Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JOST Werke SE (XTER:JST, Financial) maintained a strong adjusted EBIT margin of 11.3% despite a decline in sales.
- The company reported a significant free cash flow of EUR61 million in the first half of 2024.
- JOST Werke SE's leverage remained below the one-time factor, even after a EUR22 million dividend payment.
- The company invested EUR15 million in Trailer Dynamics, enhancing its R&D capabilities in e-Trailer technology.
- North America showed a strong EBIT margin of 17.4% in Q2, driven by a favorable product mix and efficient operations.
Negative Points
- Sales declined by 10% year-over-year, with an organic decline of 16% in Q2 2024.
- The European market faced a significant organic sales decline of 17%, impacting EBIT due to higher fixed costs.
- The North American market experienced a 22% organic sales decline, particularly in the trailer and compact loader segments.
- Asia-Pacific Africa saw a slight decline in sales, with a less favorable regional mix affecting EBIT.
- The agricultural sector remains cautious, with OEMs expecting a slow recovery, impacting future growth prospects.
Q & A Highlights
Q: Can you explain the strong segment profitability in North America, particularly the 17.4% margin? Was this due to structural changes or one-off events? Also, what is your outlook for the agriculture sector, especially regarding high horsepower demand in North America?
A: (Joachim Durr, CEO) There were no large structural changes in North America. We maintained flexibility in our operations and adjusted personnel according to market conditions. (Oliver Gantzert, CFO) The profitability was driven by a favorable product mix, particularly premium loaders, and improved operational efficiency. We expect North American margins to remain strong. Regarding agriculture, we anticipate a slight market recovery in 2025 as dealer inventories decrease and market sentiment improves.
Q: Have you gained market share in North America or seen revenue from India in the agriculture sector? Also, can you provide insights into the aftermarket in Europe and North America?
A: (Joachim Durr, CEO) We have positive market feedback and are winning customers, particularly due to our global supply capabilities. The positive results are mainly due to a favorable product mix. In India, our compact loader factory is performing as planned. (Oliver Gantzert, CFO) We are consolidating our Brazilian acquisition, which is performing well, particularly in the construction sector.
Q: What are your expectations for the truck market in North America and Europe for next year, considering recent market forecasts?
A: (Joachim Durr, CEO) The North American market is expected to stabilize, with a potential slight increase in 2025 due to pre-buy effects ahead of new emission regulations. In Europe, the market is harder to predict, but current levels may be sustainable given industrial output.
Q: Can you provide details on the expected cash flow for the second half of the year?
A: (Oliver Gantzert, CFO) We expect the second half to be stronger in terms of free cash flow, supported by inventory reductions and ongoing initiatives. Adjustments for earn-out payments and factoring impacts should be considered, with an adjusted free cash flow of around EUR45 million for the first half.
Q: What can we expect from the upcoming Capital Markets Day in terms of M&A and strategic opportunities?
A: (Oliver Gantzert, CFO) We will present our refreshed corporate strategy, including mid- and long-term outlooks, M&A strategies, and organic growth initiatives. There will be discussions on agriculture and transport opportunities, as well as insights into our R&D pipeline and customer value synergies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
