Sdiptech (SDIP) Q1 2025 earnings summary

Executive summary

• Net sales rose 4% year-over-year to SEK 1,330 million, with organic sales down 4% due to customer caution and postponed investments; acquisitions and a 1% positive currency effect offset declines.

• Adjusted EBITA was SEK 251 million, flat year-over-year, with an 18.9% margin; organic adjusted EBITA fell 8% while acquisitions contributed positively.

• Profit after tax was SEK 74 million (down from SEK 110 million), with earnings per share after dilution at SEK 1.83.

• Cash flow from operations was stable at SEK 170 million for the quarter, with a 74% cash conversion rate.

• Staff costs rose 5%, mainly due to higher minimum wages and inflation in the U.K., impacting profitability.

Financial highlights

• Adjusted EBITA margin was 18.9% (down from 19.6% in Q1 2024), reflecting cost pressures, especially from UK wage regulation.

• Net debt/Adjusted EBITDA stood at 2.25x (financial net debt/Adjusted EBITDA: 2.25x; net debt/Adjusted EBITDA: 3.31x).

• Return on capital employed was 12.5% (down from 13.2%); return on equity was 9.2%.

• Cash flow from operations for the last 12 months was SEK 822 million, with a rolling cash conversion of 83%.

• Earnings per share after dilution for LTM Q1 2025 was SEK 10.05.

Outlook and guidance

• Management aims for 5%-10% organic profit growth but acknowledges this is a tough target for 2025 given current trends.

• Ongoing global turbulence and increased UK wage costs are expected to continue impacting results into Q2; focus remains on profitability, efficiency, and selective growth.

• Acquisition pipeline remains strong, with ongoing dialogues and a focus on balancing acquisition pace with external uncertainties.

• Price increases to offset staff cost inflation typically lag by 6-9 months due to long-term contracts.

• Operations and cost levels are being adapted to market conditions; further divestments may occur.