Loihde - Two-folded quarter
Loihde released Q2 result with strong topline growth. Net sales grew in line with our expectations, with strong SeSo sales, while DiDe was negatively impacted by the soft market. Profitability fell short of our expectations and was weak with market issues. Year-end seems brighter, but uncertainty remains high, especially in DiDe.
- Group results: Loihde’s net sales came in line with our expectations. Net sales grew by 15% to EUR 34.2m (Evli: 34.2m). The growth was driven by strong demand for security solutions. With soft utilization rates in DiDe and one-time costs from SeSo’s ERP program, Loihde’s profitability came in softer than we expected. Adj. EBITDA amounted to EUR 1.0m (Evli: 2.2m), reflecting a margin of 2.9%. Challenges in ERP program are seen to fade away in H2 and cost savings are expected to boost H2 profitability.
- Security Solutions (SeSo): Net sales came in roughly in line with our expectations and grew by 25% to EUR 24.1m (Evli: 23.8m). The growth was driven by strong demand for both physical and digital security solutions. Acquisitions had also a positive impact on the growth rate. An important concept of One Security has grown driven by both new client acquisitions as well as up-selling. ERP challenges limited SeSo’s profitability, and the company sees it fading away during H2.
- Digital Development (DiDe): Net sales declined by 4% to EUR 10.1m and came in roughly in line with our estimates (Evli: 10.4m). The decline was due to decreased demand for software development while the demand for cloud services, data and analytics, and AI grew during the quarter. DiDe’s low utilization rates pushed the unit’s profitability down. Cost savings should improve DiDe’s profitability going forward despite the uncertain market environment.
- 2023 guidance intact (revised on 22nd Aug): SeSo to grow by over 10% and DiDe to be flat or grow. Adj. EBITDA to improve from EUR 10.3m.