Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consumer market growth observed in key markets, particularly Denmark, leading to increased design appointments and store activity.
- Gross margin improvement in the Nordics despite volume shortfalls, with better operational trends and on-time kitchen deliveries.
- Successful cost reduction programs have been implemented, reducing costs significantly and exceeding targets.
- Advancements in strategic priorities, including nearing operational status for the new Jönköping factory, which promises industry breakthroughs.
- Reorganization efforts have pushed more accountability to local entities, enhancing operational excellence and engagement.
Negative Points
- Organic sales declined by 6% in the quarter, with a significant 11% drop in the project market due to housing completion issues.
- Operating cash flow was negative at SEK154 million, primarily due to investments and seasonal working capital changes.
- The UK market experienced a slight decline in gross margin due to volume-driven under absorption and a decrease in average order values.
- The Finnish construction market faces structural issues, potentially impacting housing recovery longer than other markets.
- Net debt increased by SEK386 million since the end of the second quarter, driven by investments and working capital fluctuations.
Q & A Highlights
Q: Can you provide an overview of the performance in the consumer market and project market during the quarter?
A: Kristoffer Ljungfelt, President & CEO, explained that the consumer market has started to grow again, particularly in Denmark, leading to increased design appointments and store activity. However, the project market faced challenges due to a lack of housing completions, impacting volumes and profitability. Organic sales were down 6% overall, with a significant decline in the project market.
Q: How did the UK market perform in the third quarter?
A: Kristoffer Ljungfelt noted that UK sales were flat, with strong consumer sales offset by weak trade and project sales. The gross margin in the UK declined slightly due to volume-driven under absorption and a decrease in average order values in consumer sales. The company is focusing on improving average order values and strengthening its premium product proposition.
Q: What strategic initiatives are being implemented to address cost reductions?
A: Kristoffer Ljungfelt highlighted ongoing cost reduction programs, including a new cost program linked to reorganization efforts. The company aims to continue reducing costs until the market fully recovers. The recent program is expected to generate savings of SEK85 million, contributing to a total group saving of about SEK300 million.
Q: What progress has been made with the new factory in Jönköping?
A: Kristoffer Ljungfelt shared that the Jönköping factory is nearing operational status, with the building completed and most machinery in place. The factory will enhance performance, efficiency, and sustainability. The transfer of production from other sites to Jönköping is planned to start in January 2025.
Q: How is the UK transformation progressing towards an asset-light model?
A: Kristoffer Ljungfelt stated that significant progress has been made, including exiting unprofitable social housing business, reducing staff, and closing unprofitable stores. The company is targeting more affluent customer groups and forming new partnerships, which are expected to improve profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
