Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ework Group AB (LTS:0MCB, Financial) reported an increase in gross margin to 4.1% from 3.8% last year, driven by growth in add-on services.
- The company experienced strong growth in Denmark and Poland, with Poland benefiting from increased nearshoring demand.
- Ework Group AB expanded its operations into Belgium, aligning with its strategy for European expansion.
- The company launched a new internal digital platform aimed at increasing scalability and long-term efficiency, with AI and automation playing key roles.
- Ework Group AB secured several new frame agreements with both new and existing clients, indicating renewed confidence in their services.
Negative Points
- Net sales declined by 17% to SEK3.5 billion, primarily due to the phase-out of unprofitable client contracts and fewer workdays.
- The company faced challenges in Sweden and Norway, with lower volumes impacting overall results.
- Operating profit decreased to SEK34.3 million from SEK44.7 million last year, affected by lower business volumes.
- The public sector consulting and telecom industries remained restrained, contributing to a decline in these segments.
- Ework Group AB's financial net was negatively impacted by currency effects, particularly related to an inter-company loan to the Polish business.
Q & A Highlights
Q: Have you extended the scope of phasing out unprofitable contracts, or does it mainly reflect the contracts announced in early 2024?
A: We have mainly phased out one big contract as communicated in 2024. The current volume drop is related to this, but we continuously assess contracts to ensure profitability. - Karin Schreil, CEO
Q: Is it fair to expect gradually improved growth in gross profit given the uncertain market and phased-out contracts?
A: Yes, we focus on improving gross margins by discontinuing nonprofitable agreements and adding more high-margin services. However, market uncertainty remains a challenge. - Karin Schreil, CEO and Johanna Eriksson, CFO
Q: Can you comment on the business development in April or May amid macroeconomic turmoil?
A: It's challenging to predict due to the complex market landscape. We are focusing on client needs and leveraging our updated service portfolio, including nearshoring services. - Karin Schreil, CEO
Q: Are you taking any cost measures in response to recent developments?
A: Yes, we are adjusting operations to current circumstances with both short-term initiatives and long-term strategic efforts to enhance efficiency and cost-effectiveness. - Karin Schreil, CEO and Johanna Eriksson, CFO
Q: How do you expect AI to impact operational efficiency?
A: We see growing demand for AI from clients and internally. Our new digital platform and data model will enable AI use cases to automate tasks, improving efficiency and focus. - Karin Schreil, CEO
Q: What is the outlook for the public sector, which has been lukewarm?
A: The public sector remains restrained due to budget limitations, but there is strong underlying demand for automation and AI. We expect growth eventually, supported by new agreements like with Svenska kraftnat. - Karin Schreil, CEO
Q: With a decline in sales in Q1 2025, how are you adjusting your strategy?
A: We focus on clients with high demand, leverage nearshoring for cost-conscious clients, and enhance add-on services to meet current needs. Staying close to clients is key. - Karin Schreil, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
