Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vaisala Oyj (FRA:VAYA, Financial) reported a strong growth in net sales, increasing by 13% year-on-year.
- The order book grew by 14% compared to the beginning of the year, indicating robust demand.
- Operating margin reached a healthy 15.9%, showcasing improved profitability.
- Subscription sales saw a significant increase of 16%, reflecting successful strategic initiatives.
- The company maintained a strong financial position with low leverage and an asset-light business model.
Negative Points
- The market outlook remains uncertain and unpredictable, with potential impacts on future performance.
- Cash flow from operating activities decreased slightly due to increased net working capital requirements.
- The Industrial Measurement side faced challenges in the first quarter, impacting year-on-year comparisons.
- The subscription business is still operating at a negative EBIT level, with profitability yet to be achieved.
- There is ongoing uncertainty in the Chinese market, affecting sales and growth prospects.
Q & A Highlights
Q: What were the main drivers behind the strong order intake in the Weather and Environment business area, excluding the Spain order?
A: The strong order intake came from multiple sources, primarily on the traditional side of the business. There were no particular large orders, but rather a steady stream of mid-sized orders ranging from EUR 5 million to EUR 10 million. The subscription sales are not included in the order book, so the bulk of the growth is from traditional business orders.
Q: What contributed to the high service sales growth in the Industrial Measurements segment?
A: The growth is a result of systematic work over time, increasing the share of service sales and improving operational efficiency. Additionally, the embedded base grew significantly post-COVID, leading to more renewals of service contracts. However, this 40% growth is exceptionally high for this quarter and not expected to sustain at this level.
Q: Can you explain the improved profitability in the Weather and Environment segment?
A: The improved profitability was driven by higher volumes leading to better gross margins and controlled operating expenses. The restructuring on the Weather and Environment side late last year also contributed to cost savings, which are now reflected in the numbers.
Q: What are the main investment priorities for Vaisala in the coming months?
A: Vaisala will continue to invest in R&D and go-to-market strategies. The focus is on renewing the portfolio and being agile in sales and marketing investments, particularly in markets that require more direct investment. These are long-term strategies and part of the company's business model.
Q: What are the early signs of recovery in North America, and how do they impact Vaisala's outlook?
A: The early signs of recovery in North America are seen in deal flow, inquiries, and sales, which are small but encouraging. However, the market remains uncertain, and these signs could easily change. Vaisala has adjusted its guidance to reflect a more normal level of uncertainty, raising the lower end of its guidance range.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
