Release Date: February 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GARO AB (LTS:0REY, Financial) has a strong presence in the energy transition market, with products that are essential for future infrastructure upgrades.
- The Electrification business area showed a 2% increase in sales, demonstrating stability and growth potential.
- Ireland continues to be a strong market for GARO AB (LTS:0REY), contributing positively to sales and profitability.
- The company achieved Eichrecht certification for its products, enhancing credibility and opening opportunities in the German market.
- GARO AB (LTS:0REY) has implemented an action program focused on boosting efficiency, controlling costs, and strengthening profitability, which is expected to have a positive impact moving forward.
Negative Points
- Net sales for the fourth quarter decreased by 9% compared to the same quarter last year, with a significant decline in the E-mobility sector.
- The E-mobility business area faced a 33% decrease in sales, highlighting ongoing challenges in this market segment.
- The company reported a negative operating profit for the full year, primarily due to inventory write-downs in the E-mobility sector.
- Residential construction in the Nordic region experienced a significant decline, impacting housing-related product sales.
- GARO AB (LTS:0REY) has a high inventory value, indicating room for improvement in working capital management.
Q & A Highlights
Q: Can you elaborate on the impact of deliveries to data centers on your Q4 figures?
A: Jonas Klarén, CEO: The impact is detailed in our report, primarily in Ireland, where data centers are a strong sector. Helena Claesson, CFO: It has boosted sales in Ireland throughout 2024, contributing to growth in other markets and product groups.
Q: With a 15% reduction in headcount year-on-year, are you operating at full capacity, or can you grow without increasing headcount?
A: Helena Claesson, CFO: We have improved production efficiency, allowing for growth with the current workforce. Jonas Klarén, CEO: Our facilities, especially in Poland, have the potential to scale up quickly, particularly with the expected growth in the German EV market.
Q: Regarding new debt covenants tied to cash flow, how should we view working capital if growth returns?
A: Helena Claesson, CFO: There is significant room for improvement in working capital. We aim to reduce inventory levels and return to pre-COVID net working capital levels of 20%-25% relative to turnover.
Q: What are your expectations for the E-mobility market recovery and its impact on Garo?
A: Jonas Klarén, CEO: The recovery is slower than hoped, but long-term opportunities remain strong due to the expansion of charging infrastructure driven by sustainability goals.
Q: How is the demand in the public sector and commercial markets affecting your outlook for 2025?
A: Jonas Klarén, CEO: Demand remains strong, driven by renovation needs and energy efficiency focus. We expect gradual market improvements in both Electrification and E-mobility, with a positive outlook for 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
