Earnings call transcript: Bewi Asa Q2 2025 sees stock decline amid mixed market

Bewi Asa’s recent earnings call for the second quarter of 2025, held on August 20, highlighted several strategic initiatives and challenges. The company’s stock price fell by 10.67% following the call, reflecting investor concerns over financial performance and market conditions. According to InvestingPro data, the company’s shares are currently trading near their 52-week low of $1.88, with a market capitalization of $435 million. InvestingPro analysis suggests the stock may be undervalued at current levels.

Key Takeaways

• Bewi Asa’s stock fell by 10.67% following the earnings call.
• The company is investing heavily in its automotive sector, with a budget of €20 million for the year.
• Germany’s market challenges are affecting upstream volumes.
• The company plans to issue equity to strengthen its balance sheet.

Company Performance

Bewi Asa reported mixed performance across its markets, with notable challenges in Germany affecting raw material volumes. However, the Nordic region showed promising improvements in insulation volumes. The company is actively managing its inventory to capitalize on low raw material prices, which is a strategic move amid fluctuating market conditions.

Financial Highlights

• Year-to-date working capital CapEx: Negative €5 million.
• Year-to-date working capital OpEx: Negative €41 million.
• Current leverage ratio: 4.8, with expectations for a decrease.

Market Reaction

Following the earnings call, Bewi Asa’s stock price dropped by 10.67%, closing at €22.5. This decline places the stock closer to its 52-week low of €18.92, reflecting investor apprehension about the company’s immediate financial health and market strategy.

Outlook & Guidance

The company plans to issue equity to bolster its balance sheet and is targeting long-term bond refinancing. While automotive investments are set to decline next year, Bewi Asa remains committed to reducing its leverage through increased EBITDA and debt reduction.

Executive Commentary

Christian, the CEO, emphasized the company’s focus on automotive investments, stating, "We will be around EUR 20,000,000 this year, and we are all invested in automotive." Marie, the CFO, noted the importance of strategic inventory management, saying, "From time to time, we are high on stock. That’s a part of the business."

Risks and Challenges

• Market fluctuations in Germany pose a risk to raw material volumes.
• The company’s high leverage ratio could impact financial flexibility.
• Potential supply chain disruptions may affect inventory strategies.
• Macroeconomic pressures in Europe could dampen consumer demand.

Despite these challenges, Bewi Asa is actively pursuing acquisitions and strategic initiatives to enhance its competitive position and financial stability. InvestingPro data shows the company maintains a "GOOD" overall financial health score of 2.5 out of 5, with particularly strong performance in cash flow management. Subscribers can access detailed analysis of these metrics and more through InvestingPro’s comprehensive research tools.

Full transcript - Bewi Asa (BEWI) Q2 2025:

Christian, CEO: Over 60 the percent new utilization.

Marie, CFO: Insulation, On the downstream, Oxbardom insulation, so means We are Rovir Cosner there, so most of our only fair 44% of net sales. Working capital or discontinued operation. Year to date, our working capital CapEx negative EUR 5,000,000. Year to date, so our working capital OpEx negative EUR 41,000,000.

Also positive EUR

: For border packaging or insulation, we know an effective or well invested platform from Kantar Wexten Uten New Year Investing.

Moderator/Translator: Christian. And then we will switch to English for the Q and A. So please post your questions in English or Norwegian. I’ll try to translate. First question is from Fabian Jorgensen in Pareto Securities.

How can upstream volumes be down when insulation volumes are slowly picking up? Any timing effects or changes in market share that drives the negative development?

Christian, CEO: Now as we have said in the presentation also, Germany as a market for raw is one of the markets in Europe which is struggling the most. So that is also taking away volume from raw. And we have also said that The Nordics is picking up in insulation. So the explanation is pretty simple. The countries which we represent is up in insulation.

And some of the countries which we are only selling raw materials to, like Germany and also some other Eastern countries, are down compared to the previous year.

Moderator/Translator: Thank you, Christian. A follow-up question also from Fabian in Pareto. How much is left in your automotive investment budget? Target was around €20,000,000 and your run rate before this investment plan was put forward. When will you get down to those levels?

Christian, CEO: We will be around EUR 20,000,000 this year, and we are all invested in automotive. So I will expect that to decline further for next year with the capacity the company has today.

Moderator/Translator: Thank you. Then we have some questions from Eva Larsen. He says that the cash flow has over the last three years been good in the second quarter, but this not this quarter. Why is that, Marie?

Marie, CFO: That can be explained basically by two things. One is that the cash flow comprises of the total operation. We do have some lower results in raw that has now been merged with Unipool in July. But we do also have some higher working capital and that is related to volumes in driving, of course, accounts receivables, but also inventory. So that’s basically and that will be a release then in the second half of the year.

Moderator/Translator: Thank you. And I think that also answers Eva Lawson’s second question, which is why the working capital is up so much in the first half year when the net sales is flattish. So you already answered that.

Marie, CFO: That’s correct. And I think, just to remind you all, when it comes to inventory, we are working continuously, of course, to have as low inventory as possible. But then we need to work strategically with inventory. So currently, the raw material prices are low. And then we do take the opportunity to have some buffer for commercial reason.

So from time to time, we are high on stock. That’s a part of the business.

Moderator/Translator: Thank you, Marie. Another question from Eva. The CEO has previously said that you will not do any acquisitions unless the leverage is 2.5. From the presentation, you said that the leverage will be 4.8 after the equity issue. Still, you say that you are in an acquisition process.

Why is that?

Christian, CEO: On the one side, we are doing a mission, and the leverage number for the quarter is correct, €4,700,000 That is a leverage number, which we have said will go down because an increase of €5,000,000 EBITDA will then take down it a half and lower debt on EUR 20,000,000 will take it down a half. My expectation to the leverage in the short run on that number, it is that, that will go substantially down. So on the one side, that’s why we are doing in a mission to strengthen our position. And Bevy is always looking at acquisitions. And I will stand at my comment, our financial target in Bevy is to have a leverage on SEK 2,500,000,000.0.

And if we are going to do acquisitions in the future, near or long, we are going to look for that as a number which we are going to refer to.

Moderator/Translator: Thank you. We have another question from Andrea Ulsner. Hi, thanks for the presentation. Have you already received commitments for the equity issue? What do you plan to do with the proceeds?

Will they be used to partly redeem the bonds? Could we have some more detail on your plans for the bond refinancing?

Christian, CEO: As we have stated in the communication as well, we have received commitments for the equity issue. We also state that we are planning to strengthen our balance sheet, as I’ve said on the previous comment as well. And on the strategy of refinancing, it is a strategy for the company to refinance in a long term perspective when the timing is correct for that, and we see that in the future, near future.

Moderator/Translator: Anything you want to add, Farid?

Marie, CFO: No. But again, we have communicated that this has, of course, been initiated because the financing will go short, but it’s too early to comment upon what we will do with the bond. That we will come back to.

Moderator/Translator: Yes. Thank you. Then we have no further messages or questions. So we say thank you for listening in and see you soon. Thank you.

Christian, CEO: Thank you.

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