Getinge AB (GNGBF) Q3 2024 Earnings Call Highlights: Navigating Growth Amidst Challenges

GuruFocus News
4 min read

In This Article:

  • Order Intake Growth: Increased by 10%, with 7.4% organic growth.

  • Net Sales Growth: Increased by 3.5%, with 0.2% organic growth.

  • Adjusted Gross Margin: Decreased by 2.8 percentage points.

  • Adjusted EBITA: SEK903 million, margin of 11.5%.

  • Free Cash Flow: Approximately SEK0.4 billion.

  • Net Debt: SEK11.3 billion, leverage of 2x EBITA.

  • Cash Position: Approximately SEK2.2 billion.

  • Organic Net Sales Growth Guidance: 2% to 5% for 2024.

  • Acquisitions Contribution to Growth: Expected 3% to 5% additional growth.

Release Date: October 18, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Getinge AB (GNGBF) reported a strong global market momentum with a 10% increase in order intake, including 7.4% organic growth.

  • The company saw improved adjusted gross margins in life science and surgical workflows, indicating operational efficiency in these segments.

  • Recent acquisitions, such as Paragonix Technologies and Intact Solution, are expected to contribute significantly to growth and align well with Getinge's existing product portfolio.

  • The company's server ventilators received cybersecurity clearance from the US Defense Health Agency, enhancing their marketability within the US Department of Defense.

  • Getinge AB (GNGBF) maintains a solid financial position with a leverage of 2x EBITA, despite recent acquisitions, indicating strong financial management.

Negative Points

  • Net sales growth was modest at 3.5%, with organic growth flat compared to the previous year, indicating challenges in driving sales.

  • The adjusted gross margin for the group decreased due to negative mix, inflation, and under-absorption, impacting overall profitability.

  • Temporary supply chain challenges negatively affected net sales, particularly in acute care therapies, highlighting operational vulnerabilities.

  • The CE certificate for the Cardiosave balloon pump remains suspended, potentially affecting future sales and market confidence.

  • The company faces elevated quality-related costs, trending above SEK0.5 billion for the year, which could pressure margins.

Q & A Highlights

Q: In the report, you're seeing consumables down in balloon pumps and hardware down in ECMO. Is there an aspect of market share losses in these areas, or is it just purely comps? A: (Mattias Perjos, CEO) It's definitely a comps effect. We have no information on any significant market share losses. We expect customers might find a second source for ECMO hardware, but nothing material in the quarter.

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