Nederman Holding AB (FRA:5QR) Q4 2024 Earnings Call Highlights: Record Net Profit and Strategic ...

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Fri, Feb 14, 2025, 12:04 AM 4 min read

Order Intake Q4 2024: SEK 1.4 million, a decrease of 4.8% currency neutral versus Q4 2023.
Full Year Order Intake 2024: SEK 5.78 million, a currency neutral decrease of 3.3% from 2023.
Sales Q4 2024: SEK 1.62 million, a currency neutral growth of 7.6% from Q4 2023.
Full Year Sales 2024: SEK 5.9 million, down from SEK 6.188 million in 2023.
Adjusted EBITA Q4 2024: SEK 185 million, margin of 11.4%.
Profit After Tax Q4 2024: SEK 87 million, up SEK 10 million from Q4 2023.
Earnings Per Share Q4 2024: SEK 2.49, up from SEK 2.2 in Q4 2023.
Cash Flow from Operations Q4 2024: SEK 245 million, up from SEK 212 million in Q4 2023.
Net Debt: SEK 1.697 million, up from SEK 1.332 million 12 months prior.
Dividend Proposal: SEK 4, up from SEK 3.95 last year.
Extraction and Filtration Technology Sales Q4 2024: SEK 724 million, 5% higher than Q4 2023.
Process Technology Sales Q4 2024: SEK 452 million, 3.4% increase from Q4 2023.
Duct and Filter Technology Sales Q4 2024: SEK 229 million, 13% increase from Q4 2023.
Monitoring and Control Technology Sales Q4 2024: SEK 241 million, 19.3% increase from Q4 2023.

Warning! GuruFocus has detected 4 Warning Sign with FRA:AB7A.

Release Date: February 13, 2025

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

Positive Points

Nederman Holding AB (FRA:5QR) reported its highest ever net profit, leading to a proposed dividend increase to SEK 4 from SEK 3.95.
The company achieved its second-highest sales quarter ever, with a currency-neutral growth of 7.6% in Q4 2024.
Strong cash flow management resulted in a SEK 245 million positive cash flow from operations in Q4, up from SEK 212 million in 2023.
Significant investments in manufacturing and logistics, including new facilities in Detroit and Helsingborg, have enhanced efficiency and innovation capabilities.
The Monitoring and Control Technologies division saw strong order growth, particularly in Asia Pacific and China, driven by demand for advanced measurement technology.

Negative Points

Order intake for Q4 2024 decreased by 4.8% currency neutral compared to Q4 2023, with a notable decline in the Process Technology division.
The order backlog going into 2025 is lower than the previous year, indicating potential challenges in maintaining sales momentum.
Market uncertainty, particularly in Europe and Germany, has led to fewer large orders and hesitancy in decision-making.
The EBITA margin remained flat despite strong sales growth, partly due to a mix of lower-margin solutions business and transitional costs from facility relocations.
The Duct and Filter segment experienced a decline in EBITA margin, attributed to lower-margin large orders in the EV battery sector.

Q & A Highlights

Q: Can you elaborate on the demand situation in Europe and EMEA during Q4 2024, and how did January 2025 compare? A: In Q4, demand was relatively stable, but December was slower than expected. January 2025 was more normal and expected, with underlying business remaining solid. However, larger orders are experiencing prolonged decision periods due to market turbulence. - Matthew Cusick, CFO

Q: Despite strong sales growth in Q4, the EBITDA margin remained flat. Can we expect margin improvements if volumes increase in 2025? A: The flat margin was due to a mix of business, including more solutions with lower margins and costs associated with moving to new facilities. If volumes increase, we expect margin improvements due to better operational efficiency and synergies from consolidated sites. - Matthew Cusick, CFO

Q: The Duct and Filter segment's EBITA margin declined in Q4. Can you explain this and the margin profile for large battery orders? A: The margin decline was mainly in ducting, with large battery orders having lower percentage margins but contributing positively to the bottom line. Investments in production efficiency are expected to improve margins. - Matthew Cusick, CFO

Q: Order intake was lower at the start of 2025 compared to 2024. How will this affect sales in the first half of 2025, particularly in Process Technology? A: The majority of the backlog reduction is in Process Technology. While there is a strong pipeline, market volatility may delay decisions. Sales in the first half of 2025 may see lower contributions from fibre and textile, but the base business remains strong. - Matthew Cusick, CFO

Q: With increased focus on EV batteries, are you facing price pressure or competition in this sector? A: We haven't seen significant downturns or increased competition in the EV battery sector. Our strong performance in the US has positioned us as a reliable partner for large installations, which may benefit other areas like smelters and foundries. - Sven Kristensson, 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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