Release Date: July 18, 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 a gross margin improvement to 4.1% from 3.8% in the same quarter last year, driven by increased value creation and add-on services.
- The company secured multiple new framework agreements, including significant contracts with Norsk Tipping, Miljødirektoratet Norge, and Danske Spil, enhancing its client base.
- Ework Group AB is expanding its nearshoring capabilities and has seen positive developments in markets like Denmark and Finland, with increased order intake in these regions.
- The implementation of a new internal digital platform is nearly complete, which is expected to improve operational efficiency and scalability, particularly with AI integration.
- Despite market challenges, Ework Group AB has maintained steady or increasing hourly rates, particularly due to a high number of senior consultants on assignment.
Negative Points
- Net sales for the second quarter decreased by 13% compared to the previous quarter, primarily due to the phase-out of non-profitable client contracts and fewer working days.
- The company continues to face market restraints, particularly in the Nordic region, with Sweden and Norway experiencing reduced consultant assignments and consultant freezes.
- Ework Group AB's EBIT decreased to SEK45 million from SEK52 million last year, impacted by lower revenue and increased IT costs due to the new platform implementation.
- The Automotive industry poses challenges due to global uncertainties and technological transformations, affecting Ework Group AB's client engagements in this sector.
- The company does not foresee a clear market recovery in the near term, with continued challenges in Sweden and Norway, and a decrease in order intake across most markets.
Q & A Highlights
Q: Can you provide more details on the recent interactions with different end markets, particularly the Automotive sector?
A: The Automotive sector is impacted by global uncertainties and technological transformations, including electrification. It's a mixed picture with some clients continuing development without freezes, while others have paused consultant intake. Outside Automotive, Banking, Life Science, and Telecom show positive developments, though Tech remains challenging.
Q: Are you seeing any aggressive pricing competition from competitors in the current market?
A: Yes, there is fierce competition among providers, but our hourly rates remain steady or are increasing due to a higher number of senior consultants. In managed service provider (MSP) agreements, we don't face the same level of competition.
Q: How do you foresee costs progressing, and what measures are you considering if demand doesn't pick up?
A: We are exploring short-term cost reduction initiatives and maintaining current cost levels. If the market doesn't improve, further cost reductions will be necessary. Our new digital platform and AI adoption will help increase efficiency and support long-term cost management.
Q: What trends are you observing in nearshoring and remote work post-pandemic?
A: There's an increasing demand for nearshoring, with clients seeking skilled experts from low-cost countries. While more companies want employees back in offices, remote work remains attractive for consultants, often on a part-time basis.
Q: What challenges have you faced with the implementation of the new IT platform, and what benefits do you expect?
A: Implementing the new platform, which includes a new data model and ERP system, has been comprehensive. Challenges include data quality issues affecting time reporting and billing. The platform will enhance efficiency and enable AI and automation, benefiting clients, partners, and Ework.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
