Release Date: December 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Systemair AB (FRA:52SA, Financial) reported a strong gross margin of 37.3%, up from 33.9% in the previous year, indicating improved profitability.
- The company achieved a record high operating profit of 347 million SEK, with an operating profit margin of 11%, up from 10.1% last year.
- Organic growth was positive at 2.6%, with significant contributions from regions like North America, Eastern Europe, and the Middle East.
- The company successfully completed several strategic investments and expansions, including new facilities in Lithuania and Germany.
- Systemair AB (FRA:52SA) has a robust M&A pipeline, indicating potential for future growth through acquisitions.
Negative Points
- Net sales for the quarter decreased by 1.3% compared to the previous year, impacted by a negative currency effect of 4.3%.
- Western Europe experienced a decline in organic sales by 4.5%, with the German market showing no clear signs of recovery.
- The company's profitability outside Europe was lower, with challenges in the Turkish market affecting overall margins.
- Working capital increased, leading to a decrease in cash flow by 15.6 million SEK.
- The company had to cut 60 employees in South Africa as part of a strategic repositioning, indicating challenges in that market.
Q & A Highlights
Q: Could you elaborate on the strong performance in North America, particularly the differences between Canada and the US?
A: Roland Kasper, CEO: The strong performance in North America was primarily driven by a strengthened residential market in Canada, which has returned to normal levels. Distributors have restocked, and business is picking up. In the US, the residential market has been slower, partly due to the election, but there are expectations for improvement. Currently, Canada is the stronger market for residential products.
Q: How do you perceive the potential tariff risks in North America, especially post-election?
A: Roland Kasper, CEO: It's speculative to predict tariff risks, but recent meetings between Canadian and US leaders suggest a move towards normalization. We don't see a significant threat to the NAFTA agreement or tariffs from Canada to the US. Additionally, we have production capabilities in the US, allowing for flexibility in production volumes.
Q: Can you provide more details on the new factory in Lithuania and its impact on production capacity and market reach?
A: Roland Kasper, CEO: The Lithuania factory produces residential units for Europe and larger units for North European markets. The expansion was necessary due to increased demand, particularly in industrial and larger air units. We are optimistic about the factory's utilization and its contribution to meeting market demands.
Q: With net debt levels decreasing, how do you see your growth strategy progressing, particularly in terms of M&A opportunities?
A: Roland Kasper, CEO: We have a stable and interesting M&A pipeline, with activity levels picking up in the last 3 to 6 months. We are actively pursuing opportunities and expect to continue expanding through strategic acquisitions.
Q: Regarding the positive sales development in Norway, what has contributed to this, and is it a temporary trend or a sign of market recovery?
A: Roland Kasper, CEO: The growth in Norway is driven by larger projects on the unit side and a shift from new builds to renovation projects in the residential sector. Additionally, there are export projects contributing to the growth. The market activity level in Norway is healthy, indicating a more stable development.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
