Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- B2C sales increased by more than 5% in the fourth quarter, showing strong consumer demand.
- Adjusted EBIT improved significantly to DKK30 million from DKK18 million in Q4 last year, with an EBIT margin increase from 5.8% to 9.9%.
- The company reported a strong cash conversion rate of 84.3%, indicating efficient cash management.
- TCM Group AS (OCSE:TCM, Financial) plans to acquire the remaining 55% of Celebert, which has shown impressive revenue and earnings growth.
- The company achieved a gross margin increase from 22.3% to 22.5% due to a favorable sales mix with higher-margin B2C sales.
Negative Points
- Overall sales declined by 2% due to a downturn in B2B project sales.
- Revenue in Norway decreased by 10.7% due to challenging trading conditions.
- Administrative expenses were relatively high in Q4, impacting overall profitability.
- Supply chain bottlenecks, particularly in lacquering capacity, increased production costs and affected margins.
- Visibility for B2B growth in the second half of the year is low, creating uncertainty in future projections.
Q & A Highlights
Q: Can you elaborate on the certainty of acquiring the remaining 55% stake in Celebert and the benefits of owning it 100%?
A: Torben Paulin, CEO, confirmed that the majority owner has verbally agreed to sell the remaining stake, making the acquisition likely to occur mid-year. Owning Celebert fully will allow TCM Group to achieve synergies in assortment, management, administration, and potentially marketing.
Q: What is the visibility and lead time for B2B growth in the second half of the year?
A: Torben Paulin, CEO, stated that visibility is very low. However, there are indications of increased permissions for new builds and more projects to work on, suggesting potential growth in B2B by the end of the year.
Q: Are you able to leverage strong B2B demand to improve prices and margins, or is it mainly volume growth?
A: Torben Paulin, CEO, noted that despite more projects, the market remains under pressure, and the growth is primarily volume-based rather than price-driven.
Q: Why are administrative expenses high, and what is the outlook for these costs?
A: Thomas Hjannung, CFO, explained that administrative expenses were high due to bonus provisions and amortizations on IT development. He expects future expenses to align with current levels, with no significant increases anticipated.
Q: What impact will the acquisition of Celebert have on TCM Group's financials?
A: Thomas Hjannung, CFO, indicated that the acquisition will contribute to absolute growth, with an expected consolidation of Celebert's revenues for about five to six months. However, there will be eliminations for current supplies to Celebert, affecting the top line.
Q: How do you see the market outlook for Denmark and Norway in 2025?
A: Torben Paulin, CEO, expressed cautious optimism for Denmark with potential B2B recovery. For Norway, improvements are uncertain, but interest rate reductions could positively impact the B2C market.
Q: What is the impact of supply chain issues on Q1 2025, and when will it be resolved?
A: Torben Paulin, CEO, stated that supply chain issues, particularly in lacquering capacity, will impact Q1. The new lacquering equipment is expected to be operational by mid-Q2, resolving these issues.
Q: How significant is the impact of bottlenecks on gross margins?
A: Thomas Hjannung, CFO, estimated the impact on gross margins to be between 0.5% and 1%, primarily due to overtime, weekend work, and external suppliers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
