Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Etteplan Oyj (FRA:EPL, Financial) managed to grow despite a challenging market environment, supported by strategic acquisitions.
- The company reported strong operating cash flow, maintaining a good level throughout the year.
- Etteplan Oyj (FRA:EPL) continued its development efforts, particularly in AI, implementing the first service solutions for customers in technical communications.
- The acquisition of Swedish company AFFRA AB and a minority stake in Bangladeshi IT service provider BJIT are strategic moves to enhance service offerings.
- The company won several outsourcing contracts and expanded its customer base beyond its traditional markets, including a partnership with a Japanese company, Konoike.
Negative Points
- Market demand was weaker than expected, with slow customer decision-making and declining order books.
- Revenue decreased organically, and overall profitability was under pressure, weakening at the company level.
- The company's revenue from key accounts decreased by 6.9%, impacting overall growth.
- Etteplan Oyj (FRA:EPL) had to implement temporary layoffs and restructuring measures due to the challenging market conditions.
- The company revised its financial guidance downward, reflecting slower-than-anticipated market recovery and demand.
Q & A Highlights
Q: What are the scenarios for the lower and upper range of the specified guidance, and does the lower end require strong performance in the second half?
A: Yes, achieving even the lower end requires improved market demand. We expect the market to pick up based on reports and anticipate a stronger Q3 and Q4. Our industry typically responds quickly when investments resume.
Q: What were the reasons for the sudden weakening of the environment compared to the outlook at the beginning of the year?
A: We observed some initial investments from customers, but overall, project deliveries slowed as customers' order books declined. This led to a weaker demand situation, despite earlier signs of potential improvement.
Q: Does the Q2 performance reflect the overall market trend, and how do you see the competitive environment?
A: The performance varies by country and service area, but generally, it reflects the market trend in manufacturing demand. There are differences across regions, but this is the general understanding.
Q: Can you provide more details on the decrease in revenue from key accounts?
A: Key sectors like pulp and paper, forestry, and industrial manufacturing are not receiving as many new orders, impacting our growth and profitability. This is the main reason for the decline in key account revenue.
Q: Was the softer profitability in Q2 due to pricing or lower utilization rates?
A: Pricing has been relatively stable, but there is price pressure due to competition. The main impact on profitability was from lower demand and necessary restructuring to adapt to market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
