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1. Net Sales: SEK3.042 billion, up 7.6% from SEK2.827 billion last year.

2. Organic Growth: 5.4% overall, with growth in all regions except Eastern Europe.

3. Gross Margin: 35.3%, compared to 33.9% in the previous year.

4. Adjusted Operating Profit: SEK213 million, with an operating profit margin of 7.0%.

5. Profit After Tax: SEK135 million, compared to minus SEK24 million last year.

6. Cash Flow: Decreased by SEK34.2 million due to increased working capital.

7. Free Cash Flow: SEK54.6 million, down from SEK381.2 million last year.

8. Net Debt: SEK981 million, compared to SEK1.079 billion last year.

9. Net Debt to EBITDA: 0.62, indicating low leverage.

10. Geographic Sales Breakdown:

    • Nordics: 7.1% organic growth.

    • Western Europe: 3.4% organic growth.

    • Eastern Europe: -9.8% organic decline.

    • North America: 12.8% organic growth.

    • Middle East, Asia, Australia, and Africa: 15.2% organic growth.

    • Warning! GuruFocus has detected 4 Warning Signs with AFLYY.

    Release Date: March 06, 2025

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

    Positive Points

    • Systemair AB (STU:52SA) reported a 7.6% increase in net sales, reaching SEK3.042 billion, with organic growth of 5.4%.

    • The company achieved strong organic growth in regions such as North America, Middle East, Asia, Australia, and Africa.

    • Systemair AB (STU:52SA) reported a robust gross margin of 35.3%, up from 33.9% in the previous year.

    • The company has successfully reduced its emissions in scopes 1 and 2 by 10% compared to the last quarter of the previous year.

    • Systemair AB (STU:52SA) is well-prepared for increased M&A activity, with a low net debt to EBITDA ratio of 0.62, providing ample headroom for strategic investments.

    Negative Points

    • Sales in Eastern Europe declined by 9.8%, with significant decreases in Poland, Slovenia, and Estonia.

    • The German market remains challenging, with a decrease in sales, impacting overall performance in Western Europe.

    • The US market is experiencing softness, partly due to an uncertain political climate affecting short-term investments.

    • Selling and administrative expenses increased, including a loss from bad debts of SEK4.8 million.

    • Free cash flow decreased significantly to SEK54.6 million from SEK381.2 million in the previous year, mainly due to increased working capital and high investment levels.

    Q & A Highlights

    Q: Can you provide insights into the sales development in Western Europe, particularly the German market, and the potential impact of the new infrastructure fund? A: Germany is a significant market for us, currently our second or third largest. The market is soft, especially in comfort ventilation, but infrastructure projects are performing well. The new infrastructure fund could boost demand, but such projects typically have long lead times, taking 6 to 12 months from order to delivery. (Roland Kasper, CEO)

    Q: Regarding the transition to energy-efficient refrigerants in the US, could this lead to price increases in the short term? A: We saw strong business development in North America in December as projects were finalized using older refrigerants. The outlook for new refrigerants is positive, with strong development in Canada. The US market is softer, influenced by political and investment uncertainties. (Roland Kasper, CEO)

    Q: How are you managing the tariff implications between the US and Canada? A: We have limited interdependence between US and Canada operations. We have pre-stocked products in Canada and can shift production to the US within three months if tariffs impact us. We have sufficient capacity in our US factory to handle this. (Anders Ulff, CFO)

    Q: Can you update us on the Menerga situation, including order and delivery status from the new site and expected cost savings? A: The ramp-up in Slovenia is progressing better than planned, with production exceeding expectations. We aim for annual savings of SEK70 million, and we are focusing on sales to leverage the new technical platform. (Roland Kasper, CEO)

    Q: What is your outlook for the Nordic market, given the recent solid organic growth? A: The Nordic market is performing well, with strong growth in Denmark and Finland. Sweden is seeing increased residential activity, while Norway's residential market is slower. Overall, the Nordic markets are healthy, with positive signs for future growth. (Roland Kasper, CEO)

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

This article first appeared on GuruFocus.