Q3 2024 BHG Group AB Earnings Call Transcript
Key Points
- BHG Group AB (STU:7B1) reported a significant improvement in earnings, with a profit of SEK52 million in the second quarter, marking a SEK40 million increase compared to the same quarter last year.
- The company achieved a positive cash flow of SEK103 million and a cash conversion rate of 65%, deviating from the usual negative cash flow pattern in the third quarter.
- BHG Group AB (STU:7B1) has successfully reduced its inventory levels from a peak of over SEK3 billion in 2022 to approximately SEK1.3 billion, enabling a reduction in warehouse footprint.
- The company has made progress in its international expansion, with the premium living segment growing by 11% outside of the Nordics.
- BHG Group AB (STU:7B1) has improved its adjusted EBIT by SEK133 million on a rolling 12-month basis, demonstrating effective cost management and strategic initiatives.
- Net sales decreased by 18% in the third quarter, with organic growth at minus 9.8%, indicating ongoing market challenges.
- The market remains challenging, with a recovery not expected until the first half of 2025, particularly in markets like Finland and Norway.
- Premium living segment experienced negative mixed effects, impacting gross margin and profitability negatively.
- The company's net debt stands at SEK1.2 billion, with a net debt to LTM adjusted EBITDA ratio of 4.6 times, indicating a high level of leverage.
- Interest costs, including a negative currency effect, amounted to SEK55 million, with a projected run rate of SEK150 million annually, posing a financial burden.
Hi. My name is Gustav Gustaf Ãhrn, CEO of BHG. I'm here together with Jesper Flemme, CFO, to present our Q3 report. We will also be available after the presentation to do our best to answer your questions. Slide 2 please.
The financial highlights of the report. Another challenging quarter from a market perspective, and sales were down approximately 10% organic compared to the same quarter last year. Still in the contracting market. But a step in the right direction with a sales improvement compared to the first half of the year earnings came in with a profit of SEK52 million second quarter. A significant improvement of SEK40 million versus the same quarter last year as mentioned, topline improving but still a challenge and the improvement in earnings came from margin improvements as well as improved direct selling costs and savings on SG and A we can for the fourth consecutive quarter. Happily summarize that our work is paying off and we have achieved our set target of improving our result in a challenging market, the positive cash flow
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