New Wave Group (NEWA) Q3 2024 earnings summary

Executive summary

• Net sales in local currencies increased by 2% in Q3, outperforming a market that declined by 7-9% across key segments, with total Q3 sales at SEK 2,308.3 million, down 1% year-over-year.

• Operating margin for Q3 was 13.6%, down from 16.3% last year, with operating profit at SEK 312.8 million, impacted by higher personnel costs and absence of prior year one-offs.

• The company gained market share in all major segments despite overall market contraction and maintained strong cost control.

• Cash flow from operations improved to SEK 191.4 million in Q3 and SEK 732.6 million for the nine months, driven by lower inventory purchases.

• Continued investments in teamwear, sales, and marketing, especially in the US and Europe, with positive early results in Europe and a gradual build-up in the US.

Financial highlights

• Q3 net sales: SEK 2,308.3 million (down 1% year-over-year, currency effect -3%); organic growth 2% in local currencies.

• Q3 operating profit: SEK 312.8 million (13.6% margin); nine months: SEK 799.7 million (11.9% margin).

• Q3 net income: SEK 204.1 million (EPS: SEK 1.54); nine months: SEK 535.6 million (EPS: SEK 4.04).

• Cash flow from operations: SEK 191.4 million in Q3; SEK 732.6 million for the first nine months.

• Equity ratio reached a record 60.7%, with net debt reduced to SEK 1,927.5 million.

Outlook and guidance

• Management remains optimistic long-term but expects continued market headwinds in the short term, with further tough quarters likely.

• Focus remains on gaining market share, maintaining a strong balance sheet, and pursuing value-adding acquisitions.

• Ongoing investments in sales and marketing, especially in the US and Germany, expected to continue until sales growth materializes.

• No signs of further deterioration in order intake; pre-selling orders for Craft for next spring are up.