on the order book going into Q4 2025? Was the book-to-bill ratio above one in Q3?
A: While we don't usually forecast the order book, we have secured several new deals and volumes, indicating a positive trend. Although the project-based nature of our business means delivery timing can vary, we are optimistic about future sales and see no significant risk of reduced sales.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
