Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Loomis AB (LOIMF, Financial) reported a record quarter in terms of both revenue and operating income, with revenues exceeding SEK7.6 billion.
- The company achieved an organic growth of 7%, driven by strong demand for cash handling automated solutions, particularly in the US and Europe.
- Operating margin increased to 11.6%, with significant improvements in both the US and European segments.
- Loomis AB (LOIMF) returned over SEK1 billion to shareholders through dividends and share repurchase programs, demonstrating a strong commitment to shareholder value.
- The company is making progress on sustainability initiatives, including a reduction in carbon emissions and a commitment to science-based targets for emission reductions.
Negative Points
- Currency rate changes negatively impacted revenue due to hyperinflation currencies.
- The international business line continues to face cyclical headwinds, with a decline in performance.
- Additional restructuring charges were booked in the quarter, indicating ongoing challenges in optimizing operations.
- The Swedish market recorded negative organic development, with potential impacts from the ending Bankomat contract.
- Increased interest rates have led to a rise in net financial items, affecting overall financial performance.
Q & A Highlights
Q: Can you elaborate on the CapEx levels in the quarter and if this is a new steady state level? Also, how will the end of the Bankomat contract affect your Swedish business?
A: On CapEx, we don't plan on quarterly levels, but we aim to optimize this item over time. Regarding Sweden and Bankomat, we don't comment on specific contracts, but we adapt our operations to market conditions. Sweden accounts for about 3% of Loomis' total revenues.
Q: Can you provide more details on the consolidation of branches and associated costs? Is this specific to Sweden or more broad-based?
A: The consolidation is not specific to Sweden; it's a broad approach across Europe and LATAM. We're examining operations to ensure optimal positioning for future growth, focusing on footprint, capacity, and competencies.
Q: How do you view the second half of the year for European prospects in terms of defending and expanding margins?
A: We continue to analyze necessary adjustments and expect additional restructuring charges. We anticipate savings from these efforts to be 30% to 40% higher than the program, leading to margin expansion in the coming quarters.
Q: How do you see the international operations developing, and where are you experiencing volume growth?
A: International operations are stable at a low level. Volume growth is significant in automated solutions, with double-digit growth in both regions. In the US, growth is driven by new customers, while in Europe, it may involve some cannibalization of CIT and CMS business.
Q: What is the impact of the Hosteltáctil acquisition on Loomis Pay's growth, and should we annualize the contribution?
A: Hosteltáctil had annual revenues of EUR1.5 million in 2023. We integrated them from March 1, contributing four months to the quarter. The acquisition is margin accretive, but it's early to fully assess its impact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
