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Robit Oyj reported its fourth-quarter earnings for 2024, revealing a 6.6% decline in net sales to €21.4 million. Despite the decline in sales, Robit’s stock surged by 7.91%, closing at €1.50, up from €1.39. According to InvestingPro data, the company maintains a healthy current ratio of 2.77, indicating strong liquidity position. The company’s earnings per share (EPS) forecast was -€0.02, and it managed to improve its EBIT by €2.6 million. While trading at a relatively high P/E multiple of 150, the company shows promising free cash flow yield. The positive market reaction can be attributed to the company’s strategic focus on innovation and cost-saving measures.
Key Takeaways
- Robit’s stock rose by 7.91% following the earnings release.
- Net sales declined by 6.6% in Q4 2024.
- EBIT improved by €2.6 million, despite a drop in sales.
- New product launches and cost-saving measures are key strategic focuses.
- The company targets sales growth and improved EBIT in 2025.
Company Performance
Robit Oyj experienced a challenging year with a 2.8% decline in full-year net sales and a 4.4% drop in orders received. InvestingPro analysis reveals the company maintains a solid financial health score of FAIR, with particularly strong cash flow metrics. The company improved its EBIT by €2.6 million, signaling effective cost management and operational efficiency. With a gross profit margin of 33.85% and an Altman Z-Score of 6.62 indicating financial stability, the company’s strategic initiatives, including new product launches and a renewed supply chain, are expected to drive future growth. InvestingPro subscribers have access to 6 additional key insights about Robit’s financial health and growth prospects.
Financial Highlights
- Q4 2024 net sales: €21.4 million (6.6% decline YoY)
- Full-year net sales: Declined by 2.8%
- EBIT: Improved by €2.6 million
- Net cash flow from operations: €1.5 million (down from 2023)
- Comparable EBITDA: 8%
Market Reaction
Robit’s stock price increased by 7.91% to €1.50, reflecting investor optimism despite the sales decline. The stock’s performance was bolstered by the company’s strategic focus on innovation and operational improvements, alongside a positive outlook for 2025.
Outlook & Guidance
Robit is optimistic about 2025, targeting net sales growth and improved EBIT. The company plans to focus on recovering its Down the Hole segment and expanding in North America, Australia, and Africa. While InvestingPro data indicates analysts don’t anticipate profitability this year, the company’s debt-to-equity ratio of 0.65 provides financial flexibility for its expansion plans. New product launches and supply chain enhancements are expected to support these goals. For detailed analysis of Robit’s growth potential and comprehensive financial metrics, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.
Executive Commentary
Artur Hallanen, Group CEO, stated, "Our target is to halve our emission intensity by 2030 from the base year of 2020." He emphasized the company’s market-driven approach to achieving targeted gross margin levels and expressed confidence in performance improvements in the latter half of 2025.
Risks and Challenges
- Supply chain disruptions could impact product availability and costs.
- Market saturation in certain regions may limit sales growth.
- Macroeconomic pressures, including inflation and currency fluctuations, could affect profitability.
- The ongoing decline in the Down the Hole segment poses a recovery challenge.
- Delays in customer decision-making may impact order volumes.
Q&A
During the earnings call, analysts inquired about the global demand situation and inventory management. Robit highlighted stable mining market conditions and a strong demand in North America, while acknowledging above-optimal inventory levels and plans to enhance supply chain planning.
Full transcript - Robit Oyj (ROBIT) Q4 2024:
Artur Hallanen, Group CEO, Robit: Welcome to Robit’s quarter four and full year twenty twenty four results analyst and press conference. My name is Artur Hallanen, the group CEO, and I’m here with our CFO, Wille Beltane. At the end of the we’ll go through the presentation. At the end of the presentation, you have possibility to ask questions either through the audio channel or through chat.
First, a standard disclaimer about the forward looking statements. In 2024, we delivered a clear improvement in profitability. Also, we were able to grow in a demanding market in two out of our three businesses in top hammer and geotechnical segment. Market demand remained at a good level in the mining segment, but we did not see the recovery or the improvement in the construction industry that we were earlier previous year, we were expecting to see. Construction industry remained at the low level throughout the year.
Orders received for the full year dropped by 4.4% and net sales by 2.8%. The drop in net sales was coming from our down the hall segment, whereas TopHammers Geotechnical grew. Profitability improved clearly from the comparison period. We delivered 2,600,000.0 Euro improvement in our EBIT. The improvement was a result of the, let’s say, competitiveness for saving actions we have implemented and we have renewed our down the whole supply chain as well as introduced a new product range, product family that is more competitive on the marketplace.
And we have taken also other cost saving measures to improve the company profitability. Net cash flow from operations was €1,500,000 down from 2023 when we had a very good operating cash flow. The profitability improvement supported cash flow development, but on the other hand, more cash was tied into the net working capital, especially due to the inventories during the year. Great achievement in 2024 was a reduction in our emission intensity. We are now almost 40% below our comparison period of 2020.
