Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Catella AB (LTS:0RL4, Financial) has preserved liquidity and maintains a strong capital position, which is crucial during market downturns.
- The company has realized material cost efficiency improvements, reflected in a SEK16 million reduction in costs year-on-year.
- Despite a challenging market, Catella AB (LTS:0RL4) has maintained stable assets under management (AUM), indicating resilience.
- The merger of Catella Residential Investment Management and Catella Real Estate is expected to create a stronger, more efficient fund platform.
- Catella AB (LTS:0RL4) successfully issued a SEK600 million bond under a new MTN program, met with strong investor interest.
Negative Points
- Net revenue decreased by SEK10 million due to lower transaction activity across all business areas.
- One-off restructuring costs of SEK13 million impacted the quarterly results.
- The corporate finance division experienced another weak quarter due to a slow transaction market, particularly in France.
- Despite cost reductions, the company reported a net loss of SEK23 million for the quarter.
- The transaction market remains subdued, with overall volumes and capital inflows in the European real estate market continuing to be low.
Q & A Highlights
Q: Should we expect fixed fees to remain around the current level as a percentage of AUM, or is there potential for change?
A: Michel Fischier, CFO, explained that fixed fees are expected to remain around current levels due to a transition from fund-based to asset management-based fees. However, there is potential for an increase if investments into core funds rise and revaluations improve.
Q: Are you confident that corporate finance volumes will pick up in Q4, or is it more of a hope?
A: Daniel Gorosch, Interim CEO, stated that Q4 typically sees the largest volumes due to seasonality, and there are signs of market improvement, suggesting a stronger quarter.
Q: Is the improved sentiment in corporate finance also affecting discussions with potential buyers of Kaktus?
A: Daniel Gorosch confirmed that a better market with more capital increases the probability of closing transactions like Kaktus. However, they are not in a hurry and will wait for the right buyer at the right price.
Q: Do you foresee additional cost efficiency measures in the near future?
A: Michel Fischier mentioned that cost reviews are ongoing, and while no specific external redundancy program is planned, they expect more efficiencies to be reflected in future numbers.
Q: How certain are you about closing the divestment of Plexus in Q4, and what are the IRR expectations?
A: Michel Fischier stated that they expect to close the transaction by the end of the month with certainty, though the IRR is expected to be close to zero due to current market conditions.
Q: What will trigger a restart in transaction activity, and how will it impact variable and performance fees?
A: Daniel Gorosch noted that gradual market improvements, such as decreasing credit margins and a more liquid bond market, will help. This should translate into increased transaction-related fees as the market recovers.
Q: How do you view the sustainability of the corporate finance segment's negative operating profit?
A: Daniel Gorosch emphasized the importance of having the right team in place for when the market turns, expecting higher margins over the cycle due to the success-based business model.
Q: Can you elaborate on the SEK13 million one-off cost?
A: Michel Fischier explained that these costs are related to severance and cost adjustments across the organization, including the CEO departure.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
