Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NCAB Group AB (LTS:0AAQ, Financial) maintained a healthy gross margin of 37.1% for the full year, up from 36% in the prior year.
- The company saw positive order intake growth in the Nordics, particularly in the defense and green energy sectors.
- North American operations showed a 7% increase in net sales and improved EBITA margin from 13.3% to 16%.
- The company successfully completed several acquisitions in 2024, expanding its presence in Belgium, Switzerland, Austria, and Denmark.
- NCAB Group AB (LTS:0AAQ) has a strong liquidity position with available liquidity at SEK1.4 billion.
Negative Points
- The European market experienced weak demand, leading to an 11% decline in net sales and a significant drop in EBITA margin to 0.9%.
- Overall net sales decreased by 6% in Q4, with an organic growth decline of 11% in US dollars.
- The company's EBITA decreased by 40% in Q4, primarily due to low revenue in Europe.
- Working capital increased slightly due to the acquisition of DVS Global, impacting cash flow.
- The company faces challenges with tariffs in North America, which could affect pricing and supply chain dynamics.
Q & A Highlights
Q: Can you provide insights into the margin pressure in Europe and expectations for 2025?
A: The margin in Europe was significantly impacted by low revenue in Q4. We expect some recovery in Q1 as year-end effects stabilize. Traditionally, Q4 is our weakest quarter, and we anticipate returning to more stable levels in 2025. (Peter Kruk, CEO)
Q: Are there any cost adjustments being made to address lower volumes?
A: Yes, we have been trimming costs and have reduced headcount by approximately 23-25 people through various activities. These cost reductions will start to show benefits in the coming months. (Peter Kruk, CEO)
Q: Have you noticed any pre-ordering effects due to tariff changes, particularly in North America?
A: We haven't observed significant pre-ordering. The new tariffs from China are in effect, and we are prepared to transfer these costs to customers. We also offer alternatives to source from outside China. (Peter Kruk, CEO)
Q: How is the integration of DVS Global affecting costs and margins?
A: The integration of DVS Global has incurred additional costs, particularly in Q4, due to IT rollouts and integration activities. These factors, combined with low revenue, have impacted margins. (Timothy Benjamin, CFO)
Q: What is the current status of order intake and conversion rates, especially in defense and aerospace sectors?
A: We have seen substantial orders in the defense sector, particularly in the Nordics, which will translate into revenue over a longer period. This may affect conversion rates in upcoming quarters. (Peter Kruk, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
