Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MEKO AB (FRA:1OM, Financial) achieved a 7% growth in Q3, with 2% organic growth, driven by strong performance in Sweden and Norway.
- The company improved its gross margin this quarter, aided by price increases and enhanced efficiency.
- MEKO AB (FRA:1OM) maintained a solid financial position, with leverage levels within the target range, providing flexibility for future operations.
- The company received the highest ESG rating (AAA) from Morgan Stanley Capital International, recognizing its sustainability efforts.
- MEKO AB (FRA:1OM) is preparing for the launch of several new warehouses in 2025, which are expected to enhance inventory management and customer service.
Negative Points
- The market conditions in Denmark and Finland were softer, with Finland experiencing weaker demand.
- The acquisition of Elit Polska, while strategically beneficial, resulted in lower gross margins for the group due to Poland's lower margins.
- The integration of Elit Polska involves anticipated restructuring costs estimated between SEK70 million to SEK100 million.
- The Polish market remains highly competitive, with ongoing challenges such as salary inflation and a slowdown in exports.
- The Denmark market performance was not up to last year's levels, partly due to a competitive environment and slower market conditions.
Q & A Highlights
Q: How does the current inventory level impact cash flow, and should we expect this to continue with upcoming projects?
A: The inventory level is primarily a seasonal effect due to the winter season buildup. It is likely to remain stable as we need a buffer for upcoming warehouse projects. (Pehr Oscarson, CEO)
Q: Regarding the integration process in Poland, do you foresee further acquisitions in the market?
A: The Polish market still requires consolidation, and there will be M&A activities. Our focus is currently on integrating Elit Polska, but further consolidation is expected in the next 2-3 years. (Pehr Oscarson, CEO)
Q: Can you provide more details on the price increases in Sweden and Norway?
A: Price increases have stabilized, balancing out currency effects. There is limited room for further increases, but we continue to improve gross margins through purchasing efficiencies. (Pehr Oscarson, CEO)
Q: How will you ensure business continuity with the launch of four new warehouses next year?
A: Each project is separate with local plans. We have contingency plans to cover potential disruptions, including using other regions like Sweden as backups. Launches are planned from March to June 2025. (Pehr Oscarson, CEO)
Q: What is the status of your efficiency programs, particularly in Denmark?
A: The efficiency program in Denmark has shown some effects, though not fully reflected in the P&L yet. We continue to seek further efficiencies, especially post the new warehouse project. (Pehr Oscarson, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
