Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Schouw & Co AS (FRA:5RF, Financial) reported an 11% increase in EBITDA to DKK737 million, driven by strong performance in BioMar.
- BioMar achieved a 36% increase in EBITDA to DKK361 million, marking its strongest second quarter ever.
- HydraSpecma saw a 7% increase in EBITDA to DKK88 million, benefiting from synergies from recent acquisitions.
- Borg Automotive's top line grew by 12% to DKK548 million, with a 29% increase in EBITDA to DKK57 million.
- Fibertex Nonwovens reported a 50% increase in EBITDA to DKK58 million, supported by volume growth and a favorable product mix.
Negative Points
- Overall top line for Schouw & Co AS (FRA:5RF) was down 5% to DKK8.7 billion, impacted by raw material costs and lower activity levels.
- GPV's top line decreased by 16% to DKK2.28 billion, with a 24% drop in EBITDA to DKK144 million due to soft industrial markets and ERP costs.
- Fibertex Personal Care experienced a 7% decline in top line to DKK488 million, with a 24% decrease in EBITDA to DKK44 million due to fierce competition and low volumes in Asia.
- The company is facing tough competition in several segments, particularly from Chinese products in the automotive sector.
- Schouw & Co AS (FRA:5RF) anticipates a challenging second half for GPV, with a downgrade in expected EBITDA to DKK610 million to DKK660 million.
Q & A Highlights
Q: Can you elaborate on the profit protection initiatives introduced across all divisions?
A: Profit protection planning involves being proactive in managing costs and investments amid soft markets and volatility. This includes adjusting the cost base and market strategies to ensure we meet our profit plans and guidance. For example, GPV has reduced its workforce by 1,000 people over the last year to align with these initiatives.
Q: With GPV's contribution margin improving but EBITDA down, is there an inability to adjust the fixed cost base to lower activity levels?
A: While GPV's contribution margin improved slightly, the EBITDA decline is due to factors like IT costs and closing operations in Malaysia. The scale is important, and we are working on the cost base to maintain profitability despite lower activities.
Q: Can you confirm if there is an overall softening of demand across your businesses?
A: Yes, there is an overall softening of demand, particularly affecting GPV. However, BioMar had a strong first half and is expected to continue performing well, although volumes and margins may vary due to biological factors and seasonal changes.
Q: Regarding BioMar, what impact do declining raw material prices have on gross profit per kilo, and what is a sustainable level going forward?
A: We don't expect raw material prices to decline much further. Our focus is on maintaining high margins through commercial excellence and product mix. During peak seasons, more basic feeds are sold, which can dilute margins slightly, but we aim to keep them high.
Q: Are there any specific segments within GPV that are experiencing subdued activity levels, and how does this align with market demand?
A: GPV is primarily involved in industrial segments that are currently soft, such as heavy equipment. While defense and security segments are strong, GPV's presence there is limited. We are exploring opportunities to expand into these areas, but it takes time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
