Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Talenom PLC (OHEL:TNOM, Financial) achieved a 7% increase in revenue, despite a slowdown in growth due to reduced acquisition activity and economic downturns in the Nordics.
- Profitability improved through efficiency measures in Finland and increased business volume in Spain.
- The company is focusing on organic growth, with over 30% of revenue now coming from outside Finland.
- Talenom PLC (OHEL:TNOM) has a strong track record of digital transformation, which has significantly improved their EBIT margin over the years.
- The upcoming mandatory e-invoicing in Spain is expected to positively impact Talenom PLC (OHEL:TNOM)'s business, leveraging their unique software solutions.
Negative Points
- Growth slowed down due to lower acquisition activity and economic downturns in Finland and Sweden.
- The economic downturn in Finland led to a decline in net sales by 1.7% for the full period and 3.6% in the last quarter.
- Sweden's profitability was negatively impacted by ongoing integration projects and the implementation of Talenom's own software.
- The company's EBITDA margin in Sweden is significantly lower compared to Finland, indicating room for improvement.
- The focus on long-term profitability in Sweden has resulted in short-term profitability pressures.
Q & A Highlights
Q: What's behind the growth in the number of personnel?
A: The number of personnel has been low due to fewer acquisitions in the same quarter last year. In Finland, personnel numbers have decreased, while in Spain, they have increased. Overall, there hasn't been a significant total increase in personnel numbers. - Matti Eilonen, CFO
Q: Regarding acquisitions of intangible assets, how do you see dynamics for the coming years? Will these investments grow, stay, or decrease?
A: Our strategy is to focus on organic growth, aiming for two-thirds of growth from organic sources and one-third from acquisitions, targeting over 30% total growth. This year, we are focusing on integrating existing offices and strengthening our core operations in all countries, which means fewer acquisitions. Future acquisitions will likely occur in Spain and possibly Italy. - Otto-Pekka Huhtala, CEO
Q: What is the optimal organic growth rate for your business per year in a normal economic environment?
A: In the best case, we have achieved 18.6% organic growth in Finland. We believe that a 20% organic growth rate is possible and are implementing strategies to achieve this by 2026, assuming everything proceeds as planned. - Otto-Pekka Huhtala, CEO
Q: How has the economic downturn in Finland and Sweden affected your growth?
A: The economic downturn has significantly slowed our organic growth in both Finland and Sweden. In Finland, net sales declined due to decreased business volumes and transaction volumes among our customers. We are prioritizing customer retention to be well-positioned for an economic upswing. - Matti Eilonen, CFO
Q: Can you elaborate on the profitability improvements in Finland and Spain?
A: In Finland, profitability improved due to efficiency measures and a profitability improvement plan initiated in spring 2023. In Spain, increased business volume has enabled profitability development. We are pleased with the positive EBITDA figures in Spain and expect continued progress. - Matti Eilonen, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
