In This Article:
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Revenue: DKK 445 million, a decline of 1.7% compared to the same quarter last year.
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Organic Revenue Growth: Declined by 1.6%.
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Operating Profit Margin (excluding special items): Decreased from 5.8% to 3.9%.
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US Revenue Decline: Data migration business revenue declined by around 60% during the quarter.
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Europe Revenue Decline: Data migration business revenue declined by around 30% for the first nine months.
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Asia Gross Margin Improvement: Increased by almost 10 percentage points compared to last year.
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Denmark Gross Margin Improvement: Improved by 1.5 percentage points to 24.8%.
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Adjusted Full Year Outlook: Organic growth outlook adjusted to 6%-7% from 10%; operating profit margin adjusted to 6%-7% from 8%-9%.
Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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NNIT AS (STU:5NN) won the largest contract ever in the USA, which is strategically important and progressing according to plan.
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The company has seen good traction and demand within the data, digital, and manufacturing areas.
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Internal software KPIs, such as customer satisfaction and employee attrition, are tracking well, indicating strong internal performance.
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The turnaround initiatives in region Asia have improved gross margins by almost 10 percentage points, showing positive impact.
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The public sector business in Denmark is performing well, with improved profitability and a solid backlog and pipeline for future growth.
Negative Points
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The third quarter was more challenging than expected, with a significant decline in revenue, particularly in the data migration business.
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There was a moderate slowdown in the life sciences market, leading to project delays and hesitancy in signing new agreements.
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The US region experienced an organic growth decline of 8.33%, primarily due to the slow recovery in the data migration business.
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Capacity adjustments were necessary in the US and Europe, impacting 5% to 10% of the workforce, reflecting a mismatch between capacity and demand.
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The financial outlook for the year was adjusted downward, with expectations for organic growth and operating profit margins reduced.
Q & A Highlights
Q: Can you elaborate on what could drive the Q4 margin to the higher end of the 8% to 12% range? A: Carsten Ringius, CFO, explained that optimizing capacity to deliver on the strong backlog and ensuring all projects are completed in Q4 without postponements are key factors. Par Fors, CEO, added that the capacity reductions in Q3 will lead to better matching of capacity and demand.