Systemair AB Q2 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Carl Ragnerstam - Nordea Markets, Research Division - Analyst : It's Carl here from Nordea. I have a few questions. Firstly, we saw that the Nordic region turned into quite significant negative organic growth during the quarter at least in a historical context, I would say. So my question is, if you could give us some more color on the development in the Nordics, I mean,should we see this as an exceptionally high negative organic growth due to sort of lumpiness? Or is this quite a representative level for the underlying market development that you are currently experiencing?

Question: Carl Ragnerstam - Nordea Markets, Research Division - Analyst : Okay. Perfect. And in the quarter, would you say that Norway performed worse than Sweden in the quarter, you might have said it before, just given it's one of your most profitable markets, I guess? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2020 / 8:00AM, SYSR.ST - Q2 2021 Systemair AB Earnings Call

Question: Carl Ragnerstam - Nordea Markets, Research Division - Analyst : Okay. Perfect. And on the margin side, as you said, the gross margin held up quite well and, in fact, expanded year-over-year despite the negative organic growth. But on the other hand, you only took down SEK 25 million worth of SG&A year-over-year in the quarter. Yes, I mean did you see that you could do more on the SG&A side? Or did you expect the market to come back and then, as such, that you see it's not necessary to take out costs? Or how do you view that?

Question: Carl Ragnerstam - Nordea Markets, Research Division - Analyst : Okay. Perfect. And I know it's a fairly frequently asked question, but I would do it anyway. I mean could you please update us on the development within Airwell and Menerga during the quarter? I mean how much did they impact the margin, if you could elaborate on the sort of underlying margin development if you exclude them in the quarter? And also given the pandemic with sort of higher degree of uncertainty, would you consider to implement more strict cost-cutting programs or similar measures within these units? Or how do you view on that?

Question: Carl Ragnerstam - Nordea Markets, Research Division - Analyst : Okay. So given a high utilization rate or the production in the coming 24 to 30 weeks, I mean should we also expect sort of a better profitability for the group as well then given that? Or...

Question: Carl Ragnerstam - Nordea Markets, Research Division - Analyst : Okay. So it sounds like you have...

Question: Carl Ragnerstam - Nordea Markets, Research Division - Analyst : Perfect. Okay. That's all for me.

Question: Douglas Lindahl - Kepler Cheuvreux, Research Division - Analyst : Just following up on that Menerga situation, I'll also say that you had softening, that's the second quarter in a row. I guess it's continually for the same reasons, meaning social distance needs to be kept at high levels. But with regards to your high order backlog, does that, in that context, mean that you would really -- ideally, right now, would like to have a lower order backlog really because you need to employ so many people in order to deliver on these orders in Menerga specifically and if you'll continue with that rate. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2020 / 8:00AM, SYSR.ST - Q2 2021 Systemair AB Earnings Call

Question: Douglas Lindahl - Kepler Cheuvreux, Research Division - Analyst : Okay. And I guess you gave a bit of color on this, and it can also be seen in your sequential organic trend. But with regards to demand in the quarter,

Question: Douglas Lindahl - Kepler Cheuvreux, Research Division - Analyst : Okay. And switching topics on M&A, I guess it's a difficult year to do acquisitions as you can't really travel and see these companies. But looking into next year, do you expect that M&A has a potential to pick up? What's your view there, please?

Question: Douglas Lindahl - Kepler Cheuvreux, Research Division - Analyst : And just following up on M&A, if I could, where or what would an ideal M&A opportunity would be? Would it be geographic exposure or from a technological standpoint that you would be looking into M&A? Or how do you sort of tackle that right now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2020 / 8:00AM, SYSR.ST - Q2 2021 Systemair AB Earnings Call

Question: Douglas Lindahl - Kepler Cheuvreux, Research Division - Analyst : Okay. So both. That's it for me.

Question: Marcela Klang - Handelsbanken Capital Markets AB, Research Division - Analyst : At our sustainability trends seminar recently, you mentioned some exciting water cooling solutions within Menerga. Is it these new launches that have caused your luxury problem of too high order backlog? Or is it older products and just generally strong demand?

Question: Marcela Klang - Handelsbanken Capital Markets AB, Research Division - Analyst : Exciting and looks also good for the future. The other interesting launch, Topvex, how is the order situation there because that's more for the renovation way, I suppose?

Question: Marcela Klang - Handelsbanken Capital Markets AB, Research Division - Analyst : And those are for all European markets? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2020 / 8:00AM, SYSR.ST - Q2 2021 Systemair AB Earnings Call

Question: Marcela Klang - Handelsbanken Capital Markets AB, Research Division - Analyst : And then the Turkish hospital project, have they been booked this quarter? And what was the positive effect from those?

Question: Marcela Klang - Handelsbanken Capital Markets AB, Research Division - Analyst : And can you talk about the net effect of this -- how it affected your second quarter in krona?

Question: Marcela Klang - Handelsbanken Capital Markets AB, Research Division - Analyst : But it's starting to show?

Question: Marcela Klang - Handelsbanken Capital Markets AB, Research Division - Analyst : Yes. And then you mentioned that during the second quarter, demand situation improved towards the end. What can you say about November and starting of December, is it flat or flat but uncertain? Or do you see any trends in demand?

Question: Marcela Klang - Handelsbanken Capital Markets AB, Research Division - Analyst : So the demand looks good, and basically, it's up to them, the restrictions, what happens to the margins and the productivity. And then a final question from me, the goodwill write-down in Brazil, is there a risk for more? And is there any risk -- because you previously wrote down in Italy and France, is there any risk for more goodwill write-downs near term in any region?