eWork Group (EWRK) Q3 2024 earnings summary

Executive summary

• Order intake increased by 5.8% year-over-year to SEK 3,204M, marking a return to growth after five quarters of negative order development.

• Net sales declined 11.1% year-over-year to SEK 3,227M, mainly due to lower assignment volumes, strategic phase-outs, and fewer assignments in Norway.

• Operating profit (EBIT) was SEK 39.3M, with an operating margin of 122 basis points, reflecting improved profitability despite lower volumes.

• Margin improvement trend continued for the fifth consecutive quarter, reaching the highest order margin in four years, supported by cost reductions and value-added services.

• Expansion into Slovakia and new framework agreements contributed to positive momentum and future growth.

Financial highlights

• Order intake rose 5.8% year-over-year to SEK 3,204M, reversing a five-quarter negative trend.

• Net sales fell 11.1% compared to Q3 2023, primarily due to fewer active assignments and the phase-out of lower-margin clients.

• Operating profit (EBIT) was SEK 39.3M, down 12.3% year-over-year, but up 3.1% on an adjusted basis; profit before tax rose 16%.

• Operating margin improved to 122 basis points from an adjusted 105 basis points last year.

• EBIT to service revenue margin reached 31% (33% prior year, 24% adj.).

Outlook and guidance

• Margin development and cost efficiency are on track with the annual plan.

• Order intake is increasing, but market recovery is slower than expected, limiting volume growth and public sector demand.

• Achieving 30% EPS growth by year-end is unlikely due to insufficient volume recovery.

• Revenue growth in Q4 is not expected unless there is a significant boost in order intake.

• Good prospects for continued scaling, increased operating result, and margin.