GuruFocus -
- Sales Increase: 14% increase in sales, primarily due to the acquisition of Orbit One.
- Organic Sales Decrease: 8% decrease when adjusted for Orbit One acquisition and currency effects.
- Rolling 12-Month Sales: SEK4.5 billion compared to SEK4.1 billion in 2023.
- Operating Margin: 4.1% including one-time costs, down from 8.6% a year ago.
- Comparable Units Margin: 6.7% in Q2, up from 6.4% in Q1.
- Main Market Margin: 7.2%, adjusted for comparable units, 8.2%.
- Other Markets Margin: Increased to 4.0% from 3.3% in Q1.
- Cash Flow: Strong cash flow of SEK135 million, driven by a SEK77 million decrease in working capital.
- CapEx: SEK108 million, with SEK18 million related to building projects in the Baltic and Sweden.
- Net Debt to EBITDA: 2.2 including Orbit One's rolling 12 months, 2.4 excluding it.
- Equity-to-Asset Ratio: 37%, indicating a strong balance sheet.
- Earnings Per Share (EPS): SEK0.16, down from SEK1.51 a year ago.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hanza AB (OSTO:HANZA) reported a significant new order worth SEK134 million from a global leader in the defense industry, indicating strong demand in this sector.
- The company successfully completed its integration and efficiency program ahead of schedule, which is expected to positively impact earnings.
- Hanza AB (OSTO:HANZA) has intensified sales efforts, acquiring new customers such as Munters, a Swedish company specializing in air treatment and climate solutions.
- The company opened a new factory in Estonia, enhancing operational efficiency with sustainability features like solar panels and automated transport systems.
- Hanza AB (OSTO:HANZA) maintains a strong balance sheet with a 37% equity-to-asset ratio, allowing for potential future acquisitions and expansion projects.
- The company is experiencing cyclical headwinds due to a recession, with a reported 8% decrease in organic sales when adjusted for acquisitions and currency.
- Operating margin decreased to 4.1% from 8.6% due to one-time costs associated with consolidating volumes and closing down two factories.
- Earnings per share (EPS) significantly dropped to SEK0.16 from SEK1.51 a year ago, impacted by currency fluctuations and one-time costs.
- Despite the acquisition of Orbit One, its profitability and margins are still below desired levels, although showing a positive trend.
- The company anticipates continued challenges in the mining and other industrial sectors, with no immediate recovery expected until the end of the year.
A: We haven't disclosed that specifically. Historically, our growth has been around 50% organic and 50% through acquisitions, with an average growth rate of about 19%.
Q: Are you planning for an increase in volumes in the later part of this year?
A: Yes, we expect growth due to increased market shares and orders coming in. We anticipate a market rebound and higher efficiency from new facilities, which will enhance our flexibility.
Q: Was the large new order from the defense sector from a new or current customer?
A: It's a very confidential matter, and we can only disclose the size and start of delivery, but not the customer details.
Q: Regarding your financial targets, should we expect the underlying margin to handle an acquisition?
A: Acquisitions don't necessarily lower margins. While Orbit One had a lower margin, future acquisitions could have equal or higher margins, contributing positively to Hanza's overall margin.
Q: Is the Mitsubishi deal expected to have a major impact from the third quarter?
A: Yes, we are in volume production now, and revenue from Mitsubishi will start impacting from Q3 onwards.
Q: How do you see demand in the mining business?
A: The second quarter was similar to the first, but we anticipate an upturn by the end of the year.
Q: Do you see any competitors trying to create similar offerings to Hanza's MIG?
A: We haven't seen anyone else doing it in the same way. The barrier to entry is high due to the need for manufacturing clusters and the ability to transfer manufacturing.
Q: How can we think about working capital development in the coming quarters?
A: We expect fluctuations, but the trend is towards strong cash flow and freeing up working capital, especially from the Orbit One acquisition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.