In This Article:
Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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NORMA Group SE (WBO:NOEJ) has announced a transformation plan aimed at improving operational efficiency and profitability.
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The company reported a positive development in CO2 emissions reduction, indicating progress in sustainability efforts.
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Material cost ratio improved by 180 basis points due to cost reductions in purchasing and lower purchase prices.
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Net operating cash flow turned positive compared to the previous year, driven by improved trade working capital.
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The company is optimistic about better performance in the second half of the year, expecting improvements in sales and margins.
Negative Points
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Net sales decreased to 284.2 million, primarily due to unfavorable market conditions.
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Adjusted EBIT margin fell to 3.6% for the first quarter of 2025, impacted by lower sales and increased personnel expenses.
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The Americas region experienced a decline in sales, with the industrial and water businesses both seeing reductions.
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The introduction of a new ERP system in Germany resulted in additional one-off costs, impacting the expense ratio.
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The automotive industry faced significant challenges in the first quarter, with expectations of continued difficulties in the second quarter.
Q & A Highlights
Q: How is Q2 evolving so far for NORMA Group, and what is the current market environment like in each SBU, especially regarding the tariff situation? A: Annette Ste, CFO, mentioned that Q2 is looking promising, with March already better than January and February. The water management sector started slow due to weather patterns but is now on track. The automotive business is expected to be bumpy due to tariffs, but negotiations with customers are ongoing to pass on these costs. The overall outlook for the year remains uncertain due to the unpredictable nature of tariffs.
Q: Can we expect a double-digit margin by 2028 as part of the transformation program? A: Annette Ste, CFO, confirmed that the transformation program aims for double-digit margins by 2028, with improvements expected along the way. The program targets a good double-digit margin, potentially reaching 13-14% or more, as the company transitions and optimizes its operations.
Q: When can we expect a net positive impact from the transformation program, and is there a new CEO involved in this process? A: Annette Ste, CFO, stated that more details will be provided in August, but the transformation program is expected to yield benefits by 2027. Mark Williams, Supervisory Board Member, added that a reputable headhunter is engaged to find a new CEO, but the plan is so obvious that any new CEO would likely agree with the need to improve margins and efficiency.