Solteq - Profitability improvement, weaker sales
Solteq had lowered its guidance ahead of the earnings report and the net sales decline of 6.5% y/y in Q3, mainly attributable to a slow recovery in customer demand, came as no surprise, albeit the magnitude was somewhat of a disappointment compared with H1 figures. Comparable EBIT improved to EUR 0.6m (Q3’23: EUR -0.8m) as cost savings measures started to take effect.
- Comparable net sales in Q3 were EUR 11.4m (Q3’23: EUR 12.2m) vs. Evli 12.4m, a decline of 6.5% y/y in comparable terms. The company lowered its revenue guidance on Wednesday, with our estimates still reflecting the old guidance. The miss on net sales was as such no surprise, however the magnitude was somewhat of a disappointment compared with H1 figures.
- The comparable operating profit in Q3 amounted to EUR 0.6m (Q3’23: EUR -0.8m) vs. Evli EUR 0.9m. The operating profit came in at EUR 0.3m (Q3: EUR -0.7m).
- Retail & Commerce: Comparable revenue in Q3 amounted to EUR 8.5m (Q3’23: EUR 9.2m) vs. Evli EUR 9.3m. Revenue declined by 7.5% in comparable terms driven by postponed decision-making by customers on launching new projects. The adj. EBIT was EUR 0.7m (Q3’23: EUR 0.3m) vs. Evli EUR 0.8m. The much-needed profitability improvement was driven by cost savings initiatives taking effect and relative profitability surprisingly good given the lower net sales.
- Utilities: Revenue in Q3 amounted to EUR 2.9m (Q3’23: EUR 3.0m) vs. Evli EUR 3.1m. The adj. EBIT was EUR -0.1m (Q3’23: -1.1m) vs. Evli EUR 0.1m. The profitability enhancement was fueled by steps taken to improve product quality and operational efficiency.
- Guidance for 2024 (updated on Oct 23rd): Solteq expects the comparable revenue to diminish relative to the comparison period (2023: EUR 54.2m) and operating result to be positive.