- Net Sales: SEK3.111 billion, a decrease of 2% from SEK3.175 billion last year.
- Organic Growth: Negative 0.3%.
- Gross Margin: 36.0%, up from 34.6% last year.
- Operating Profit Margin: 9.8%, down from 10.5% last year.
- Profit After Tax: SEK210 million, down from SEK242 million last year.
- Cash Flow: Free cash flow of SEK91.3 million, down from SEK177 million last year.
- Net Debt: SEK1.056 billion, down from SEK1.4 billion last year.
- Net Debt to Adjusted EBITDA: 0.71, down from 0.9 last year.
- Tax Rate: 27.1% or SEK78.3 million.
- Geographic Breakdown:
- Nordics: Negative organic growth of 4.1%.
- Western Europe: Negative organic growth of 4.1%.
- North America: Positive organic growth of 1.8%.
- Middle East, Asia, Australia, and Africa: Positive organic growth of 10.7%.
Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Systemair AB (STU:52SA, Financial) reported a strong gross margin of 36.0%, up from 34.6% in the previous year.
- The company finalized the acquisition of PHEM in Malaysia, expanding its presence in Southeast Asia and Australia.
- Systemair AB (STU:52SA) continued its capacity investments in Lithuania, Italy, Canada, and Germany, with new facilities expected to be operational in the second quarter.
- The company successfully relocated Menerga's production from Germany to Slovenia, which is expected to generate annual cost savings of at least SEK70 million.
- Systemair AB (STU:52SA) celebrated its 50th anniversary, marking a significant milestone in its history.
Negative Points
- Net sales in the quarter decreased by 2% to SEK3.111 billion compared to SEK3.175 billion last year.
- The company reported a smaller negative organic growth of 0.3% for Q1.
- Operating profit margin decreased to 9.8% from 10.5% in the previous year.
- Profit after tax amounted to SEK210 million, down from SEK242 million last year.
- Free cash flow decreased to SEK91.3 million from SEK177 million last year, mainly due to increased trade receivables and decreased trade payables.
Q & A Highlights
Q: Can you provide more details on the US market performance?
A: The US market saw a slight contraction in volumes, primarily related to the distribution business. This is viewed as a short-term issue, influenced by summertime and distributor warehouse situations, rather than a long-term trend. (Roland Kasper, CEO)Q: What are the main drivers behind the improved gross margin?
A: The improvement is due to several factors, including profit improvement programs, previous price increases, and the divestment of the AC segment. These efforts are part of a long-term strategy to stabilize and enhance gross margins. (Anders Ulff, CFO)Q: Are there any plans for further price adjustments in the near future?
A: No price adjustments were made in the last quarter, and there are no plans for further adjustments in the next three to five months. (Roland Kasper, CEO)Q: How is the Menerga production move progressing?
A: The move from Germany to Slovenia is complete, and production is now fully operational in Slovenia. The reorganization is expected to generate annual cost savings of at least SEK70 million, with full effect in the next fiscal year. (Roland Kasper, CEO)Q: What is the outlook for the Nordic market for the remainder of the year?
A: The Nordic market showed a slight decline in the quarter, but industrial activity remains strong. The outlook is stable, although it's challenging to make precise predictions. (Roland Kasper, CEO)Q: How is the cost situation developing, particularly in terms of salaries and freight?
A: Salaries and freight costs have increased due to inflation, but freight rates have stabilized recently. Outbound freight costs are being transferred to customers where possible. (Anders Ulff, CFO)Q: What explains the improved profitability in markets outside of Europe?
A: The profitability in regions like North Africa, Turkey, Middle East, Asia, and India is in line with the group's targets. The company is growing and taking stronger market positions, allowing for better pricing strategies. (Roland Kasper, CEO)Q: How do you view the competitive landscape in more challenging markets like the Nordics and Western Europe?
A: Market shares in the Nordics are stable, and in mid-Europe, the company is gaining market share in certain applications, particularly in Germany, Benelux, and the UK. (Roland Kasper, CEO)Q: What caused the lower organic growth pace in the "rest of the world" segment?
A: The slower growth in the quarter was mainly due to seasonal factors in Turkey and the Middle East. Other markets like North Africa, India, and Asia continued to grow strongly. (Roland Kasper, CEO)Q: What are your expectations for the cost situation in the near term?
A: Costs related to salaries and freight have increased but are stabilizing. The company is continuously working on cost adjustments to improve profitability. (Anders Ulff, CFO)For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Systemair AB (STU:52SA) Q1 2025 Earnings Call Transcript Highlights: Mixed Performance Amid Strategic Moves
Systemair AB (STU:52SA) reports a slight decline in net sales and profit, but shows improvement in gross margin and strategic expansions.
