Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Beijer Ref AB (STU:BRZ0, Financial) reported a strong Q2 with a 12% increase in sales and a 13% growth in EBITDA, marking record margins for the company.
- The company achieved positive cash flow in Q2, which is typically not expected until Q3 or Q4, indicating effective inventory management.
- Beijer Ref AB (STU:BRZ0) successfully closed an acquisition in the US and has a pending acquisition in Hungary, which are expected to enhance its market presence.
- The company's private label brands, Sinclair, Inventor, and Freddox, experienced strong double-digit growth, contributing positively to organic growth.
- The US market showed a remarkable 34% growth, supported by strategic acquisitions and favorable weather conditions, with plans to expand further by opening new branches.
Negative Points
- Despite the positive results, the net profit increased by only 2% compared to last year, partly due to higher net financial expenses driven by increased debt and interest rates.
- The EMEA region experienced slower growth in key markets like France, UK, and the Netherlands due to unfavorable weather conditions.
- The company's effective tax rate stood at 24%, which could impact net profitability.
- There is uncertainty regarding the full impact of margin initiatives in the APAC region, with expectations to reach a double-digit margin business by 2025.
- The transition to new A2L products in the US market is expected to have a limited impact in 2024, with more significant effects anticipated in 2025.
Q & A Highlights
Q: Can you elaborate on the APAC margin improvement and the impact of pricing initiatives?
A: The APAC margin improvement is due to internal initiatives and synergies from acquisitions, which initially diluted margins but are now showing positive effects. The goal is to reach a 10% EBITA margin by 2025, though it may not be a straight line to that target. (Christopher Norbye, CEO)
Q: Could you provide more details on the data center order and its significance?
A: The data center order is a breakthrough for us, utilizing green technology and natural refrigerants. It's a significant order, but more details will be disclosed in Q3. This order represents a promising opportunity for future projects. (Christopher Norbye, CEO)
Q: What drove the organic growth in the US, and how did weather conditions affect it?
A: The US saw a volume uptick with stable low single-digit price increases. Weather conditions, particularly high cooling degree days, contributed to increased activity, but the exact impact is hard to quantify. The US market remains strong with positive margin development. (Christopher Norbye, CEO)
Q: How do you view the cost base and margin outlook for the second half of the year?
A: We expect stable margins throughout the year despite ongoing investments, particularly in the US. The focus remains on maintaining margins while supporting growth initiatives like private label and e-commerce. (Christopher Norbye, CEO)
Q: What is the strategy for expanding private label brands like Sinclair and Inventor?
A: Sinclair and Inventor are being rolled out in more regions, including APAC and the US. In EMEA, they account for about 20% of HVAC sales. The focus is on expanding these brands without cannibalizing premium offerings, aiming for continued growth and margin improvement. (Christopher Norbye, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
