Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Takkt AG (XTER:TTK, Financial) has a solid foundation with an attractive and scalable business model.
- The company markets its products through well-known and respected brands with a combined legacy of over 600 years.
- Takkt AG has a large base of loyal and longstanding customers who appreciate their product and service excellence.
- The company is taking decisive actions to address internal challenges, including adjusting brand strategies and improving operational performance.
- Takkt AG is strengthening its leadership team by adding new talent with deep industry and tech expertise.
Negative Points
- Takkt AG is experiencing declining sales due to weak markets and internal issues, including suboptimal brand strategy changes.
- Process and system migrations were not well executed, resulting in negative performance impacts.
- The company faced challenges with the integration of systems for order intake, sales, and aftersales processes, leading to service quality issues.
- There was a significant decline in sales for the Office Furniture and Displays division, partly due to a flawed marketing approach and supplier issues.
- Takkt AG's profitability is well below its ambition, with a reported EBITDA significantly lower than the previous year.
Q & A Highlights
Q: Can you explain the strategic review process and the role of the interim CEO in making significant strategic decisions?
A: Andreas Weiser, Interim CEO, stated that he and the executive leadership team are working closely with the board of directors on the long-term strategy. The interim CEO's mandate includes short, mid, and long-term development for Takkt AG. The process for selecting a permanent CEO is ongoing, and the board is taking it seriously.
Q: How will the release of working capital and inventory reductions impact free cash flow in Q4?
A: Lars Bolscho, CFO, explained that while they expect to improve cash flow through working capital management, free cash flow will still be below the previous year due to lower profit levels. The focus remains on compensating for lower profits through trade working capital improvements.
Q: What are the specific issues affecting the Office Furniture and Displays division, and how are they being addressed?
A: Andreas Weiser highlighted two main issues: a shift to a brand-focused marketing approach that reduced quality leads and a supplier's manufacturing relocation causing certification delays. They have reverted to a balanced omni-channel marketing strategy and resolved the certification issue.
Q: What measures are being taken to address the challenges in the Food Service division?
A: The company has made progress in resolving data and process issues, rebuilt the outbound sales team, and reduced order backlog. These efforts have led to a significant improvement in sales performance from Q2 to Q3.
Q: How is Takkt AG balancing cost management with investments in growth and system improvements?
A: Andreas Weiser emphasized the importance of maintaining a balance between short-term cost and cash flow improvements and long-term investments in growth, systems, and processes. They are avoiding unsustainable cost-cutting measures that could hinder turnaround progress.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
