Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NKT AS (NRKBF, Financial) achieved double-digit growth in both revenue and operational EBITA for the eighth consecutive quarter, with organic growth at 25%.
- Operational EBITA reached EUR 93 million, marking the highest quarterly result in the company's history.
- The acquisition of Solidia contributed positively, with no negative surprises during the integration process.
- NKT AS (NRKBF) secured long-term frame agreements in the Netherlands and Denmark, enhancing its market position.
- The company maintains a robust order backlog of EUR 11 billion, providing good earnings visibility for the rest of the decade.
Negative Points
- Non-recurring costs related to the integration of Solidia impacted financial results.
- The operational EBITA margin decreased compared to the same quarter last year, influenced by project mix and risk provisions.
- The construction market remains weak, affecting the applications segment, particularly in the construction-exposed areas.
- Free cash flow was negative at EUR 134 million for the quarter, impacted by changes in working capital and increased investments.
- The company faces ongoing challenges with legacy onshore high voltage projects, requiring provisions and risk management.
Q & A Highlights
Q: Can you provide assurance that the provision in the solutions segment is an isolated issue and not indicative of structural challenges?
A: Claes Westerlind, CEO: The provision is related to specific onshore legacy projects and is not material from a group perspective. It stems from a confined area of past production and technology. We are not overly concerned about this topic.
Q: Is the underlying EBITDA margin for applications around 10% after adjusting for the EUR4 million inventory revaluation from Solid?
A: Claes Westerlind, CEO: Yes, your adjustment is not incorrect. The power distribution segment is performing well, but the construction market remains subdued. Historically, we have seen margins between 7% to 9%, but recent performance has been above this range.
Q: How much of the CapEx for major projects will remain by the end of 2024?
A: Line Fandrup, CFO: The majority of investments are still ahead of us. CapEx will continue to increase in 2025, with 2025 expected to be the peak year for these investments.
Q: When can we expect a revision of NKT's long-term ambitions?
A: Claes Westerlind, CEO: We agree that a revision is due and are conducting a thorough internal process. We do not exclude the possibility of announcing revised ambitions in Q4.
Q: How is the pipeline for high voltage projects looking for 2025?
A: Claes Westerlind, CEO: Tender activity has intensified, and we have no concerns about 2025. However, due to the size of projects, annual market sizes can vary significantly, so we focus on average market sizes over a period.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
