Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sdiptech AB (FRA:938, Financial) reported a 7% increase in sales for the quarter, with 1% organic growth.
- The company has a strong focus on sustainability, with 80% of revenues connected to UN sustainability development goals.
- Sdiptech AB (FRA:938) has a solid acquisition strategy, having completed three acquisitions this year, contributing positively to the company's growth.
- The company is restructuring its organization into four business areas to enhance transparency and focus on growth drivers.
- Cash conversion remains strong, with SEK167 million generated from operations in the third quarter, reflecting effective cash management.
Negative Points
- The company experienced an 8% organic decline in adjusted EBITDA due to high profit margins in the previous year not being sustained.
- Sdiptech AB (FRA:938) took a SEK53 million hit this quarter, primarily due to a write-down of goodwill and restructuring costs related to the divestment of its elevator business.
- The divestment of the elevator business in Central Europe is ongoing, with potential challenges in finding buyers for different parts of the business.
- Interest costs have increased, impacting profit after tax and earnings per share.
- The company faces tough comparisons from the previous year, with high organic growth in Q4 2023 posing a challenge for future performance.
Q & A Highlights
Q: Could you explain the SEK18 million deterioration in adjusted EBIT for the elevator business this quarter? Was it due to restructuring costs or underlying performance?
A: Yes, there were SEK10 million in costs not related to operations, indicating restructuring costs. We are splitting the group into service, installation, and production to find different buyers, and we are confident about divesting these businesses by next year.
Q: What price level do you expect for the elevator business, given its current loss-making status?
A: The service portfolio will be sold at a market price, similar to leasing stocks. Installation and production will be sold as profit-generating businesses, with pricing based on expected profit levels for next year.
Q: With key employees leaving, do you foresee any disruption in acquisition or operational activities?
A: No disruptions are expected. We have a strong team and processes in place. The M&A team will continue its work, and the new business areas will be managed by existing staff, ensuring a smooth transition.
Q: How do you view the potential for organic growth in Q4 and H1 2025, given the strong growth in previous quarters?
A: We take it quarter by quarter. While we have recurring business from service contracts and product sales, short-term projects can cause fluctuations. Last year's Q4 was strong, but we cannot provide specific forecasts for next year.
Q: Can you clarify if the SEK240 million sales divestment relates only to the Croatian business or includes other units?
A: It relates to the company based in Croatia, with operations in Bosnia, Serbia, and Germany. It does not include any Swedish operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
