Ratos (RATO) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw strong cash flows and stable earnings despite a weaker market, with Industry outperforming, Consumer improving slightly, and Construction & Services declining.

• Major structural actions included the announced merger of Knightec and Semcon, Plantasjen's reconstruction and bankruptcy in Finland, and Expin Group's refocus on rail electrification.

• Order intake and backlog remained robust in Construction & Services, now nearly two years' worth of sales.

Financial highlights

• Net sales for Q3 2024 were SEK 7,454m, down 6% year-over-year, with organic sales down 4% and significant negative currency impact.

• Adjusted EBITA/EBITDA fell 9% year-over-year; Q3 adjusted EBITA SEK 469m, LTM adjusted EBITA SEK 2,254m.

• Cash flow from operating activities was SEK 783m in Q3, with cash conversion around 167%.

• Net working capital and inventory levels declined, with net working capital at 0.3% of LTM net sales.

• Profit for Q3 was SEK -54m, with adjusted diluted EPS SEK 0.40.

Outlook and guidance

• Construction order intake and backlog remain strong, with sales expected to pick up in 2025.

• Actions taken in Q3, including restructuring and cost-saving programs, are expected to improve future earnings and profitability.

• Technical consulting and construction markets are currently subdued but expected to recover.

• No further write-downs anticipated for Plantasjen, but additional one-time costs are expected as restructuring continues.

• Financial targets for 2025 include adjusted EBITA of at least SEK 3 billion and leverage between 1.5x–2.5x.