Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cavotec SA (OSTO:CCC, Financial) reported a revenue growth of 5.1% in the third quarter, driven by strong sales in the industry segment.
- The company achieved a positive EBIT for the seventh consecutive quarter, with a significant growth of 76.3% over the previous year.
- Cavotec SA (OSTO:CCC) has a strong market position supported by megatrends and regulations aimed at reducing emissions and noise in critical infrastructures.
- The company has a large installed base in over 80 countries, providing a solid foundation for customer relations and service business growth.
- Cavotec SA (OSTO:CCC) is actively working on strategic change programs and supply chain improvements, which are starting to show positive impacts on profitability.
Negative Points
- Order intake decreased by 6% in the quarter, reflecting fluctuations in project-driven business and timing of order signings.
- The industry segment showed a decrease in EBITA margin, indicating challenges in profitability despite revenue growth.
- Cash flow was negatively affected by increased working capital due to lower prepayments and timing of receivables.
- Lead times for projects in the ports and maritime segment remain long, ranging from 1 to 2 years, which could impact revenue realization.
- The company is still undergoing transformation efforts, indicating ongoing challenges in achieving desired operational efficiency and profitability.
Q & A Highlights
Q: Your order intake was down slightly this quarter, and your order backlog seems to have normalized. When can we expect to see a positive trend in orders?
A: We don't speculate on forecasts, but historically, we have strong fourth quarters. Currently, we have high tendering activity and opportunities, particularly in Europe and the UK, driven by regulations and EU funding. I'm confident about the order intake and not worried about the recent decrease. - David Pagels, CEO
Q: Can you give examples of initiatives to enhance profitability in the industry segment?
A: We are focusing on precision in tendering, seamless collaboration between sales, engineering, and operations, and applying successful strategies from the ports and maritime segment to the industry segment. We are also focusing on new product development to generate order intake opportunities. - David Pagels, CEO
Q: How do current lead times look in both segments, and have they changed due to change programs?
A: Lead times vary by project. Ports and maritime have longer lead times (1-2 years), while industry segment lead times are shorter (3-6 months). We are continuously working to improve lead times across production sites. Most current backlog deliveries will occur in 2025. - Joakim Wahlquist, CFO
Q: What can we expect in terms of growth within the services business offering?
A: As our installed base grows, so does our service revenue potential. We focus on being responsive to customer needs, which enhances customer loyalty and generates new sales. We have a significant untapped potential in our installed base across 80 countries and are increasing service level agreements. - David Pagels, CEO and Joakim Wahlquist, CFO
Q: Are there any internal capacity or production constraints in the ports and maritime or industries division going into 2025 and 2026?
A: We have planned capacity in our facilities, including our new facility in Chennai, India. We have sufficient capacity in our existing facilities and are not worried about constraints. Lead times are more related to the complexity of the products rather than capacity issues. - David Pagels, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
