Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Netel Holding AB (FRA:2CR, Financial) achieved an organic sales growth of 2.7% in Q1 2025, reflecting a positive development in line with expectations.
- The company reported an adjusted EBITA of EUR 20 million with a margin improvement to 2.9% from 2.8% last year.
- Strong growth in the power segment, particularly in Norway, with a 23.8% increase in sales due to new significant customers and expanded geographical presence.
- Netel Holding AB has a robust order backlog, with approximately EUR 2 billion expected to be delivered in the remaining nine months of 2025.
- The company has successfully implemented new digital tools and systems, which are expected to positively impact margins throughout the year.
Negative Points
- Infra services experienced a sales decrease of 11.3% in Q1 2025, attributed to strong competition and a comparison to an unusually strong first quarter last year.
- Telecom sales decreased by 3.8%, affected by a high proportion of projects started for future deliveries.
- The company faces strong price competition in its market segments, leading to lower margins.
- Netel Holding AB's cash flow in Q1 2025 was negative, although improved from the previous year, highlighting ongoing challenges with seasonality and project ramp-up.
- The company's net debt remains above its capital structure target, with a leverage ratio of around 3.0 times compared to the target of 2.5.
Q & A Highlights
Q: Looking at the outlook you described for this year, it sounds like you are seeing quite a broad-based growth, with maybe a little less in infra-services and slightly more in power and telecom. Is that how you perceive your view at the moment?
A: Yes, that's correct. We see high growth for power and telecom due to contracts won last year and new ones this year. We expect some growth in infra-services, but the market situation remains competitive as in 2024. However, we see strong development in power and telecom.
Q: Regarding the order backlog, if it's about $2 billion to be delivered, it looks very healthy. Have you started to have a slightly longer duration of the order backlog than historically?
A: We have had several interesting multi-year framework agreements in the past and continue to do so. We stated in our last call that we had roughly half of the backlog for 2025, and we now have roughly $2 billion in the backlog for the remaining nine months of 2025.
Q: How do you see the updated financial targets being broken down by your business verticals and geography? Is it logical to push these targets in telecom as well?
A: It is a mix for us as a company. We have a journey to improve profitability in telecom and increase our margin there. All divisions should aim to deliver on our financial targets eventually.
Q: For telecom, would it be logical to aim for a 5 to 7% margin, considering the mix of fiber rollouts and other factors?
A: It's a longer journey for us to reach those targets in telecom compared to other divisions, but we expect step-by-step improvements in that division as well.
Q: Regarding Finland, what financial consequences do you expect from disposing of it? Are there any large costs related to the closure?
A: We believe we have made relevant assumptions and estimates for our Finnish operations. We are cautious in our financial estimates and believe we have an interesting position for the rest of the process to succeed with the completion of the divestment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
