Release Date: August 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zaptec ASA (STU:6I4, Financial) achieved a strategic cooperation with Polestar across Europe, enhancing its market presence.
- The company announced the Zaptec Go 2, a new product expected to unlock EU markets and drive growth.
- Zaptec secured a pan-European contract with Spirii valued at EUR23 million, indicating strong future revenue potential.
- The company reported a significant improvement in EBITDA, more than doubling from the previous year.
- Zaptec maintained a strong gross margin of 38%, up from 35% in the same quarter last year, showcasing effective cost management.
Negative Points
- The EV market experienced a decline, with a 5% drop in EU plug-in vehicle sales and a 9% decline in Zaptec's core markets.
- Despite revenue growth, there was a slight decrease in sales compared to the second quarter of the previous year.
- The company faces price pressure from competitors, particularly those with large inventories, affecting market dynamics.
- Zaptec's OpEx reduction may not be sustainable long-term due to expected increases in costs, such as salary adjustments.
- The German market remains challenging with low sales and high competition, delaying significant growth until 2025.
Q & A Highlights
Q: Can you provide some color on the OpEx reduction? What are the main cutbacks, and do you expect to sustain this level moving forward?
A: We have focused on reducing costs mainly by cutting back on marketing, travel, and new hires. There's also seasonality in Q2 due to holiday pay in Norway. We foresee a slight increase from Q2 levels due to salary adjustments, aiming for an OpEx level similar to Q1, which was significantly down from Q4. - Eirik Haerem, CFO
Q: What measures are you taking to reduce inventory? Is it just a question of reducing production volume?
A: Reducing production volume is crucial, but we are also adjusting our price strategy in Europe and focusing on increasing sales to match production with sales. - Kurt Ostrem, CEO
Q: Many competitors report negative sales growth, especially in Sweden. What makes you different, and what are your top two competitive advantages?
A: We have a strong product that is competitive in all markets, with built-in features and safety. Our broad distribution base and strong support team also give us an edge, making it difficult for competitors to penetrate the market. - Kurt Ostrem, CEO
Q: What kind of competition are you facing in key European markets, and what about price pressure?
A: We face both European-wide and local competitors. Despite price pressure, we maintain competitiveness due to our lower cost of goods sold. Some competitors have large inventories, leading to lower prices, but we remain strong due to our brand and product quality. - Kurt Ostrem, CEO
Q: Do you still expect revenue growth in 2024 compared to 2023?
A: Yes, we do expect revenue growth, although market conditions are uncertain. We aim to increase market share and revenue, with significant growth anticipated in 2025. - Kurt Ostrem, CEO
Q: When is the German market expected to ramp up?
A: The German market is currently weak due to past subsidies and large inventories. We don't expect significant changes until 2025, despite it being the largest car market in Europe. - Kurt Ostrem, CEO
Q: What should we think about the gross margin when the Zaptec Go 2 starts selling in 2025?
A: The Zaptec Go 2 will contribute to a higher gross margin as it is a premium product with a higher price and margin. Its increased share will positively impact our margins. - Kurt Ostrem, CEO
Q: Is the 20% EBITDA target still valid?
A: Yes, we believe it is achievable due to our scalable organization, allowing us to handle higher volumes with the existing setup. It will take time, but we aim to increase EBITDA progressively. - Kurt Ostrem, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
