Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GARO AB (FRA:46GA, Financial) has a strong presence in multiple European countries, including Sweden, Norway, Ireland, Finland, Poland, the UK, and Germany, with ongoing expansion into Spain.
- The company has a diverse product portfolio, including e-mobility chargers and electrical distribution products, which accounted for significant portions of sales.
- GARO electrification business area showed improved EBIT margin of 9.2% due to efficiency programs.
- The temporary power product area noted a growth of 12% compared to the previous year.
- Demand outside the Nordic region showed growth, supporting continued investment in Germany and Spain.
Negative Points
- Net sales decreased by 21% compared to the same quarter last year, with significant declines in both GARO electrification and e-mobility sales.
- Operating profit for the quarter was negative SEK4 million, a significant drop from SEK18 million positive in the same quarter last year.
- The e-mobility market recovery is slower than expected, particularly in Sweden, affecting sales and profitability.
- The construction market in Sweden and the Nordic region remains weak, impacting demand for GARO electrification products.
- The company breached its net working capital to sales ratio covenant, although a waiver was obtained.
Q & A Highlights
Q: Could you elaborate on the covenants tied to the working capital to sales ratio and any specific initiatives to reduce inventories?
A: Helena Claesson, CFO: We have a covenant related to net working capital in relation to turnover. GARO was in breach of this KPI but received a waiver. The focus is on managing stock levels, payables, and receivables. The declining sales have made this KPI challenging, but it's not tied to any specific initiative like selling old chargers.
Q: Can you provide details on the two large engine orders expected in Q3 for the electrification segment?
A: Patrik Andersson, CEO: The orders are valued at around SEK6 million to SEK7 million. The margins are expected to be in line with our standard margins, indicating it's regular business for us.
Q: Are there any additional cost-saving programs planned for the e-mobility segment?
A: Patrik Andersson, CEO: We completed a cost-saving program in Q1. However, given the current market conditions, we are exploring various options to ensure profitability in the e-mobility segment.
Q: Has the previously mentioned cost-saving program within e-mobility met expectations, given the flat number of employees over quarters?
A: Patrik Andersson, CEO: Yes, the cost-saving program has aligned with our expectations and what we previously communicated.
Q: What is the outlook for the e-mobility market and GARO's strategic focus?
A: Patrik Andersson, CEO: The e-mobility market recovery is slower than expected, especially in Sweden. However, our long-term vision remains unchanged, focusing on the transition to electric vehicles and the need for destination charging. We anticipate gradual market improvement and are investing in Germany and Spain.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
