Release Date: July 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 1.8% in the quarter, mainly due to a positive calendar effect from Easter.
- Seven acquisitions were made during the quarter, totaling SEK300 million in annual turnover.
- Cost reduction programs have saved around SEK100 million annually, primarily related to personnel expenses.
- The company has a solid financial position and plans to continue investing in organic growth and M&A opportunities.
- Positive signals from larger industrial customers in Finland, indicating potential higher production output in the autumn.
Negative Points
- Organic growth was negative at 3.2%, with Sweden and Finland showing significant declines.
- EBITDA decreased from SEK201 million to SEK166 million, with weaker results in all markets, especially Sweden.
- The EBITDA margin dropped from 8.4% to 6.8%, driven by weaker demand and margin pressure.
- Continued weak market conditions, particularly affecting small and medium-sized customers in the construction sector.
- Extra costs and delivery disturbances related to the consolidation of warehouses in Norway.
Q & A Highlights
Q: Can you quantify the effect of the challenging customer mix on the gross margin this quarter?
A: It's difficult to quantify precisely, but the decreased share of small and medium-sized customers negatively impacted the gross margin. We will analyze this further to understand the exact mix effect.
Q: Have you gained any positive outcomes from large customers in recent quarters?
A: Yes, we have ongoing activities to convert large customers to our own brands, which will improve margins. Our key account team is actively managing assortments and price negotiations to meet customer needs effectively.
Q: What should we expect for the second half of 2024 regarding organic sales growth?
A: While market conditions remain challenging, we are focusing on our initiatives and product launches to drive growth. We need market support for significant success, but we are well-positioned to capitalize on any upturn.
Q: How do you see the sales growth year-over-year comparison for the near term?
A: The market remains slow, but as we approach the end of the year, comparisons will be against periods when the market was already declining. We need to be proactive to achieve positive results.
Q: How much more can you add to acquisitions in the near term?
A: We have a strong pipeline and financial capability for further acquisitions. Our focus is on businesses with SEK100 million to SEK200 million in turnover, and we have interesting discussions ongoing.
Q: Can you elaborate on the extra costs related to the warehouse consolidation in Norway?
A: The consolidation incurred single-digit millions in extra costs due to higher personnel expenses and temporary measures. Most of these costs are behind us, but some additional costs may arise as we optimize efficiency.
Q: Are there any green shoots indicating a market recovery, particularly in Finland?
A: We hear positive signals from larger industrial customers in Finland planning higher production output in the autumn. While we don't see it in sales yet, the sentiment is more optimistic.
Q: How do you view the demand situation currently?
A: Demand is stable at a low level. June was challenging, but we expect to see more activity in August. We are closely monitoring sales and order lines to respond quickly to any changes.
Q: What is your position in the welding market after recent acquisitions?
A: We are now a leading player in the welding sector, with significant market share. The real value will come from cross-selling our other assortments to welding customers and optimizing purchasing processes.
Q: What was the impact of IFRS 16 on financial cash flow for the quarter and half-year?
A: The impact was SEK108 million for the quarter and SEK189 million for the first six months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
