Release Date: April 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales outside Europe and North America increased by 25%, providing a more balanced geographic footprint.
- Despite revenue decline, VBG Group AB (FRA:KU4, Financial) maintained a solid EBITA margin of 13.1%.
- The company made two strategic acquisitions: Italytec in Brazil and Ledson Lights AB, enhancing their market position.
- Strong cost control and favorable product mix helped maintain gross margins despite weaker demand.
- The Truck and Trailer Equipment division showed signs of recovery with a positive sales trend at the end of the quarter.
Negative Points
- Overall revenue declined by 12% compared to the first quarter of 2024, primarily due to challenges in North America and Europe.
- The Mobile Thermal Solutions division experienced an 18% sales decrease, impacted by supply chain issues and slow market conditions.
- The strengthening of the Swedish krona negatively impacted results by SEK8 million.
- Ringfeder Power Transmission division saw an 11% sales decrease, with a weaker product mix affecting EBITA margin.
- Cash flow was lower than the comparable quarter last year, partly due to higher working capital tied up in accounts receivables.
Q & A Highlights
Q: Can you provide more details on the semi-trailer market and its current demand trends?
A: Anders Erken, CEO, explained that after eight consecutive quarters of decline, there are signs of demand picking up, albeit from low volumes. This gradual increase is expected to continue, supported by Volvo's forecast of increased production capacity for tractors and semi-trailers in Europe.
Q: What is causing the continued weakness in the Compact Off-Road segment?
A: Anders Erken, CEO, noted that the inventory reductions in the distribution chain have concluded, and the current weakness is due to the time it takes for demand to recover.
Q: Are there any signs of pre-buying from customers in the Mobile Thermal Solutions (MTS) segment?
A: Anders Erken, CEO, stated that there are no signs of pre-buying. The segment faced a tough start due to supply chain issues, but the order book is strong moving forward, despite the uncertainty in the US market.
Q: How have customers responded to the announced price hikes?
A: Anders Erken, CEO, mentioned that customers are generally understanding of the price hikes due to the well-known impact of tariffs. The increases are modest, particularly in the Off-Road segment, and more significant in the Bus segment.
Q: Can you elaborate on the slow start and increased orders in the Ringfeder Power Transmission division?
A: Anders Erken, CEO, explained that the division experienced a slow start but has a strong order intake with many project orders in the pipeline. The product mix varies, but the outlook remains positive.
Q: Are there plans for more acquisitions in 2025?
A: Fredrik Jigneus, CFO, confirmed the goal of making one to three acquisitions per year, aiming to add SEK500-600 million to the group annually. Two acquisitions have already been made in the first quarter.
Q: Is there a strategy to diversify into markets beyond Europe and North America?
A: Fredrik Jigneus, CFO, stated that the company aims to grow in markets like Brazil and India, highlighted by recent acquisitions in these regions. Sales outside Europe and North America grew by 25% in the quarter.
Q: What initiatives are in place to enhance the after-sales position?
A: Anders Erken, CEO, emphasized the strategic importance of the aftermarket, with efforts in product development and acquisitions. The target is to achieve 25-30% of sales from after-sales over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
