Kreate Group (KREATE) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw improved profitability with EBITA margin rising to 3.8% from 3.0% year-on-year, marking the third consecutive quarter of EBITA growth.

• Revenue declined 19.3% year-over-year to EUR 122.4 million for January–June 2024, mainly due to lower large project volumes, but Swedish revenue grew by double digits.

• Order backlog increased 9% sequentially to EUR 200.1 million at the end of June 2024, though down 24.5% year-on-year.

• Strategic focus shifted to profitability and growth in rail, light rail, and Swedish markets, with notable project wins in both Finland and Sweden.

• Management expects revenue to be weighted more heavily in the second half of 2024.

Financial highlights

• Q2 2024 revenue was EUR 68.0 million, down from EUR 85.7 million in Q2 2023; H1 2024 revenue was EUR 122.4 million, down from EUR 151.6 million.

• Q2 EBITA was EUR 2.6 million (3.8% margin), flat in euros but up in margin from Q2 2023; H1 EBITA was EUR 2.9 million (2.4% margin), up from EUR 2.2 million (1.4%).

• Earnings per share for Q2 were EUR 0.16.

• Free cash flow from operating activities was EUR -9.6 million for H1 2024, impacted by normalization of net working capital.

• Interest-bearing net debt increased to EUR 31.7 million at the end of June 2024.

Outlook and guidance

• 2024 revenue is expected to decline to EUR 270–300 million (2023: EUR 320.0 million), while EBITA is forecast to increase to EUR 8–11 million (2023: EUR 7.8 million).

• Guidance is based on the current order backlog and a more selective approach to project offerings, expected to improve profitability.

• Long-term outlook remains positive in both Finland and Sweden, with large public and private projects in the pipeline.