Release Date: April 02, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales increased by 4.5% compared to last year, reaching SEK5,480 million.
- LCP segment showed strong growth with a 6.4% increase in organic growth.
- Cash flow from operating activities improved significantly to SEK180 million, compared to a negative SEK202 million last year.
- The company has implemented a new IT platform in the Benelux, targeting further automation and process improvements.
- A fully guaranteed rights issue of SEK1,250 million is set to improve financial stability and reduce debt levels.
Negative Points
- Gross profit decreased to SEK762 million from SEK856 million last year due to lower gross margins.
- Adjusted EBITDA dropped significantly to SEK110 million from SEK201 million the previous year.
- The company made a noncash impairment of goodwill amounting to SEK2.5 billion.
- Leverage increased to 6 times from 4 times last year, indicating higher financial risk.
- Gross margin declined to 13.9% from 16.3% last year, affected by new contracts with lower margins and market price pressure.
Q & A Highlights
Q: Could you provide more insight into the outlook for the PC cycle, considering recent communications from Dell and HP suggesting a back-end loaded 2025?
A: Johan Karlsson, CEO: We share the view that the underlying volume drivers in the market remain consistent. However, predicting the impact of macroeconomic instability on demand is challenging. The current level of instability makes it difficult to forecast accurately.
Q: Regarding price pressure and margin dilution, when do you expect the dilution effect from initial contracts to normalize?
A: Johan Karlsson, CEO: In slow markets, existing contracts generate less demand, necessitating new contracts to maintain sales. This results in a higher share of new contracts with lower margins. As demand returns, the pressure should ease.
Q: How much of the organic growth in the quarter was due to a catch-up effect from a weak Q1 versus actual market improvement?
A: Johan Karlsson, CEO: It's difficult to quantify precisely, but approximately half of the growth can be attributed to delayed orders from the previous quarter, with the remainder generated in the current quarter.
Q: Can you elaborate on the strategic shift towards standardized services and its impact on your offerings?
A: Johan Karlsson, CEO: We are transitioning from customized to standardized service offerings, which allows for scalability and improved customer service. This shift is part of our long-term strategy, and while it stabilizes margins, it is more about quality and future service delivery.
Q: What are the key components that will help achieve your target gearing ratio of 2 to 3 times, especially with the current rights issue?
A: Johan Karlsson, CEO: Improved margins from services, better market conditions, and ongoing cost reductions are crucial. Additionally, the new IT platform in Benelux offers opportunities for further efficiency improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
