Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ElringKlinger AG (ELLRY, Financial) has made significant progress in its transformation strategy, SHAPE30, including the divestment of two group companies to focus its product portfolio.
- The company's joint venture, EKPO, unveiled the NM20 stack module, its most powerful fuel cell module yet, supported by government programs.
- E-mobility business unit revenue more than doubled in the first nine months of 2024 compared to the same period in 2023, driven by series production of cell contacting systems.
- ElringKlinger AG (ELLRY) reported a strong order intake in Q3 2024, amounting to EUR481 million, a 28% increase compared to the prior-year quarter.
- The aftermarket segment performed strongly, increasing sales by around 14% to EUR84.9 million between July and September 2024.
Negative Points
- ElringKlinger AG (ELLRY) booked impairments of EUR58.1 million in Q3 2024 due to the divestment of two subsidiaries, impacting earnings.
- The company's sales revenues in Q3 2024 grew only marginally by 0.1% organically, reflecting challenging market conditions.
- Earnings attributable to ElringKlinger shareholders were significantly below the prior-year figure, resulting in negative earnings per share in Q3 2024.
- Operating free cash flow in Q3 2024 fell short of the prior year figure due to higher funding requirements for net working capital.
- The global light vehicle production contracted by 4.6% in Q3 2024, impacting ElringKlinger AG (ELLRY)'s original equipment segment revenues.
Q & A Highlights
Q: What is the expected revenue run rate for the e-mobility segment, and what are the projections for next year?
A: Thomas Jessulat, CEO, stated that the e-mobility segment is expected to generate between EUR 60 million and EUR 80 million annually, with contributions from ramping up battery projects. The revenue run rate is anticipated to remain stable until mid-next year, before the US contract ramps up.
Q: Can you provide insights into the cost restructuring plans for ElringKlinger's European operations?
A: Thomas Jessulat, CEO, explained that ElringKlinger is focusing on simplifying its structure and improving its margin profile. The company plans to optimize its footprint and asset performance over the next two to three years, aiming for better profitability and return on capital.
Q: What is the current profitability level of the e-mobility segment, and when is breakeven expected?
A: Thomas Jessulat, CEO, mentioned that the e-mobility segment's profitability in Q3 was comparable to previous quarters due to increased contributions and startup expenses. The segment is expected to reach breakeven around 2027, with continued production ramp-ups.
Q: Are there any further divestments planned as part of the SHAPE30 strategy?
A: Thomas Jessulat, CEO, indicated that while no specific decisions have been made, further divestments are possible as the company continues to assess non-performing assets and the product portfolio. The focus is on shaping the group for future growth.
Q: How is ElringKlinger addressing labor inflation and its impact on margins?
A: Thomas Jessulat, CEO, acknowledged the challenge of labor inflation and stated that the company is focusing on repricing projects and expanding e-mobility contributions to improve the cost base. The aim is to maintain a stable margin profile despite inflationary pressures.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
