Andritz Earnings Call: Mixed Results with Strong Order Growth

Andritz ((AT:ANDR)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Andritz presented a mixed sentiment, with the company showcasing significant growth in order intake and a robust order backlog. However, these positive aspects were tempered by challenges such as a decline in overall revenue and net income. The company’s successful restructuring efforts and positive developments in the Hydropower segment provided some optimism for the future.

Significant Increase in Order Intake

Andritz reported a substantial 20% year-on-year increase in order intake, reaching €2.3 billion. This growth was driven by notable performances in the Pulp & Paper segment, which saw a 52% increase, and the Hydropower segment, which grew by 14%. This surge in order intake is a promising indicator of future business activity and revenue potential.

Strong Order Backlog

The company’s order backlog increased to €10.2 billion, offering a stable cushion for future sales. This strong backlog is a positive sign, suggesting that Andritz is well-positioned to maintain steady sales in the coming quarters.

Service Revenue Growth

Service revenue reached an all-time high, contributing 44% to total revenue. This growth was particularly notable in the Hydropower and Environment & Energy segments, indicating a successful expansion of service offerings and customer engagement.

Successful Restructuring Efforts

Andritz reported improved project execution and the positive effects of its restructuring efforts, especially in the Metals and Pulp & Paper segments. The company reduced its headcount by about 1,300 people, which is expected to enhance operational efficiency and profitability.

Positive Developments in Hydropower

The Hydropower segment experienced a 23% increase in revenue and a 54% rise in EBITA to €24 million. The EBITA margin also improved from 5.1% to 6.4%, highlighting the segment’s strong performance and contribution to the company’s overall results.

Revenue Decline

Despite positive developments, Andritz faced a 7% decline in overall revenue, falling to €1.8 billion. This decline was primarily attributed to decreases in the Pulp & Paper and Metals segments, which impacted the company’s financial performance.

Net Income Decline

Net income dropped to €89 million, with a margin of 5.1%, down from the previous year. This decline was mainly due to seasonal impacts and the overall reduction in revenue, posing a challenge for the company’s profitability.

Decreased Revenue in Metals

The Metals segment saw a 6% decrease in revenue, affected by muted markets in Europe and North America. This decline underscores the challenges faced in these regions and the need for strategic adjustments.

Challenges in Environment & Energy

Order intake in the Environment & Energy segment declined by 4%, although it remained at a high level of €443 million. This indicates some challenges in maintaining growth momentum, despite the segment’s overall strong performance.

Forward-Looking Guidance

Looking ahead, Andritz maintained its revenue forecast for fiscal year 2025, projecting between €8.0 billion and €8.3 billion, with a comparable EBITA margin ranging from 8.6% to 9%. The company also confirmed its midterm targets for 2027, with projected revenues between €9 billion and €10 billion and a comparable EBITA margin exceeding 9%. This guidance reflects confidence in the company’s strategic direction and market opportunities.

In summary, the Andritz earnings call highlighted a mixed financial picture, with strong order intake and a robust order backlog providing optimism, while challenges such as revenue and net income declines pose hurdles. The company’s restructuring efforts and positive developments in the Hydropower segment offer hope for improved future performance.