Release Date: November 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Accsys Technologies PLC (ACSYF, Financial) reported a strong half-year FY25 performance with EBITDA more than doubling year-on-year, exceeding the 30% gross margin target.
- Total Accoya sales volume grew by 10% globally, with significant growth in the UK and US markets, which saw increases of 24% and 18%, respectively.
- The company achieved EUR2.5 million in operational cost savings, with additional savings from lower Hull maintenance costs.
- The opening of the Accoya USA production site in Kingsport, Tennessee, provides local production capacity in a key market, enhancing supply reliability.
- Accsys is focusing on accelerating commercial activities to utilize available capacity, increase profitability, and reduce debt, with a strong emphasis on customer experience and market presence.
Negative Points
- Accsys Technologies PLC (ACSYF) reported a net debt increase to EUR40.2 million, up from EUR37.1 million at the start of the financial year.
- The company incurred EUR3.9 million in exceptional restructuring costs and a non-cash impairment charge of EUR18 million due to the closure of the Hull plant.
- Accoya USA joint venture reported a loss of EUR4.3 million, reflecting costs associated with the pre-revenue phase and production ramp-up.
- Sales in Germany were negatively impacted by the broader macroeconomic situation, contributing to a decline in the rest of Europe.
- The company faces challenges in raw material availability for Accoya Color, which limits production capacity despite strong demand.
Q & A Highlights
Q: Can you elaborate on the 10% sales growth and the factors driving it, such as restocking, underlying market demand, and market share gain?
A: Jelena Van Os, CEO: Most of the growth is due to underlying demand and market share growth. While new distributors are building some stock, the majority of the growth is from market share gains and not just restocking.
Q: What production and sales levels are assumed in the guidance for Accoya USA, and is 5,000 cubic meters for the second half a realistic expectation?
A: Sameet Vohra, CFO: The new plant will take time to ramp up. We expect North America to produce around 7,000 to 8,000 cubic meters for the financial year, considering the transition from Arnhem.
Q: How is pricing evolving in Europe versus the US, especially with competition from Latin-based hardwood exporters?
A: Jelena Van Os, CEO: Pricing in the US is generally higher than in Europe. We have implemented selective discounting to enter new markets, but overall, we maintain a premium pricing strategy and do not foresee significant price reductions.
Q: What is the expected impact of the Solid Roots Program on gross profit margins?
A: Sameet Vohra, CFO: The Solid Roots Program aims to improve overall equipment effectiveness, not directly gross margins. We expect to maintain a gross margin of around 30.7% and aim to increase it over the next few years.
Q: What is the market acceptance of Tricoya, and how is demand evolving?
A: Jelena Van Os, CEO: Tricoya is gaining consistent market acceptance, with applications in roofing and facades. It represents 28% of our sales volume, and we continue to optimize production costs while serving longstanding customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