And our target is to halve our emission intensity by 02/1930 from the base year of 2020. So by 02/1930 from the base year of 2020, so we are on a good pace in achieving that target. We continue to bring new innovations to the market. In the end of last year, we introduced H18 Hammer, an extension to our eight Series Hammer family where we have earlier introduced already four, five, six and eight inches hammers. H18 is the first of the eight series hammer, hammers going into piling applications, so essentially supporting our geotechnical segment.
With this hammer, our customers are getting greater power output, lower air consumption and it’s a versatile hammer for all applications in the filing sector. Also, we brought to the market new shoulder driven RG5551 rods that are for surface drilling market. With this kind of a shoulder driven, more robust designed rods, customers are able to achieve faster penetration rate, longer lifetime and also straighter holes. Also, due to these benefits as well as due to the sturdier design, the downtime of the customers can be significantly reduced. If you look more closely on the quarter four development in quarter four, we continued the growth in TopHomer and Geotechnical segments.
TopHammers grew by 5.8% and Geotechnical grew by 2.8%. We had a very challenging quarter in the down the hole business. Sales in down the hole dropped by 49.9%. And main reason behind that is this one supply agreement that ended mid last year as well as the weak market in the well drilling sector, which is important segment for our down to hole business as well as the exploration markets. Those markets were weaker than we anticipated earlier and also on the new business opportunities that we had here.
So delaying the customer decision making and we’re not able to compensate for the loss that we had from the other customers. If you look at the market areas, in quarter four, the growth was there driven by Asia and EMEA and East markets. EBIT did improve in the quarter four. Comparable EBIT was EUR 800,000.0, small improvement from the comparison period. We were able to get control of the freight cost and the availability situation.
Freight cost were very high for us last year and especially in quarter two and quarter three, but quarter four as we anticipated when we published quarter three results, we were able to get those under control and it did not have a negative impact anymore on our results in quarter four. Cash flow from operations was negative €1,600,000 Big impact came from our payables that were significantly lower than at the end of the quarter three and that boost the whole cash flow to negative from cash flow from operations to negative. If you look at sales development for 2024 by market area, Australasia, we had a small positive picture was mixed in Australasia. We had a very strong growth in the top hand segment. We let’s say, we continued that we had already had two years of consecutive good double digit growth numbers in Australasia when it comes to the top hand business.
On the other hand, this DTH supply agreement that ended mid year that was in Australasia and that then impacted the DTH business in that market area negatively. Asia had a small positive sales development. Asia picked up the pace nicely during the year. Towards the end of the year, we were able to win more business from the mining sector as well as there were tunneling projects in the Asia region that supported the good development or good progress towards end of the year. EMEA East, which is our largest market area, it was a bit mixed picture.
We had pockets and areas within that territory where sales developed very well. But on the other hand, especially, I would say, the construction related markets in Europe, somewhat Middle East, they didn’t have that good development in 2024. In Americas, sales declined by 8.1%. We had relatively flat development in North America, so the decline essentially came from South America. And there, especially mining sector, it’s it’s predominantly mining sector in in the South America, and that contributed to the decline in 20 in the Americas market area.
Our sustainability roadmap has four focus areas, sustainable partnerships, CO2 emission reduction in our value chain, happy and healthy workplace as well as efficiency throughout the product line cycle. We took good development in many of the areas during the year. I already mentioned the positive development on the CO2 emission intensity where we are almost 40% below the comparison comparison year. Also, one positive to highlight is the improvement in the employee engagement index that we had from 2023. So that’s that was a good step forward on that front as well.
I will hand over to Will to go over the financials a bit more in detail.
Wille Beltane, CFO, Robit: Thank you, Artur. So as Artur already mentioned, our profitability improved in 2024, although the net sales declined. And in Q4, our net sales declined by 6.6% to EUR 21,400,000.0 and the comparable EBITDA percentage decreased to 8%. On the comparable EBIT level, we saw an improvement in Q4 to 3.5% from the 3.3% in the comparable comparison period and the full year improvement was over €2,500,000 In Q4, result of the period also improved to EUR 600,000.0 and the full year improvement at the bottom line, the result of the period was over EUR 4,000,000. In q four, the net working capital increased on all levels.
So the net working capital totaled at €41,500,000 Inventories increased during the year to €40,200,000 receivables increased to €18,100,000 and payables also increased to €16,800,000 So the net working capital percentage of the last twelve months sales ended up at 46%. Our cash flow before changes in net working capital was EUR 1,400,000.0 in Q4 and as mentioned, the net working capital increased affected negatively on the operating cash flow that ended up at minus EUR 1,600,000.0 in the quarter and 1,500,000.0 during the full year. Cash flow from investing activities was low, only minus €200,000 in Q4 and the cash flow from financing activities ended at minus €2,100,000 in Q4. We ended up at a €9,000,000 cash and cash equivalents balance at the end of the year and total interest bearing loans and utilized credit limits declined during 2024 and then ended up at €27,700,000 and that includes €4,000,000 of IFRS 16 lease liabilities. Our net debt continued to decrease in ’24 and ended at €18,600,000 at the end of the year and our financing covenant net debt to twelve month rolling EBITDA ratio was 2.87 at the end of 2024.
