Getinge AB (GNGBF) Q4 2024 Earnings Call Highlights: Strong Sales Growth and Strategic Shifts

Yahoo

31-01-2025

Order Intake Growth: 11% overall growth, with 7.4% organic growth.
Net Sales Growth: Increased by 11.8%, with 9.2% organic growth.
Adjusted Gross Profit: Increased by SEK1 billion to SEK5.6 billion.
Adjusted EBITDA: SEK2.143 billion, with a margin of 19.4%.
Free Cash Flow: Increased by more than 70% to around SEK1.7 billion.
Net Debt: SEK10.5 billion, adjusted to SEK7.8 billion excluding pension liabilities.
Leverage: 1.6 times adjusted EBITDA, 1.2 times when adjusted for perpetual liabilities.
Dividend Proposal: SEK4.60 per share, representing 38% of free cash flow per share.
Paragonix Technologies Contribution: Net sales growth of about 65%, contributing approximately SEK240 million.
Surgical Perfusion Net Sales: SEK450 million in 2024, with restructuring costs estimated at SEK800 million.
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Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Order intake grew by 11%, with organic growth of 7.4%, indicating strong demand across most regions and business areas.
Net sales increased by 11.8% in the quarter, with 9.2% organic growth, driven by healthy price increases and a positive product mix.
The acquisition of Paragonix Technologies contributed significantly, with a 65% net sales growth in Q4, enhancing Getinge AB's position in the organ transport market.
Free cash flow increased by more than 70%, reaching approximately SEK1.7 billion, reflecting improved business performance and efficient working capital management.
The financial position remains solid with a leverage of 1.6 times adjusted EBITDA, well below the internal threshold, supporting a proposed dividend increase to SEK4.60 per share.
The life science segment experienced flat growth, with weak orders for High Purity New England within bioprocessing.
A provision of SEK297 million was made for ongoing field actions related to the Cardiosave Balloon Pump, impacting financial results.
The surgical perfusion product portfolio is being phased out due to declining market share and eroding margins, leading to restructuring costs of approximately SEK800 million.
Quality-related costs peaked in 2024, exceeding SEK800 million, due to various remediation efforts, impacting profitability.
Price increases are becoming increasingly difficult to implement in the market, potentially affecting future revenue growth.
Q: Can you provide insights on the margin outlook for 2025, given the 100 basis point improvement in 2024? A: We are not providing specific yearly guidance on margins but expect continued improvements. We are ahead of the trajectory set during the Capital Markets Day and anticipate further progress in the coming years.
Q: How should we interpret the strong order and revenue momentum in ECMO and balloon pumps, and what is the outlook for 2025 considering increased competition? A: There was some backlog delivery in Q4, particularly for balloon pumps, but underlying demand remains strong, especially for ECLS. Despite new competition, we continue to grow, indicating a growing market with customer loyalty to our products.
Q: Regarding the strength in life sciences, particularly sterilizers, are these revenues non-recurring, and what is their impact on EBITDA? A: The business is not dependent on one customer and is not considered non-recurring. The order cycles and delivery patterns are lumpy, but we expect continued growth in these categories over the planning period.
Q: Can you discuss the impact of price adjustments on Q4 results and the pricing outlook for 2025? A: Price adjustments contributed around 3% to both Q4 and the full year. While we expect continued price increases in 2025, they may be slightly below 2024 levels due to market challenges.
Q: What is the rationale behind phasing out the surgical perfusion business, and how will resources be reallocated? A: The decision is due to low market share and losses in the surgical perfusion segment. Resources will be reallocated to more profitable areas like transplant care and ECMO, where we see better growth opportunities.
Q: Can you provide details on Paragonix's profitability and its contribution to 2025 forecasts? A: Paragonix turned profitable by the end of Q3 and continues to improve. While still dilutive to the group, it shows leverage as it grows. We do not disclose detailed profitability figures.
Q: What is the expected impact of the surgical perfusion phaseout on 2025 sales and margins? A: Sales from the surgical perfusion business will be around SEK300 million in 2025. The phaseout will result in a marginally positive EBITDA margin impact from 2025 onwards.
Q: How did quality issues impact earnings in 2024, and what is the outlook for related costs? A: Quality-related costs peaked in 2024, exceeding SEK800 million. We expect these costs to trend downwards, but it's challenging to provide a granular breakdown due to the complexity of the issues involved.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.