Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carel Industries SpA (FRA:CIG, Financial) reported a gradual improvement in the refrigeration sector, particularly in North America, driven by market share increases and the momentum of natural refrigerants.
- The company maintained a strong EBITDA margin of 18.3% in the first half of 2024, despite a challenging market environment.
- Carel Industries SpA (FRA:CIG) is experiencing significant growth in North America, with a 12.4% increase in sales, particularly in data centers and electrification.
- The company has a strong pipeline for variable speed compressor technology in North America, with sales of inverters growing by approximately 50% in the first half of 2024.
- Carel Industries SpA (FRA:CIG) is investing heavily in R&D, reaching its target of more than 5% of sales, and is excited about multiple innovation directions.
Negative Points
- Revenues for the first half of 2024 declined by 11.7% compared to the same period in 2023, primarily due to poor performance in the EMEA region.
- The company faced a significant decline in the heat pump sector, with sales dropping by more than 50%, compounded by high stock levels and tough comparables.
- Carel Industries SpA (FRA:CIG) experienced a 26.7% decrease in EBITDA, impacted by negative operating leverage due to the revenue decline.
- The net profit for the first half of 2024 was EUR27.8 million, down 30.9% from the previous year, affected by operating results and financial charges.
- The EMEA region saw an 18.1% decline in sales at fixed exchange rates, with a sharp slowdown in heat pumps and a stagnant refrigeration market.
Q & A Highlights
Q: Can you provide insights into the revenue guidance for Q4, considering the weak performance in Q3? Is this based on current data or more of an optimistic outlook?
A: We expect a gradual improvement in the second half, with Q3 likely close to Q2. This is based on normalization of stock levels in various verticals, excluding heat pumps, and tangible signs of improvement in refrigeration. We anticipate a sequential recovery leading to our full-year guidance.
Q: What are your expectations for full-year margins, given the current consensus is above 18%?
A: While Q4 typically has lower profitability, this year we expect stronger sales in Q4 relative to other quarters. We are implementing cost containment initiatives, and while Q4 will be weaker, the top line should support maintaining current profitability levels.
Q: Can you elaborate on the growth potential of the data center vertical and the role of variable-speed compressor technology in the US?
A: Data centers are the fastest-growing vertical, especially in North America, with expected double-digit growth. For variable-speed compressors, we are investing in technology and support, and while current US sales are small, we anticipate significant growth similar to Europe’s past trends.
Q: How is Kiona performing, and what are your expectations for its growth and profitability?
A: Kiona's recurring sales grew by approximately 15%, slightly below expectations due to tough market conditions. However, profitability is ahead of expectations, exceeding 25%. We are investing in technological and commercial integration, with positive expectations for future growth.
Q: What is the current state of stock levels, and how does it affect your outlook for 2025?
A: Stock levels, excluding heat pumps, are close to normalization. We maintain a positive medium-term outlook with high single-digit organic growth expectations. While it's difficult to provide specific guidance for 2025, we are optimistic about the medium to long-term prospects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
