Q2 2024 Arjo AB (publ) Earnings Call Transcript
Key Points
- Arjo AB (ARRJF) reported a 3.7% organic growth in Q2 2024, continuing the positive trend from Q1.
- The company saw an improvement in gross margin to 43.6%, compared to Q2 2023, with further potential for year-over-year improvement.
- Adjusted EBITDA increased to SEK496 million, up from SEK471 million in Q2 2023, indicating strong profitability.
- Operational cash flow for Q2 was SEK344 million, maintaining a cash conversion rate of nearly 70%, consistent with the previous year.
- The company is experiencing good growth in key markets such as North America, Western Europe, and the Rest of the World, with specific strength in Canada, Australia, and New Zealand.
- Arjo AB (ARRJF) is facing slow customer decision-making in the US, particularly affecting Patient Handling programs.
- The company is experiencing postponements and delays in capital spending decisions in Western Europe, notably in the Netherlands and Belgium.
- There is a dampening effect on gross margin due to the increasing share of rental sales, which have lower margins than capital goods.
- The diagnostics business saw a decline of more than 10% in Q2 2024 compared to strong comps from Q2 2023, impacting overall growth.
- Higher salary costs due to inflationary pressures are affecting the company's cost structure, although mitigated by internal efficiencies and price adjustments.
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Thank you very much and also from our side, welcome to our Q2 2024 earnings call, where Niclas and myself, look forward to give you some more details on the Q2 report that we just released. If I can have the next slide, please.
The agenda for today. We will start with the business update from Q2, financial update and our outlook for 2024 before we open up for questions, and we intend as always to keep this call to an hour and finish no later than 9:00. The next slide, please.
Q2 continues on the path from Q1 with a 3.7% organic growth and continued good growth across most of our markets. We continue to see a healthy demand for our products and solutions with service and rental continuing to develop strongly also in this quarter. We are still not up to speed with our outcome programs in Patient Handling and Pressure Injury Prevention.
In Patient Handling, the progress in US, on customer decision-making is still slow, while our pipeline continues to develop
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