Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Instone Real Estate Group SE (XTER:INS, Financial) delivered a solid performance in Q3 2024, maintaining strong cash generation with an operating cash flow of EUR 127.1 million.
- The company has a low financial leverage with an LTC of only 8.8% and a substantial cash position of around EUR 270 million, positioning it well for future growth investments.
- Retail sales have significantly recovered, driven by buy-to-let investors and a rising share of owner-occupiers, indicating improved market conditions.
- Instone Real Estate Group SE (XTER:INS) achieved a high gross margin of 24.2%, reflecting operational excellence and cost leadership.
- The company is confident in achieving its full-year 2024 targets, with expected revenues in the lower half of the forecast range and adjusted earnings within the range of EUR 30 to 40 million.
Negative Points
- Adjusted revenues for the first nine months of 2024 were slightly below the previous year's level, attributed to lower construction output.
- Institutional investors remain cautious, impacting the pace of institutional deal signings.
- The market for institutional transactions is still challenging, with only one additional transaction expected by year-end.
- The gross margin is expected to decrease slightly in the future due to a change in the product mix and construction price inflation.
- The company faces challenges in the acquisition market, with sellers still asking for high values despite market conditions, delaying potential acquisitions.
Q & A Highlights
Q: How do the current government troubles in Germany impact Instone Real Estate Group SE?
A: Kruno Crepulja, CEO, mentioned that all political parties recognize the necessity to increase residential spaces in Germany. He believes the situation could be positive or at least neutral for Instone, as the government may push to increase the supply of flats.
Q: What are Instone's expectations for sales activity in 2025?
A: Kruno Crepulja, CEO, indicated that sales volumes in 2025 are expected to be significantly higher than in 2024, driven by owner-occupier and buy-to-let investor demand. However, the institutional market may not fully recover, and precise forecasts will depend on market conditions.
Q: What is the outlook for gross margins in the upcoming quarters?
A: David Dreyfus, CFO, stated that gross margins might decrease slightly due to a change in product mix and construction price inflation. However, new projects acquired in the current market environment could have higher margins, potentially increasing margins in the medium term.
Q: Can you provide details on the institutional deals Instone is currently negotiating?
A: David Dreyfus, CFO, mentioned that the institutional deals under discussion are in the lower range, below EUR100 million. The mix between institutional and retail sales could vary depending on the number of deals closed.
Q: What are Instone's plans regarding treasury shares?
A: David Dreyfus, CFO, stated that there are no current plans to increase the treasury shares position or cancel existing shares. The company will monitor the market and consider options going forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
