Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VBG Group AB (FRA:KU4, Financial) demonstrated resilience in softer market conditions by improving efficiency and reducing headcount.
- The company maintained a stable operating cash flow of SEK 153 million, with a return on operating capital nearing 40% over the past 12 months.
- The consolidation of three production facilities in Toronto is expected to yield significant efficiency gains and strengthen the market position of the Mob Climate Control brand.
- Despite a decrease in sales, the company achieved an increased gross margin and maintained a strong financial position with a net cash position of SEK 304 million.
- Ringfeder Power Transmission division showed growth due to the recent acquisition of Rathi Transpower, contributing positively to the division's EBITA.
Negative Points
- Overall sales dropped by 12% in Q3, with an 11% decline when adjusted for currency and acquired volume.
- The Truck and Trailer Equipment division experienced an 11% revenue drop, primarily due to slow sales in the European semi-trailer industry.
- The Mobile Thermal Solutions division saw a 16% revenue decline, with significant drops in the offroad consumer segment and the US bus segment.
- Earnings per share decreased by nearly 29%, amounting to SEK 4.496 per share for the quarter.
- The Ringfeder Power Transmission division faced a slowdown in the mining industry in Brazil and Eastern Europe, impacting sales negatively.
Q & A Highlights
Q: Are you seeing the decline in the semi-trailer market continuing or bottoming out?
A: We observed a decline or flattening out at the end of the second quarter. However, manufacturers extended their vacation periods and slowed down further in quarter three. We expect quarter four to remain at this level without significant improvements, indicating a flattening out rather than a ramp-up.
Q: How is the truck segment performing, and what are your expectations?
A: The truck segment has shown stable order intake, particularly in the company and aftermarket segments. Despite a slowdown in OEMs, we have gained traction in the bodybuilder segment. We are confident that the company business will continue at this pace.
Q: Can you elaborate on the weakness in the off-road segment within Mobile Thermal Solutions?
A: The off-road segment includes various sub-segments. While there is good demand in areas like fire trucks, the main drop is in the consumer side, particularly side-by-side volumes. This is due to destocking in dealer areas, driven by uncertainty in the US consumer market.
Q: What caused the shift in Ringfeder Power Transmission's performance between Q2 and Q3?
A: Ringfeder Power Transmission's performance can fluctuate due to its project-oriented nature. The decline in Q3 was mainly due to slower demand for installations or projects in Eastern Europe and Brazil, impacting project-based sales in these regions.
Q: With lower volumes in truck and trailer, and MTS, what cost measures can you implement?
A: We have already reduced our headcount by 4% and are exploring further efficiency improvements and capacity adjustments. We have a resilient organization capable of adapting to different business cycles, as demonstrated by our strong operational cash flow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
