Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elanders AB (LTS:0JBY, Financial) achieved a strong cash conversion rate of 90% for the full year.
- The company managed to reduce its working capital by SEK145 million.
- There is a positive trend in demand from several customer segments, particularly Electronics, which saw a strong organic growth of around 9%.
- Elanders AB (LTS:0JBY) continues to acquire new customers, especially in the Fashion segment in North America.
- The company's new facility in Thailand is operational and expected to contribute positively to earnings in 2025.
Negative Points
- The Automotive segment experienced significant negative growth, impacting both Supply Chain and Print divisions.
- The adjusted EBITA margin decreased to 5.9% from 7.3% the previous year, primarily due to reduced Automotive volumes and soft demand from Fashion in North America.
- The Print and Packaging Solutions segment faced a challenging quarter with a negative growth of 5%.
- The company incurred one-off costs of SEK52 million related to structural measures and revaluation of additional consideration for Kammac.
- There is uncertainty in predicting future demand in the Automotive sector, leading to cautious cost adjustments and restructuring.
Q & A Highlights
Q: Can you elaborate on the margin impact for Supply Chain Solutions in Q4, particularly regarding the Automotive sector?
A: The main reasons for not matching last year's margin were lower Fashion volumes in North America and unexpected closures in Automotive operations. These factors left us with excess capacity. However, North America is starting to recover, and we are handling the Automotive situation with cost savings and adjustments. - Magnus Nilsson, CEO
Q: How do the margins for Bergen Logistics compare to when it was acquired?
A: Bergen Logistics maintains a flexible business model, achieving good margins even with low demand. When fully loaded, they achieve double-digit margins, which remain strong. - Magnus Nilsson, CEO
Q: Are you seeing positive growth in the Fashion segment in Europe, excluding new customers?
A: Yes, we are experiencing positive growth in Europe, driven by strong performance from existing customers, particularly in the low to mid-end segments. - Magnus Nilsson, CEO
Q: What is driving the 19% organic growth in the Other segment?
A: The growth is driven by fast-moving consumer goods (FMCG) in the UK and online print. We are seeing recovery in the UK, contributing to this growth. - Magnus Nilsson, CEO
Q: How are you addressing the structural changes in the Automotive sector?
A: We are handling the changes cautiously, reducing our Automotive exposure from 18% to 12% by discontinuing parts of our road transportation operations. We are focusing on cost adjustments and diversifying into other segments like Electronics and Fashion. - Magnus Nilsson, CEO
Q: Are there any signs of recovery in the UK market?
A: Yes, we are seeing increased requests and sales growth in the UK, particularly in volume-dependent areas like Tarmac. Bishopsgate is also performing well, indicating a positive trend despite the challenging market. - Magnus Nilsson, CEO
Q: Is the positive trend in Fashion client requests in the US a continuation from Q4 or a new development?
A: The positive trend began in Q3, with new customers acquired in Q4. The trend accelerated in January, particularly after Mexico's decision affecting US deliveries, leading to increased client requests. - Magnus Nilsson, CEO
Q: How do you view the future of the Automotive business within Elanders?
A: We expect Automotive to stabilize but not grow significantly. We are focusing on other segments for growth, using the same resources to support areas like Electronics, Fashion, and Health Care. - Magnus Nilsson, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
