Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nordic Waterproofing Holding AB (FRA:9ZQ, Financial) reported improved profitability in the third quarter compared to last year, with EBITDA increasing to SEK177 million from SEK159 million.
- The company experienced a significant reduction in net debt, standing at SEK815 million compared to SEK985 million a year ago.
- The acquisition of a further 26.5% of shares by Kingspan, bringing their total ownership to 62.6%, is seen positively by management, with potential synergies anticipated.
- The company's green infrastructure business showed improved operating results over the previous year.
- The EBITDA margin for the third quarter increased by 2 percentage points to 15.1%, marking a record third quarter for EBITDA.
Negative Points
- Net sales decreased by 2% due to negative currency effects and a slowdown in commercial new builds.
- Cash flow from operating activities decreased to SEK101 million from SEK149 million, attributed to a significant inventory decrease last year.
- The market situation in Finland and Norway remains challenging, impacting bitumen-based waterproofing operations.
- The residential new build sector continues to be weak across most geographies, affecting demand.
- Order books for installation services are generally weaker compared to the same time last year, particularly in Finland.
Q & A Highlights
Q: Can you provide more details on the synergies expected from Kingspan's acquisition of a majority stake in Nordic Waterproofing?
A: Martin Ellis, President and CEO, explained that the synergies include offering package solutions with Kingspan's insulation materials, which will enhance customer offerings. Additionally, strategic synergies could involve further acquisitions in the Nordics, where Kingspan has a lesser presence.
Q: Are the synergies dependent on Kingspan acquiring more shares, or can they be realized with the current ownership?
A: Martin Ellis stated that full synergies would be realized once Kingspan takes full control, as current dealings must be at arm's length due to the presence of minority shareholders.
Q: What factors contributed to the margin improvement in SealEco and the Green infrastructure segment despite declining sales?
A: Martin Ellis attributed the margin improvement in SealEco to lower raw material costs and team rightsizing. For the Green infrastructure segment, the return to normal profitability levels and a focus on high-end offerings like city roof gardens were key factors.
Q: Is the margin improvement in Q3 sustainable, or is it a temporary effect?
A: Martin Ellis indicated that the margin improvement is not a temporary effect. While Q4 is typically challenging, there is no expectation of a significant drop in results.
Q: How did the acquisition impact Nordic Waterproofing's financial targets and strategic plans?
A: Martin Ellis noted that the acquisition aligns with their strategic plans, allowing for potential expansion through acquisitions. The company aims to improve its ROCE to meet its profitability targets and maintain a solid balance sheet.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
