Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JOST Werke SE (XTER:JST, Financial) announced the acquisition of Hyva Group, which is expected to enhance their portfolio with minimal overlap and strengthen their presence in Asia.
- The company successfully consolidated its manufacturing sites in China and North America, which is expected to improve operational efficiency and profitability.
- Despite a challenging market environment, JOST Werke SE maintained a strong adjusted EBIT margin of 10.8% in Q3 2024.
- Free cash flow continued to grow, reaching EUR 83 million for the first nine months of 2024, maintaining leverage at 1 times EBITDA.
- The company is actively investing in R&D and future business opportunities, collaborating with innovative industry players like Trailer Dynamics and FERNRIDE.
Negative Points
- JOST Werke SE experienced a significant decline in sales, with a 20% decrease in organic sales for Q3 2024 compared to the previous year.
- The European market was particularly weak, with a 20% drop in the truck market and a 15% decline in the trailer market.
- North America saw a sharp decline in the trailer market by 35%, impacting JOST Werke SE's sales in the region.
- The agricultural business remains sluggish, with no immediate signs of recovery, and organic sales in this segment declined by 5.2%.
- The company faces ongoing price pressure from OEM customers due to lower volumes and market conditions.
Q & A Highlights
Q: Can you remind us of your regional production footprint, including Hyva, and how you plan to manage potential import tariffs in the US?
A: Joachim Durr, CEO: We operate a local-for-local production strategy, producing transport components like landing legs and fifth-wheels in North America, specifically in Michigan and Tennessee. This minimizes tariff impacts. For loaders, we have production in Sweden, Asia, and India, allowing flexibility to counter tariffs. Hyva's production is also largely local-for-local, except in North America, where we plan to leverage JOST's network to establish local production.
Q: With the decline in the US trailer market and ongoing weakness in EMEA, how are price negotiations with OEM customers being managed?
A: Joachim Durr, CEO: Price negotiations are ongoing, especially with lower volumes. We have a strong brand and service model, which helps defend prices. While OEMs are requesting price reductions, our global service capability and brand strength provide some protection against price pressures.
Q: What is your current assumption for recovery in the agricultural business across different regions?
A: Joachim Durr, CEO: The agricultural market is slow but showing signs of bottoming out. We expect a recovery in the second half of next year as dealer stock levels reduce and new orders begin to come in. Positive feedback and new orders are encouraging, but market volume is not yet back.
Q: Do you expect the strong margin levels in North America to be maintained, or are they a one-off?
A: Oliver Gantzert, CFO: The current high margins are supported by favorable product mix and operational efficiencies, which are sustainable. While some effects may diminish, structural improvements and a strong team should maintain solid margins.
Q: What are your expectations for the truck market in Europe next year?
A: Joachim Durr, CEO: We expect a bottoming out with slight improvement in the second half of the year. Current levels are below normal replacement rates, and while fundamentals are weak, the market is expected to stabilize.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
