Fagerhult (FAG) Q3 2024 earnings summary

Executive summary

• Q3 2024 results were impacted by softer market conditions and delayed projects, leading to intensified cost reduction and restructuring in Veko, LTS, and Arlight, including a full exit from the horticulture segment.

• Market activity varied by geography and segment, with public sector and renovation projects showing more resilience, especially in the Nordics.

• Opportunities are emerging in retrofit projects due to the EU ban on fluorescent lighting, supporting renovation demand.

• Strategic focus remains on smart lighting, sustainability, and talent, highlighted by the launch of a cloud-based smart lighting service this quarter.

• No project cancellations observed, but investment decisions are delayed due to economic and political uncertainties.

Financial highlights

• Q3 order intake: SEK 1,873 million (down 7.6% year-over-year, -5.1% organic); net sales: SEK 1,919 million (down 7.7% year-over-year, -5.2% organic).

• Q3 operating profit before IAC: SEK 181 million (9.4% margin); EPS before IAC: SEK 0.58; after IAC: SEK 0.31.

• Year-to-date order intake: SEK 6,106 million (down 3.3% year-over-year, -2.5% organic); net sales: SEK 6,266 million (down 2.9% year-over-year, -2.2% organic).

• YTD operating profit before IAC: SEK 598 million (9.5% margin); EPS before IAC: SEK 1.99; after IAC: SEK 1.71.

• Q3 operating cash flow: SEK 214 million (was 312 million in Q3 2023).

Outlook and guidance

• Cost reductions and restructuring are expected to improve operating margins in late 2024 and 2025.

• Renovation and retrofit opportunities are expected to grow, especially following the fluorescent lighting ban.

• Market recovery in new builds is anticipated in 2025, supported by regulatory drivers and diminishing fluorescent lamp inventories.

• No project cancellations, but delays in investment decisions due to macroeconomic and geopolitical uncertainties.

• Continued emphasis on innovation, cost savings, and M&A agenda.