Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The market is showing signs of recovery with low inflation and decreasing interest rates, which is positive for the building and construction industry.
- Orders for foundation systems have increased by 15% in the Netherlands over the last two quarters, indicating a promising outlook.
- The downstream units delivered solid results due to strong cost discipline and focus on margin management.
- The packaging business saw a significant improvement, contributing to over half of the group's EBIT for the quarter.
- Bewi ASA (STU:5T0, Financial) has launched a cost-cutting program expected to save EUR6 million annually, enhancing competitiveness and profitability.
Negative Points
- The upstream units, particularly raw and circular, experienced weak results due to heavy competition and pressure on margins.
- Net sales for the quarter were EUR252 million, down by 5% compared to last year.
- The HVAC market remains slow, although there is optimism about future growth.
- The automotive business is under strategic review, indicating potential challenges or restructuring needs.
- The financial performance of the circular segment continues to face headwinds, with low availability of waste and low demand in the building construction industry impacting profitability.
Q & A Highlights
Q: Can you elaborate on the measures being taken to improve the upstream units' performance?
A: Christian Bekken, CEO: We have launched a comprehensive cost-cutting program aimed at achieving annual savings of EUR6 million. This involves increasing efficiency to become more competitive and improve profitability at current levels. Additionally, we are focusing on enhancing our production capabilities for recycled materials, which will help us in the long term as demand for EPS insulation material is expected to rise significantly.
Q: How is the downstream segment performing, and what are the key drivers behind its results?
A: Marie Danielsson, CFO: The downstream segment is performing well, with improved EBITA due to strong cost discipline and margin management. Despite slightly lower volumes, the insulation business has seen an increase in underlying EBIT. The packaging business also showed solid improvement, contributing to over half of the group's EBIT for the quarter.
Q: What is the outlook for the building and construction industry, and how is Bewi ASA positioning itself for growth in this sector?
A: Christian Bekken, CEO: The building and construction industry is showing signs of recovery, with increased orders for foundation systems, particularly in the Netherlands. We are positioning ourselves for growth by focusing on operational, structural, and financial initiatives. This includes increasing our production capacity for recycled materials and launching bio-based construction boards.
Q: Could you provide more details on the strategic review of the automotive business?
A: Christian Bekken, CEO: We have announced a strategic review of our automotive business and are in the process of evaluating potential opportunities. This review aims to determine how we can better develop this segment, possibly with partners, to focus more on our core business areas.
Q: How is Bewi ASA addressing the challenges in the circular segment, and what are the future plans for this division?
A: Marie Danielsson, CFO: The circular segment continues to face financial challenges, but we view this as an investment to close the loop in the industry. We are increasing the collection and use of recycled materials, with a new production line in place to boost capacity. Our focus is on building the necessary infrastructure to enhance the use of recycled materials in our production processes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