So an improvement on that as well. Equity ratio remains strong and improved to 50.7% at the end of the year. Our senior loans from financial institutions at the end of Q4 at the end of the year totaled at EUR 23,600,000.0 and the senior financing agreement is ending at mid twenty twenty six. So we will start the refinancing negotiation during H1 twenty twenty five. Our current loan amortization schedule is €1,500,000 payments biannually at the June and at the December.
We also have the interest rate swap of €10,000,000 that will end at the June 2026. Back to you, Art.
Artur Hallanen, Group CEO, Robit: Thank you, Willem. So in 2025, our target is to continue driving the growth in the top hammer and geotechnical segment. As I said, those grew also last year in the challenging market conditions. The priority for us is to recover the down the hole sales and get back to positive development in the DTH segment where we had a very challenging, especially second half of the year. We will focus especially on North America, Australia and Africa markets.
We will start the year from a lower level and expect that we will gradually improve on the down to haul business as well. Another focus area for us is the supply chain management and improving there. We saw last year that we had, let’s say, some fluctuation or stability in the supply chain. On the other hand, we had a lot of airfreight resulting from poor availability of some products. On the other hand, on some products, we had too much inventory.
So, now we will implement an end to end planning process that we target to manage better the fluctuations in the supply chain and thus also improving the profitability as well as having more stable cash flow from operations. Product competitiveness is always a priority for us. We will take kind of a market driven approach there, understand the market price levels and understand where we need to be in order to do profitable business in all of our target market areas in that we want to address. So take a market driven approach to reach the targeted gross margin levels in all of our product applications. Our long term financial targets, just repeating those, is to grow faster than the market and then achieve comparable EBIT of over 10%.
Guidance for 2025 is that we estimate that our net sales will grow and comparable EBIT profitability in euros will improve compared to 2024. We expect that the mining market will remain at the current level and that the construction market still beginning of the year will be low and will start to improve in the second half of the year. There are also some risk uncertainties at this moment in the marketplace related to the tariffs and potential trade wars that are kind of outside of our control and poses some risk to the guidance. All in all, the year will start from a low level, but we estimate estimate that it will improve from towards the second half of the year towards the end of the year. All in all, I want to thank Robert team for the year 2024 and we look to deliver good 2025.
This was the end of the presentation, so we can take some questions now.
Wille Beltane, CFO, Robit: I can see there’s a couple of questions from Aapeli Purusimo at the chat. So, I’ll ask those and, Arata, I’ll leave the answering to you on these ones. How do you see the demand situation geographically?
Artur Hallanen, Group CEO, Robit: Yes, thanks, Arpelli, for the questions. Still,
Wille Beltane, CFO, Robit: if
Artur Hallanen, Group CEO, Robit: you look, let’s say, mining market is more of a global demand picture there and especially gold has been a commodity that has been strong and where actually ROBIT has a relatively high share or in relation to the other commodities. It’s an important commodity for us. Geographically, construction is where we see more geographical fluctuations in the demand picture and there Europe is the weaker area. North America is still showing good demand, also some seasonality there as well and some weakening during the winter season. But all in all, North America is more strong in that area.
Also, Asia, there’s also in Asia many different countries with many different situations, but there are some important markets for us where there’s, let’s say, gradual improvement in the demand situation that we estimate to materialize in 2025. But as earlier said, still early 2025, we expect to to be on the construction side at a low level.
Wille Beltane, CFO, Robit: Okay. So the next question from Aapeli, how have you succeeded in new customer acquisition? And on the other hand, have you seen any changes in the customer decision making?
Artur Hallanen, Group CEO, Robit: Yes. The decision making all in all in quarter four, in large opportunities. We had larger tenders that were open. We saw delays in the decision making and many of the cases might still be open earlier this year. So, clearly, there’s been some postponement on that, which then, on the other hand, impacts also beginning of the year sales for us.
The new customer acquisition, we had some good wins during quarter four, managed to secure, for example, another top hammer underground contract in Australia in quarter four that we will be ramping up. And all in all, it’s been steady wins, but also as we mentioned, there are also some contracts that have come to an end. So we will need to still pick up the pace of winning new customers early this year to deliver the targets we have at least in Turin. Okay. And then the third question was there was a sizable increase in inventories to secure customer deliveries.
Are you satisfied with the current inventory level? Yes. One improvement area clearly for us this year, as I mentioned, is this supply chain management, supply chain planning. We’ve had too much fluctuation there. We were a bit too low on inventory levels earlier in the year to secure ramp up of some new contracts.
But on the other hand, we did end the year with slightly too high inventory levels. So if you think where our inventories are today, they could be on a slightly lower level. Our availability situation has improved naturally, but the but the inventories are not at an optimal level at the at the end of the year situation. So that is something we will work on during this year.
Wille Beltane, CFO, Robit: Okay. No more questions in the chat. Is there anyone online? I think not.
Artur Hallanen, Group CEO, Robit: Okay. Alright. Thank you everyone for joining and and this ends our broadcast from here in Lempa. Thank you.
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