Release Date: August 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SP Group A/S (FRA:1PU2, Financial) reported an 8.4% increase in top-line revenue for the first half of 2024.
- EBITDA increased by 31.2% to DKK302 million, with an improved EBITDA margin of 20.3%.
- Profit before tax rose by 63% compared to the same period last year.
- The company has reduced its net interest-bearing debt by DKK107 million.
- A new share buyback program worth DKK40 million has been launched.
Negative Points
- The global economy remains fragile, with limited growth in Europe.
- Sales to Danish domestic customers declined by 8.2%.
- The automotive sector saw a significant slowdown, with sales down by 30%.
- High interest rates in 2023 negatively impacted the company's bottom line.
- The company has not made any acquisitions in 2023 and 2024 due to unattractive prices.
Q & A Highlights
Q: Should we have a look just a few of the products you make with the recycling plastic here?
A: Yes, of course. Here, we have a fence, and this fence is produced by Gibo Plast and is made out of household waste. And not just only household waste, it's actually made of the leftovers after sorting household plastic waste. So the core thing that you can absolutely find in plastics, we are able to convert into some nice planks that can be used for fencing. One of the new products that we have developed is made in Ergomed. It is the Ergomed Sustainability Mat where we have made a new program to take back customers' old products after they are worn out. Then we can recycle them and turn them into new mats in different ways. It's an exciting product because the mats are made in polyurethane which is normally not easy to recycle. But Ergomed has developed this and is now offering this to their customers.
Q: There's a question here regarding orders for this US factory. When are you able to start delivering to customers, and do you already have some customers who have signed up for production?
A: We have some customers who have signed up, and we are ready to do delivery as promised here in the second quarter of this year. But I would also like to add that we have space for more customers, and we have an open phone and an open e-mail. So if there are people out there who need a good and reliable supplier in the Atlanta area, then we are ready.
Q: There was a question in relation space. Is it fair to say that customers outside of Denmark have driven the recent growth, and would that make it more attractive to do international acquisitions if you can find the right companies?
A: It is fair to say that it is international customers who have been driving the growth. We actually had a fall in the sales or decline in sales of 8.2% for our Danish domestic customers. But we have been able to find other growth areas outside Denmark. And of course, we want to continue to grow in Denmark as well as outside Denmark. We have become much more international. We want to sell more of our own products. And you can also see we have constantly invested in new facilities outside Denmark.
Q: Are there areas where you would like to expand either with acquisitions or organically?
A: Not specific. I think we are very well covered geographically, but there will, of course, be a need to expand our capacity in the existing factories following the growth in the future.
Q: What is driving the massive growth you have seen in own brands?
A: New innovative solutions and new innovative products we have developed and launched in the market. Some of these products take time before they get acceptance. But now, we have seen good growth this year in animal housing ventilation globally. We have also gone to new markets. We have become much more global with our animal housing ventilation. In the guidewires, we have launched new products, and we have got the CFDA so we can sell our guidewires also in China. And we are now applying for an FDA, so we can start to sell our guidewires in North America in medical packaging because we have launched new products, and some of these products are taking off now and other standard components. Also here, we have launched a number of new products. And finally, in economics and saw market and health and safety, we have also launched a lot of new products, and that is also doing very well.
Q: Will you stay with the company like on the Board, Frank, we see you have this ownership in the company here?
A: The plan is that Lars will take over as CEO from the first of September, and I will stay on board until the end of September to make sure that the transition is smooth. And thereafter, I will have my phone open. So if Lars, Tilde, or Soren wants my advice on something, then they are welcome to give me a call. We have an excellent Board, and we have no plans to make any changes in the Board.
Q: Would there be any final remarks from your side, Frank? This is probably the last event we have with you here.
A: I would like to thank you all for having joined today and also thank you for having joined for previous presentations, and I wish you all the best going forward. And I am convinced that SP Group will still be a good place to be a customer and an exciting place to work and a good place to invest. So good luck.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
