Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bonava AB (FRA:66B, Financial) reported a significant improvement in market conditions, particularly in the consumer segment, leading to increased sales and project starts.
- The company achieved a strong growth in sales and reservations, with a 31% increase over the comparable period last year.
- Bonava AB (FRA:66B) successfully reduced its net debt from SEK6.3 billion to SEK3.5 billion, demonstrating effective financial management.
- The company reported a strong cash flow in the third quarter, contributing to the reduction in net debt.
- Bonava AB (FRA:66B) has a robust pipeline of project starts for the fourth quarter and into 2025, indicating future growth potential.
Negative Points
- The company reported a small EBIT loss on a rolling 12-month basis, indicating ongoing financial challenges.
- Bonava AB (FRA:66B) experienced a decrease in net sales to SEK1.4 billion compared to SEK2.8 billion last year, reflecting lower business volume.
- The operating EBIT was negative at minus SEK258 million for the quarter, impacted by impairment items.
- The Finnish market remains challenging, with low net sales and negative gross and operating margins due to underabsorption of costs.
- Land sales in Sweden were below book value, resulting in write-downs and impairments.
Q & A Highlights
Q: Can you explain the situation in Germany given the macroeconomic challenges?
A: Peter Wallin, President and CEO, explained that despite Germany being described as the "sick man of Europe" due to industrial and labor market challenges, Bonava sees a pent-up demand for housing. The improved disposable income of households is boosting demand, particularly in strong markets like Berlin, Dusseldorf, Cologne, Mannheim, Stuttgart, and Frankfurt.
Q: What is a reasonable level for completed unsold units in stock?
A: Lars Ingman, CFO, stated that while it's important to actively manage inventory, reaching zero unsold units might indicate selling too cheaply. The goal is to reduce unsold units to a balanced level, ensuring margins are maintained.
Q: Could you describe the land sales in Sweden and comment on construction cost development?
A: Peter Wallin noted that some land sales in Sweden were below book value, leading to write-downs. Construction costs have seen a decrease in input materials and contractor costs, although wage increases and transportation costs have added inflationary pressure.
Q: Can you provide an update on the strategy evaluation for Finland?
A: Peter Wallin mentioned that the Finnish market is challenging but showing promising signs. The assessment of Finland is ongoing, with the market trailing Swedish development by about six months.
Q: Are there opportunities to acquire land banks at distressed valuations?
A: Peter Wallin confirmed that Bonava sees opportunities, especially in Germany, to acquire land at distressed valuations. Maintaining a lean balance sheet allows the company to capitalize on these opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
