Pierce Group (PIERCE) Q4 2023 earnings summary

Executive summary

• Q4 revenue fell 10% YoY to SEK 382m; gross margin rose 6.9 ppt to 44.7%, while adjusted EBIT was SEK -24m vs. SEK -23m.

• FY 2023 revenue declined 8% to SEK 1,537m; adjusted EBIT was SEK -85m vs. SEK -53m, amid weak demand and currency effects.

• 2024 is positioned as a transformation year, with a leaner operating model targeting ~SEK 25m in annual cost improvements.

Financial highlights

• Q4 net revenue was SEK 382m, down 10% reported and 15% in local currencies; gross profit rose to SEK 171m from SEK 161m.

• Q4 profit after variable costs increased to SEK 80m from SEK 60m; margin rose to 20.9% from 14.0%.

• Q4 reported EBIT was SEK -45m vs. SEK -31m, and net loss was SEK -49m vs. SEK -23m; adjusted EBIT excluding specified unusual effects was SEK -11m.

• FY reported EBIT was SEK -111m vs. SEK -68m; net loss was SEK -96m vs. SEK -58m. Adjusted EBIT excluding SEK 57m of specified items was SEK -28m vs. SEK -53m.

• Q4 operating cash flow was SEK 51m vs. SEK 12m; year-end cash was SEK 222m vs. SEK 136m, while FY cash flow was SEK 91m vs. SEK 117m.

Outlook and guidance

• 2024 priorities include Offroad leadership, profitable Onroad growth, customer loyalty, pricing and purchasing excellence, and scalable technology.

• Weak consumer demand and an uncertain market outlook are expected to continue into 2024; modest consumer-sentiment improvement is anticipated over the year.

• A lean operating model targets ~SEK 25m in annual cost improvements, with earnings effects from Q1 2024 and cash-flow effects emerging gradually in H1.

• Medium- to long-term targets: average annual revenue growth of 15–20%, adjusted operating margin of ~8%, and net debt/EBITDA no higher than 2.0x, with temporary flexibility for strategic initiatives.

• In-freight costs are expected to keep declining at a more moderate pace, with potential increases from Red Sea disruptions.