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- Organic Growth: 6% in Q4, driven by Polish and UK markets.
- Gross Margin: 25% in Q4, leading to a double-digit EBITDA and 6% EBIT margin.
- EBITDA: 9% for the full year 2024, despite 30% lower volumes compared to 2022.
- Cash Flow: Strong cash flow in Q4 due to land sale in Warsaw, improving financial gearing to 2.7 times.
- Revenue Growth: 8% in Q4, with 6% organic growth.
- Net Interest Bearing Debt: DKK682 million by year-end, with financial gearing of 2.7 times.
- Restructuring Costs: DKK27 million in Q4 related to restructuring in Germany.
- Revenue Performance by Region: 14% growth in the UK, 30% growth in Poland, and 18% decline in Germany.
- CO2 Emissions Reduction: 13% reduction in Scope 1 and 2 emissions compared to 2019.
- Safety Record: Lost time incident frequency number of 0.9, a new record.
- Financial Outlook for 2025: Organic growth of 5% to 10% and EBIT before special items of DKK120 million to DKK180 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- H+H International AS (FRA:J0H) reported a 6% organic growth in Q4, driven by positive signals from the Polish and UK markets.
- The company achieved a 25% gross margin in Q4, leading to a double-digit EBITDA and a 6% EBIT margin, showing significant improvement over the previous year.
- Reopening of the mothballed plant in Pollington, UK, is progressing well, with new hires and successful mechanical operations.
- The sale of land in Warsaw generated strong cash flow in Q4, improving financial gearing to 2.7 times net interest-bearing debt to EBITDA.
- H+H International AS has made significant progress in ESG initiatives, reducing CO2 emissions by 13% compared to 2019 levels, and achieved a record low in safety incidents with a frequency number of 0.9.
- The German market remains challenging, with building permits declining by 19% and revenue dropping by 18%, impacting overall performance.
- Despite improvements, the company is still operating at 30% lower volume levels compared to 2022, affecting overall sales volume.
- The ramp-up of the Pollington plant in the UK is still in progress, with new hires requiring training, impacting short-term efficiency.
- The financial outlook for 2025 is cautious, with expectations of modest volume growth and no significant market recovery in Germany.
- The company’s guidance for 2025 reflects more risks than opportunities, particularly due to uncertainties in the German market and the ongoing ramp-up challenges in the UK.
A: Joerg Brinkmann, CEO, explained that challenges in the UK and Germany are impacting earnings. The UK is facing inefficiencies due to low stock levels and the ramp-up of the Pollington plant, while Germany is experiencing low volumes, leading to inefficient plant operations. CFO Bjarne Pedersen added that while fixed costs are under control, the gross profit level lacks visibility due to these challenges.
Q: What is the company’s stance on potential rebuilding efforts in Ukraine?
A: Joerg Brinkmann, CEO, stated that while there is potential for rebuilding activities, the distance from their plants to Ukraine is significant, and they are currently in observation mode. Any opportunities would be supported, but it is not expected to be a game-changing situation for the company.
Q: What are the expectations for special items in 2025?
A: Bjarne Pedersen, CFO, mentioned that there are no planned special items for 2025. Any smaller restructuring will be included in the guidance, and larger one-off events may be posted as special items if necessary.
Q: How is the company handling pricing and gross margin assumptions for 2025?
A: Joerg Brinkmann, CEO, explained that price increases are based on input cost developments and are being implemented across markets. In the UK, annual contracts have been adjusted for inflation, while Poland and Germany are seeing more frequent adjustments. Despite challenges, the company aims to continue passing on inflation costs.
Q: What are the top priorities for H+H International in 2025?
A: Joerg Brinkmann, CEO, highlighted the focus on improving the UK supply chain, managing the ramp-up in Pollington, and building stock. In Germany, the company remains reactive to market conditions. Strategically, the shift is towards growth opportunities, customer engagement, and plant performance improvements, moving away from the internal focus of streamlining.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.