Alleima (ALLEI) Q2 2024 earnings summary

Executive summary

• Organic revenue growth was flat at 0% year-over-year, with revenues at SEK 5,359 million and improved market sentiment supported by a solid backlog.

• Adjusted EBIT reached SEK 592 million with a margin of 11.1%, showing resilient earnings despite lower volumes; reported EBIT rose to SEK 689 million, aided by positive metal price effects.

• Free operating cash flow surged to SEK 486 million from SEK 72 million year-over-year, reflecting strong liquidity and operational efficiency.

• Market sentiment is improving, with previously weaker segments showing signs of recovery and strong backlog supporting future deliveries.

• Strategic focus remains on profitable growth in less cyclical niches, sustainability-driven innovation, and operational improvements.

Financial highlights

• Revenues were SEK 5,359 million, down 5% year-over-year, with organic growth at 0% compared to a record Q2 2023.

• Adjusted EBIT was SEK 592 million (-8%), margin 11.1%; adjusted EPS rose to SEK 2.23, aided by positive finance net and lower tax rate.

• Free operating cash flow was SEK 486 million, a strong result for Q2, partly due to catch-up from Q1.

• Book-to-bill ratio at 102% on a rolling 12-month basis, indicating a solid backlog.

• Net financial items were positive SEK 137 million, mainly from revaluation of financial instruments.

Outlook and guidance

• Q3 2024 expected to see seasonally lower order intake, revenues, and adjusted EBIT margin, with product mix similar to Q2.

• Cash flow is usually higher in the second half of the year; CapEx guidance for 2024 maintained at SEK 950 million.

• Metal price effects expected to be negative SEK 50 million and currency effects negative SEK 15 million in Q3; tax rate guidance at 24%-26%.

• Long-term targets include organic growth above end-market, adjusted EBIT margin above 9%, net debt/equity below 0.3x, and dividend ~50% of net profit.

• Market sentiment is sequentially improving, with cautious optimism for the remainder of the year.