Cynca Nordic (CYNCA) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were SEK 1,373 million, down 10.5% year-over-year, with organic growth at -9.1%.

• Adjusted EBITA for Q2 was SEK 133 million (9.7% margin), down from 11.6% last year.

• Water segment remained resilient, showing stable demand and improved EBITA margin at 23.7%, with strong UK performance.

• First acquisition in two years completed post-quarter, strengthening the Water segment with PDAS Holdings Ltd.

• Strategic review completed; divestments of Plåtslagaren G.H Johansson AB and WesC business finalized.

Financial highlights

• Q2 net sales: SEK 1,373 million (down from SEK 1,534 million year-over-year); organic growth -9%.

• Adjusted EBITA margin declined to 9.7% from 11.6% in Q2 2023.

• Operating cash flow for Q2 was SEK 118 million; LTM cash conversion at 107%.

• Free cash flow for the last 12 months was SEK 441 million, down from SEK 496 million in the previous quarter.

• Net financial debt/EBITDA at 2.7x, above the target of 2.5x.

Outlook and guidance

• Water segment expected to maintain solid demand and profitability in H2 2024.

• Services and Infrastructure segments anticipate gradual improvement in H2 2024, but short-term challenges persist.

• Leverage expected to remain above the 2.5x target for the rest of the year due to growth investments.

• Continued focus on acquisitions in the Water segment and reducing leverage.