Schouw & Co AS (FRA:5RF) Q2 2025 Earnings Call Highlights: Strong Cash Flow Amid Market ...

Release Date: August 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Schouw & Co AS (FRA:5RF) reported a strong cash flow of $442 million, indicating robust financial health. The company successfully reduced its net interest-bearing debts by 1.3 billion year-on-year. Bioma achieved a 14% increase in volume, particularly in the salmon and shrimp segments, showcasing effective volume strategy execution. Hydra Spema delivered a 5% increase in top-line growth, driven by strong performance in the global OEM and Nordic IAM segments. FiberTech's personal care segment saw a 7% increase in EBDA despite a 13% decrease in top-line, benefiting from positive raw material developments and operational efficiencies.

Negative Points

The company's top line decreased by 2% to 8.5 billion, reflecting challenges in the current market environment. EBDA was down 4% to 706 million, impacted by several one-off costs. Bo Automotive faced a significant 11% decline in top-line revenue, with a 66% drop in EBDA due to fierce competition and increased salary costs in Poland. The Asian market remains challenging for FiberTech's personal care segment, although there are signs of slow recovery. The company anticipates further one-off costs related to restructuring and footprint decisions, impacting future profitability.

Q & A Highlights

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Q: Can you provide additional comments on how customer demand and buying patterns have developed through Q2 in light of the geopolitical situation? Are customers taking a cautious stance, or has sentiment improved? A: The consciousness has softened a bit, with customers pushing more for orders. Companies are getting more accustomed to volatility, leading to a slightly more positive outlook from large global customers. Our backlog supports this view, indicating a new normal in the business environment.

Q: Have you experienced any difference between large and small customers in terms of demand? A: Not significantly. For instance, in the Hydrospe segment, smaller segments like industrial aftermarket in the Nordics are more positive, while the automotive segment in Europe is softer but still demanding more volume. Overall, companies are adapting to the current situation and planning for the future.

Q: Regarding Bioma, you reported 14% volume growth, but this was offset by lower raw material prices. Can you elaborate on your expectations for pricing and customer mix for the last two quarters? A: We expect a strong second half with volume, contracts, and raw material positions in place. The focus is on maintaining production efficiency and pursuing a volume strategy, despite moving into more standard products recently.

Story Continues

Q: You mentioned a customer mix effect with higher volumes toward large customers. Did this impact margins in the quarter? A: There was a product mix effect, but it's challenging to quantify. We've moved to larger customers in some regions, like Ecuador, which lowers risks and stabilizes margins despite the mix change.

Q: On ATPV, demand remains soft but shows relative improvement versus Q1. Is this the start of a turning point expected to materialize in the second half? A: Yes, demand has improved slowly, and we see the first signals of increasing demand. Customers are more positive about the future, and we have an attractive pipeline with both new and existing customers.

Q: Regarding the BOR EBDA margin, the midpoint of guidance indicates 9.1%, but you delivered 7.5%. What are the margin drivers for the second half? A: Margin drivers include volume, running efficiency, cost mix, and supply chain efficiency. We expect to deliver a strong second half, focusing on logistics and optimizing raw material usage.

Q: Can you comment on the FX impacts in the second half, given the changes in the US dollar? A: We have not made significant adjustments to our guidance based on the US dollar. We hedge and mix, so we don't expect a major impact from currency changes.

Q: On Bioma's working capital, do you see additional potential for improvement? A: Yes, there is still potential for improvement. We maintain a strong focus on working capital across the board, and while activity levels may increase, we continue to push for efficiency.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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