Garo (GARO) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 were SEK 270 million (MSEK 269.4), down 11% year-over-year, with both E-mobility and Electrification segments experiencing declines.

• Adjusted EBIT for Q3 was SEK 0.4 million (0.1% margin), down from SEK 5 million last year, with a non-recurring impairment of SEK 48.4 million mainly in E-mobility.

• Net income for Q3 was SEK -41.9 million, with a loss per share of SEK -0.84.

• Jonas Klarén was appointed as new President and CEO, bringing energy sector experience and set to assume the role within six months.

• Action program in E-mobility expanded, targeting annual savings of SEK 40 million and including a reduction of 28 employees.

Financial highlights

• E-mobility Q3 net sales were SEK 70 million, down 26% year-over-year, with an adjusted operating loss of SEK 20.1 million and inventory write-downs of SEK 39.3 million.

• Electrification Q3 net sales were SEK 200 million, down 4% year-over-year, with an adjusted operating profit of SEK 20.5 million and inventory write-downs of SEK 9.1 million.

• Adjusted EBITDA for Q3 was SEK 14.3 million (5.3% margin); Q3 EBIT after impairment was SEK -48 million.

• Net debt at period end was SEK 319 million, up from SEK 293 million a year ago; equity-asset ratio was 47.3%.

• Cash flow from operating activities after working capital changes was SEK -20 million in Q3.

Outlook and guidance

• E-mobility market recovery is slower than expected, but long-term outlook remains positive with infrastructure expansion and anticipated recovery in 2025.

• Housing construction in the Nordics is weak for 2024 but expected to recover in 2025 due to lower interest rates and political initiatives.

• Market is believed to have bottomed out, with gradual improvement anticipated for both business areas.

• Favorable demand persists in commercial, public sector, and energy efficiency-related products.

• Interest rate cuts and government incentives are expected to support housing and investment activity.