Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Netel Holding AB (FRA:2CR, Financial) reported a 0.3% increase in net sales, driven by strong growth in Infra services and Telecom in Norway and Finland.
- The company's order backlog remains strong at 4 billion SEK, reflecting its solid market position and alignment with megatrends like electrification and modernization of infrastructure.
- Netel Holding AB (FRA:2CR) has implemented strategic initiatives, including digitalization projects and organizational changes, to enhance future growth and sustainability.
- The company successfully signed a contract with Green Mountain Data Center in Norway, marking an expansion into new customer segments.
- Telecom division showed improved profitability, with a 9% organic growth in sales, driven by service agreements in Norway and fiber rollout in Finland.
Negative Points
- The Power division experienced a significant decrease in sales by over 17%, attributed to the project-driven nature of the business and fewer project completions.
- Adjusted EBITA margin decreased to 5.3% from 5.7% year-over-year, impacted by lower volumes in the Power division and less profitable projects in Infra Services.
- The company faces increased competition in the Infra services market, which has affected profitability.
- Sales in the UK have decreased by 35% year-to-date, despite a strong push for fiber rollouts, indicating challenges in winning contracts or organizational issues.
- There are ongoing strategic initiatives that require time and investment, which may delay immediate financial improvements.
Q & A Highlights
Q: Can you provide some insight into the lower margin in the Power division and how much is driven by volume versus weakness in Finland?
A: Fredrik Helenius, CFO: The lower margin in the Power division is primarily due to a nearly 20% drop in volume, which affects cost coverage. Both lower volume and the situation in Finland are key drivers for the reduced margin this quarter.
Q: Are you still on track for black figures in Finland despite the challenges in the Power projects?
A: Jeanette Reuterskiöld, CEO: Yes, we are still aiming for black figures in Finland overall. While there are losses in Power projects, we have strengthened our organization with a new business unit manager to increase volumes in the Power segment.
Q: How are the working capital initiatives impacting the current quarter, and should we expect similar effects in Q4?
A: Fredrik Helenius, CFO: We are starting to see slight effects from our working capital initiatives, which we will continue to focus on. While we expect some seasonal flow in Q4, we cannot comment on specific improvements.
Q: How secure are you about the margins in your order backlog given the current competitive environment?
A: Jeanette Reuterskiöld, CEO: Despite increased competition, we are aligning our business with financial targets. While there are risks in projects, we are confident that Infra services will contribute to reaching our targets.
Q: Can you elaborate on the impact of digitalization and the new business system on margins?
A: Jeanette Reuterskiöld, CEO: Our digitalization efforts, particularly in telecom services in Norway, aim to improve efficiency and control, reducing manual administration. This will enhance competitiveness and margins in the long run.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
