engcon (ENGCON) Q2 2024 earnings summary

Executive summary

• Order intake rose 27% year-over-year in Q2 2024, with organic growth of 26%, while net sales declined 12% to SEK 450 million, reflecting a normalization after a strong prior year.

• All regions saw increased order intake, with Europe leading for the fourth consecutive quarter and notable recoveries in the Nordics (+30%), Europe (+28%), and Asia-Oceania (+47%).

• Gross margin improved to 44.9% (from 40.6%), and EBIT margin was 18.2% (down from 20.5%), with operating profit falling 21% to SEK 82 million.

• High activity during exhibition season increased brand and product awareness, with major events in Paris and Stockholm.

• Management strengthened with a new COO appointed for January 2025 and a CFO transition planned for August.

Financial highlights

• Q2 2024 net sales: SEK 450 million (down 12% year-over-year); EBIT: SEK 82 million (down 21%); EBIT margin: 18.2%.

• Gross margin improved to 44.9% from 40.6% year-over-year.

• Operating cash flow was SEK 32 million, significantly lower than SEK 277 million last year, mainly due to lower profit.

• Net working capital as a percentage of net sales increased to 29% from 23%.

• Equity/assets ratio at 51.6%–52%; net debt/EBITDA at 0.6x.

Outlook and guidance

• Gradual recovery is expected in H2 2024, with a stronger upturn in the Nordics anticipated in 2025 as fleet replacements become necessary.

• The company remains committed to its financial targets: operating margin above 20% and ROCE above 40% over a business cycle.

• Short lead times will be crucial as dealers avoid holding inventory.