Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Genuit Group PLC (LSE:GEN, Financial) achieved a 60 basis points improvement in profit despite challenging market conditions.
- The company successfully completed a GBP15 million savings program, including the closure of two sites, without reducing capacity.
- Strong cash generation led to a 40% increase from the prior year, reducing net debt to 1.1 times.
- Two strategic acquisitions were made, expanding the company's presence in green roofs and underfloor heating markets.
- The company maintained its interim dividend of 4.1p, reflecting confidence in cash generation and strategic execution.
Negative Points
- Revenue declined by 10.6% due to subdued market conditions, including a downturn in new house building and commercial construction.
- Earnings per share decreased by about 10%, reflecting the challenging market environment.
- The company faced project delays due to excessively wet weather, impacting storm water management installations.
- There was an impairment of goodwill at Adey due to a delayed recovery in the boiler market, resulting in a GBP12 million write-down.
- The high interest rate environment and uncertain market conditions continue to pose challenges for growth.
Q & A Highlights
Q: On the 20% volume, how should we think about the drop through?
A: Tim Pullen, CFO, confirmed that the drop-through rate is around 30% to 35%, with potential improvements due to operational efficiencies, but it depends on volume and economies of scale.
Q: How have you seen the start of the second half and trading in July?
A: Joe Vorih, CEO, mentioned that the second half is expected to be similar to the first half, with some areas like commercial showing a bit of a pickup.
Q: Can you remind us about your M&A ambitions and the types of businesses you're looking for?
A: Joe Vorih, CEO, stated that the focus is on product and solution expansion in climate and water management, with an interest in international opportunities, as seen with recent acquisitions.
Q: Why is there only 20% spare capacity despite volume declines?
A: Joe Vorih, CEO, explained that the 20% is a baseline, and capacity varies by product line. The company continues to invest in productivity and capacity improvements.
Q: What percentage of revenue comes from direct business with water companies, and could this increase?
A: Tim Pullen, CFO, noted that direct business with water companies is close to zero, but the company is engaging with them to get specified in projects, aiming to capitalize on future opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
