Release Date: July 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Instalco AB (LTS:0RP5, Financial) reported a strong cash flow in Q2, with cash flow from operations exceeding SEK1 billion over the last 12 months.
- The company signed a new bank facility, enhancing financial flexibility and operational capacity.
- Instalco's order backlog grew by 4.6% organically, indicating a positive trend in future business prospects.
- The service segment accounted for 36% of net sales, showcasing resilience and stability amidst market challenges.
- Instalco's investment in Germany is progressing well, with the platform Fabri expanding from 12 to 17 companies, indicating successful international growth.
Negative Points
- Net sales decreased by 3.9% to SEK3.5 billion, with an organic decline of 2.8%, reflecting challenges in market demand.
- The EBITA margin, although improved sequentially, remains unsatisfactory at 6.4%, indicating ongoing profitability challenges.
- The Swedish market shows signs of overcapacity and continued price pressure, particularly in central and northern regions.
- Currency fluctuations, particularly the weakening of the NOK and EUR, negatively impacted financial results by 1.4%.
- Certain subsidiaries in northern Sweden and the other Nordic segment experienced declines in both revenue and earnings, highlighting regional performance issues.
Q & A Highlights
Q: What are Instalco's priorities going forward, particularly regarding growth and margins?
A: Per Sjöstrand, Chairman of the Board: We will prioritize margins, but with higher margins come more opportunities. We will be selective in our projects but remain focused on business growth, including entering new markets and segments. Operational excellence will be a key focus in the coming months to improve margins.
Q: Is the board committed to the building automation and German market expansion?
A: Per Sjöstrand, Chairman of the Board: Absolutely, we are fully committed to these strategies. We will continue to focus on these areas while also working on improving margins.
Q: Can you provide guidance on the impact of the building automation business on the Swedish segment in Q2?
A: Robin Boheman, CEO: We don't disclose exact numbers, but the building automation business has some initial costs due to underutilization. However, our first company in this segment is now profitable on a monthly basis.
Q: When can we expect the Norwegian business to achieve better utilization and profitability?
A: Robin Boheman, CEO: We saw improved utilization in Q2, which is positive. However, it's difficult to predict an exact timeline for full recovery. We are focusing on operational improvements to stabilize margins.
Q: How has the pricing level in the order backlog developed, and what is the strategy regarding project selection?
A: Robin Boheman, CEO: We are seeing more projects in the market, allowing us to be selective and focus on margins over growth. As the number of projects increases, pricing is expected to improve.
Q: Do you foresee organic net recruitment going forward?
A: Robin Boheman, CEO: Recruitment will depend on each subsidiary's performance. High-performing companies and new business areas like automation will see growth, while others may reduce staff.
Q: Are there any extra costs in the Swedish segment margins that should be noted?
A: Christina Kassberg, CFO: No extra costs in the Swedish segment this quarter. The costs have been consistent with previous discussions.
Q: What are the typical lead times for orders in the backlog?
A: Robin Boheman, CEO: Lead times typically range from 6 to 12 months from order to execution, with project durations varying from 3 to 9 months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
