Release Date: May 20, 2025

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

Positive Points

• Lagercrantz Group AB (FRA:LG72) reported a 16% increase in net revenues for Q4, with 11% from acquisitions and 5% from organic growth.

• The company achieved a 24% increase in EBITA, maintaining a strong EBITA margin of 17.8%.

• The Electrify division showed exceptional performance with a 31% revenue increase and a strong EBITA margin of 17%.

• The company completed four acquisitions in the quarter, adding $370 million in annual net sales, indicating a positive acquisition market.

• Lagercrantz Group AB (FRA:LG72) has a strategic ambition to grow with proprietary products, currently at 78%, aiming for 85% in the coming years.

Negative Points

• The TechSec division struggled with weaker construction market conditions, impacting its performance.

• Increased geopolitical uncertainty and trade barriers pose potential risks, although no significant impact has been observed yet.

• The company faced higher administrative costs due to extraordinary items, including a reservation for a claim and acquisition-related costs.

• The International division experienced a slight decline in revenues, with challenges in the German market affecting performance.

• The Electrify division's return on working capital is behind other divisions, partly due to its manufacturing model tying up inventory.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Sign with FRA:LG72.

Q: Can you provide insights on the demand side, particularly regarding CapEx versus OpEx-related products? Are you seeing a similar trend this quarter as in the last? A: Most of our products are OpEx-related, being mission-critical but not high-priced items. We noticed a temporary hesitation in investments due to geopolitical uncertainties, but this has since stabilized. Long-term effects depend on potential trade barriers, but current trends suggest a return to normalcy. (Respondent: Unidentified_1)

Q: The gross margin looks solid, but administrative costs seem higher compared to last year. Is there a specific reason for this? A: We had some extraordinary items, including a reservation for a claim and acquisition-related costs like stamp duty. These are not significant but can affect detailed financials. (Respondent: Unidentified_1)

Q: Regarding the warranty claim, can you provide more details on its segment and impact? A: It's a routine claim related to proprietary products, not significant but reserved for around 8 to 10 million. It's part of our business model to handle such claims occasionally. (Respondent: Unidentified_1)