Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bulten AB (LTS:0P49, Financial) has improved its operating result despite the third quarter typically being weak due to the summer holiday.
- The company is less dependent on the type of vehicle sold (electric or combustion engine), which provides stability amid market fluctuations.
- Bulten AB is actively working on creating more flexible and stable operations, which has contributed to improved results.
- The company is expanding its customer base beyond automotive, with growth in sectors like consumer electronics and electric vehicles.
- Bulten AB is focusing on innovation, with new product developments such as self-locking and self-sealing fasteners, which could enhance future growth and margins.
Negative Points
- There is a forecasted market-driven drop of minus 1% for the rest of 2024 in vehicle production, impacting Bulten AB's core automotive sector.
- Sales volumes for the third quarter decreased by 3.3% compared to the same period last year, indicating lower demand in the automotive sector.
- The EBIT margin improvement is partly due to one-time effects, such as insurance compensation, which may not be sustainable.
- Bulten AB is experiencing challenges in North America due to automotive customers not adhering to production plans, affecting growth in that market.
- The company's cash flow for the period is negative compared to the same period last year, with higher inventory levels due to customers not taking out their orders.
Q & A Highlights
Q: How do you see the finish of the year, considering Q3 is usually a slow quarter? Should we expect the normal seasonal pattern for Q4?
A: Sales-wise, we anticipate a slight decrease in Q4, likely a low single-digit drop. It's more about ensuring our customers take what they have ordered, rather than a backlog issue.
Q: Are you still facing issues with high capacity and demand? Is there a backlog?
A: We have some backlog, but it's typical. The main focus is ensuring customers take their orders, rather than reducing them.
Q: Regarding productivity and efficiency, are there still improvements to be made?
A: Yes, there are still opportunities for improvement, though they are not as easily attainable as before. We have areas within reach that can be optimized.
Q: Is the 8% margin target still achievable this year?
A: While it may not be achievable this year, it remains a reasonable target. The new leadership will set strategic targets moving forward.
Q: Can you explain the SEK29 million in other operating income in Q2 and SEK49 million in this quarter? Will this be recurring?
A: The income is mainly from insurance claims, with a positive net effect this quarter. Future claims will be accounted for, but the significant effect seen this quarter is unlikely to recur.
Q: How is the development between in-house and outsourced production affecting margins?
A: It's complex due to customer approvals and production locations. While there are opportunities to revisit production strategies, it's difficult to quantify the margin impact at this time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
