Alimak Group AB (FRA:2GP) Q4 2024 Earnings Call Highlights: Strong Order Intake and Profit ...

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Fri, Feb 14, 2025, 12:05 AM 4 min read

Revenue: SEK 1,817 million, down 1% or 2% at fixed rates.
Order Intake: SEK 1,837 million, up 8% at fixed rates.
EBITA Adjusted: SEK 320 million, up from SEK 288 million, margin of 17.6% versus 15.7% last year.
Cash Flow: Strong cash flow with a reduction in leverage to 1.79 from 2.12 in Q3.
Dividend Proposal: SEK 3, up from SEK 2.5 last year, a 20% increase year over year.
EPS: SEK 1.83 versus SEK 1.13, adjusted EPS SEK 2.21 versus SEK 1.72 in Q4 2023.
Net Debt: Decreased to SEK 2.6 billion, driven by operating cash flows.
Gross Margin: Improved by 40 basis points for the full year compared to 2023.
Operating Cash Flow: Best quarter ever with a SEK 200 million reduction in working capital in Q4 2024.
Leverage: End of quarter leverage at 1.79, down from 2.12 in Q3 2024.

Warning! GuruFocus has detected 7 Warning Sign with FRA:2GP.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Alimak Group AB (FRA:2GP) reported a strong order intake, profit, and cash flow for Q4 2024, indicating robust financial health.
The company has successfully improved its EBITA margin to 17.6% in Q4 2024, up from 15.7% in the previous year.
Alimak Group AB (FRA:2GP) has a solid balance sheet with reduced leverage, decreasing from 2.12% in Q3 2024 to 1.79% in Q4 2024.
The company has signed an exclusive five-year partnership with Skyline Robotics, focusing on automating window cleaning for tall buildings, showcasing its commitment to technological advancement.
A proposed dividend increase to SEK3, up from SEK2.5 last year, reflects confidence in the company's financial stability and growth prospects.

Negative Points

Revenue growth for 2024 was below the target range of 6% to 10%, indicating challenges in meeting growth expectations.
The construction division experienced a weak quarter with a 9% decline in revenue and a significant drop in EBITA margin from 17.2% to 11.1%.
HSPS division faced a soft quarter with a 6% decline in order intake and a decrease in EBITA margin from 18.3% to 17.5%.
The wind division reported a 7% decline in order intake, reflecting challenges in market conditions, particularly in North America.
The company faces potential risks from tariffs and inflation, which may necessitate further price increases to maintain margins.

Q & A Highlights

Q: Given the current inflation levels and speculations on tariffs, have you made any price increases for 2025, and do you plan to implement more during the year? A: Yes, we are implementing targeted price increases where necessary. We will continue to adjust prices as needed to manage tariffs and offset costs internally. Price increases are a crucial part of our strategy to manage these challenges. - Ole Jodhal, CEO

Q: Could you provide details on which regions or divisions are more focused on price increases? A: Price increases are being implemented across all parts of our business where appropriate. In the US, our wind division might be affected by tariffs due to steel imports, but we have alternatives like sourcing aluminum domestically. Overall, we don't see a significant risk but expect some turbulence. - Ole Jodhal, CEO

Q: How should we think about the access margin development in the near term, given the finalized projects in Q4? A: The margin in Q4 was boosted by the closure of several significant projects. While this margin level was elevated, it should not be considered the new norm. We will continue our profit improvement journey, but don't expect this level every quarter. - Ole Jodhal, CEO

Q: With a strong balance sheet, M&A is a focus for 2025. Can you provide insights into the current M&A market and your focus areas? A: The M&A market is relatively stable, and we have a good funnel of opportunities. We aim to execute acquisitions annually, focusing on service, products, technology, and geographical presence across our divisions. We expect to see progress in 2025. - Ole Jodhal, CEO

Q: Investments compared to depreciation and amortization seem low. Should we expect an increase in investments in the coming years? A: We expect CapEx as a percentage of revenue to be slightly above 2% in 2025, up from 1.8% in 2024. We maintain a CapEx-light business model, and any increase will depend on future acquisitions. - Sylvain Grange, CFO

Q: Focusing on organic growth in 2025, which segments are most likely to see growth, and why? A: We expect organic growth in industrial and wind segments, driven by global market developments. Despite challenges in the construction market, we anticipate growth due to strategic investments, new products, and market share expansion. - Ole Jodhal, CEO

Q: Adjusting the EBITA margin in construction to a normal level, the group delivered an adjusted EBITA margin above the target of 18%. Do you still stand by this target? A: Yes, we are focused on achieving and maintaining an EBITA margin above 18%. We have not announced new targets beyond this, but we are committed to delivering on our current goals. - Ole Jodhal, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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