Release Date: February 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Netel Holding AB (LTS:0AAB, Financial) reported a 1.5% increase in net sales for Q4, driven by strong performance in the power sector in Norway and telecom in Sweden and Germany.
- The company achieved an all-time high order backlog of SEK4 billion for continuing operations, indicating strong future demand.
- Netel Holding AB (LTS:0AAB) has successfully secured new contracts, including a significant framework agreement with Elvia in Norway worth SEK320 million.
- The company is focusing on divesting its loss-making operations in Finland to concentrate on more profitable markets in Sweden, Norway, Germany, and the UK.
- Netel Holding AB (LTS:0AAB) has implemented a new organizational structure and digital tools to improve resource allocation and operational efficiency.
Negative Points
- The company's profitability was impacted by lower margins in the telecom and infra services sectors, with an adjusted EBITDA margin of 5.2%, down from 5.7% last year.
- Netel Holding AB (LTS:0AAB) reported a net loss after tax of minus SEK105 million from its discontinued Finnish operations.
- The infra services division faced challenges with less profitable projects and high competition, resulting in a significant drop in EBITDA margin from 11.7% to 5.9%.
- The UK market remains challenging for Netel Holding AB (LTS:0AAB), with lower volumes and a need to adjust its strategy and customer base.
- The company's net leverage ratio is above its target, at 2.8 times compared to the desired 2.5 times, indicating a need for improved financial stability.
Q & A Highlights
Q: Looking at the order bookings, it seems to have accelerated up 12% quarter over quarter. Is this due to more projects coming to market, or are you gaining market share?
A: We are taking market positions, especially in the power segment and telecom, with new agreements in Norway and Germany. We are expanding geographically and with other services.
Q: The margin in power looks surprisingly strong this quarter. Is this abnormally high, or should we expect this level to continue?
A: The strong margins in power are mainly due to the successful completion of several substation projects in Sweden with exceptionally good margins. This quarter was particularly strong for us.
Q: The Infra Services margin has taken a significant hit year over year. Is this due to cost overruns or initially low-margin projects?
A: It's a competitive market, but we enter contracts aligned with our financial targets. Some projects faced management challenges, resulting in lower margins.
Q: Can you provide more details on the order backlog by geography and division?
A: Telecom typically has large, multi-year contracts reflected in the backlog. We've seen strong development in power and smaller, shorter-term contracts in Infra Services.
Q: With the divestment of Finland, how should we view your M&A strategy going forward?
A: M&A remains important for our long-term strategy, but our current focus is on financial stability. We will continue to explore M&A opportunities as part of our growth strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
