Release Date: November 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rockwool AS (RKWBF, Financial) reported a 7% increase in sales over the last nine months, driven by volume and stable sales prices.
- The company achieved a margin expansion of 3.5 percentage points, resulting in a nine-month margin of 17.8%.
- Strong performance was noted in North America and Central Europe, with double-digit sales growth in North America.
- The insulation segment showed robust growth with a 9% increase, demonstrating resilience in a challenging macroeconomic environment.
- Rockwool AS (RKWBF) maintained a solid EBITDA margin of 25.2%, supported by strong productivity and lower-than-expected input costs.
Negative Points
- The systems segment experienced slower growth, influenced by a divestiture and product mix shifts.
- Eastern Europe showed a mixed performance, with some countries experiencing flat or decreasing growth.
- Price pressure was noted in certain markets, such as East Europe and France, impacting overall pricing strategy.
- The systems segment faced challenges with one-off re-evaluations and lower margins in the Grodan business.
- The macroeconomic environment in Europe remains challenging, particularly affecting residential and new building activities.
Q & A Highlights
Q: Can you explain the slowdown in Eastern Europe and whether it will persist in the coming quarters?
A: Jes Hansen, President and CEO, explained that the slowdown is due to a mix of factors, including stable quarter-to-quarter performance and varied market conditions. Some markets, like Poland, face heavy price pressure, particularly from foam products. However, Rockwool is maintaining its pricing strategy.
Q: How are you managing pricing given the mixed signals of price growth and downward trends in some markets?
A: Jes Hansen noted that while there is price pressure in Eastern Europe and France, the company is tactically adjusting prices in certain applications to maintain volume. Kim Andersen, CFO, added that an 8% price increase in North America significantly contributed to the overall price growth.
Q: What is the outlook for large project pipelines and how are you engaging with architects and builders?
A: Kim Andersen stated that Rockwool does not rely on a pipeline of large orders but focuses on daily dispersed sales. Jes Hansen added that there is no indication of a material change in project discussions with architects and builders.
Q: With strong margins, how are you approaching price discussions with dealers?
A: Jes Hansen emphasized that while margins are high, there is an understanding among customers about the need for price increases due to rising input costs. The company plans to implement a steady 2% to 3% price increase next year.
Q: What are your strategic priorities as the new CEO, particularly regarding growth and market opportunities?
A: Jes Hansen highlighted the focus on North America due to a category shift towards noncombustible insulation and energy efficiency. He also emphasized the importance of the European renovation wave and the need to invest in capacity and decarbonization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
