Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Addnode Group AB (STU:AR7, Financial) reported a stable quarter with a high share of recurring revenue, providing a secure foundation in uncertain times.
- The company has made three strategic acquisitions in 2025, enhancing its portfolio in defense, railway, and forest management sectors.
- The Process Management division delivered strong growth with improved EBITA margins and a 5% organic growth rate.
- The company maintains a strong financial position with low debt, enabling continued execution of its long-term acquisition strategy.
- Demand in the Design Management division was stable in both Europe and the US, with proprietary software sales showing good growth.
Negative Points
- Net sales decreased by 39% compared to the previous year, primarily due to changes in the transaction model within Design Management.
- The German market continues to deteriorate, particularly affecting the automotive industry, leading to weaker sales.
- Cash flow from operations decreased significantly, impacted by changes in working capital and the transition to annual payment terms.
- The PLM division introduced a cost adjustment program due to weaker sales, particularly in Germany, with restructuring costs impacting EBITA.
- The economic and geopolitical situation remains uncertain, affecting customer decision-making processes for major investments.
Q & A Highlights
Q: What is driving the declining adjusted EBITA margin in the PLM division despite positive organic growth?
A: Johan Andersson, CEO, explained that the decline in adjusted EBITA margin is due to a mix of factors, including increased costs and a change in the sales mix. The company is addressing this with cost savings measures moving forward.
Q: How is the automotive market in Germany affecting the PLM division, and is there customer churn?
A: Johan Andersson stated that while there is no significant churn, the automotive market is not driving new projects, affecting service sales. The software remains in use, but new service projects are not being initiated, impacting billability.
Q: When will the cost savings from the restructuring be realized?
A: Johan Andersson noted that the cost savings will start to take effect in Q2 2025 and will gradually increase throughout the year. The full-year effect is expected to be SEK45 million, with about half realized in 2025.
Q: Can you clarify the impact of the change in payment terms on cash flow?
A: Kristina Mackintosh, CFO, explained that the transition from three-year upfront payments to annual payments began in 2023. This change will affect cash flow until 2026, with 2025 being the bottom of the effect.
Q: What is the outlook for the Design division given the macroeconomic conditions?
A: Johan Andersson expressed confidence in the Design division's outlook, citing a strong pipeline and customer demand. The company is optimistic about short-term prospects, particularly in the US market.
Q: How are the layoffs in the PLM division being implemented, and are they sufficient for a potential downturn?
A: Johan Andersson stated that the layoffs are based on current market conditions and are intended to maintain a healthy profit in the PLM division. The company is prepared for the market to remain at current levels.
Q: How is the Process Management division performing, and what is the outlook?
A: Johan Andersson reported strong performance in the Process Management division, driven by efficient operations, organic growth, and recent acquisitions. The division is benefiting from stable demand in the public sector and defense industry.
Q: What is the impact of FX revaluation on the financial results?
A: Kristina Mackintosh clarified that FX revaluation affects both accounts receivables and payables, but these are not separately reported in the income statement. The company hedges internally to mitigate FX impacts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
