Besqab (BESQAB) Q3 2024 earnings summary

Executive summary

• Integration of Aros Bostad and Besqab is progressing, resulting in increased sales and improved results for the quarter, with strong demand for new projects despite a high supply in the secondary market.

• Achieved a stable quarter with increased sales and two new project launches, aligning with strategic plans.

• The company maintains a robust land bank with 7,345 building rights and aims for a rolling production volume of 2,000 homes from 2025 onward.

Financial highlights

• Net sales reached 509.1 Mkr in Q3 2024, up from 315.9 Mkr in Q3 2023 and 487 Mkr in Q2 2024.

• Gross profit was 94 Mkr, with a gross margin of 18.5%.

• Operating income was 38 Mkr, with an operating margin of 7.4%.

• Net income for the quarter was 50 Mkr, or 0.49 kr per share.

• 212 homes sold Jan–Sep (34), 101 in Q3 (12); 85% of homes in production are sold or booked.

Outlook and guidance

• The new business plan targets a gross margin of 20%, operating margin of 15%, and ROE of at least 15% over a cycle.

• Cost synergies from the merger are expected to reach SEK 100m annually, with related costs impacting central expenses for the rest of 2024.

• The company does not plan to pay dividends on common shares in the coming years, prioritizing investments in new projects.

• Market normalization and rising home prices are expected to take more time, but the company is well-positioned for an upturn.