Organic revenue growth and continued margin improvement

Nilfisk, a leading global provider of professional cleaning products and services, reported its Q2 2024 results today with organic growth and continued gross margin improvement.

Revenue was 278.4 mEUR, up 1.9 mEUR from Q2 2023. Organic growth for Q2 2024 was 2.4%. The EBITDA margin before special items (bsi) was 14.1%.

Jon Sintorn, CEO of Nilfisk comments on the Q2 results:

“Nilfisk delivered a solid margin improvement for Q2 2024. A strong peak season in the Consumer Business and a strong performance in EMEA. Americas saw muted demand. While in APAC there was falling demand due to market conditions. The Service Business continued to grow, driven by the solid performance in EMEA and increased attachment rates.”

The ongoing gross margin improvement continued into Q2 2024 at 42.2%, up 1.8 percentage point from the same period in the prior year. This was driven by a favorable product mix, volume growth, and diligent price and discount management.

Overhead costs increased in Q2 compared to the prior year, due to investments in product launches, including a significant presence at Interclean in Amsterdam, the largest professional cleaning tradeshow in the world. Net debt continued to decrease and was 263.3 mEUR, and the gearing of 1.9x remained in Nilfisk’s target range. Free cash flow decreased by 31.7 mEUR in Q2 2024 to 8.4 mEUR from Q2 2023 due to building working capital and increased investments into the business. Special items in the quarter were 0.8 mEUR.

Q2 2024 financial highlights
Organic growth at 2.4% in Q2 2024, compared to 4.3% in Q2 2023
The gross margin reached 42.2% in Q2 2024, up from 40.4% in Q2 2023
Overhead costs amounted to 94.2 mEUR in Q2 2024, up from 88.7 mEUR in Q2 2023
The overhead cost ratio increased to 33.8% in Q2 2024 from 32.1% in Q2 2023
The EBITDA margin bsi amounted to 14.1% in Q2 2024, compared with 13.7% in Q2 2023
Free cash flow was 8.4 mEUR in Q2 2024, down by 31.7 mEUR from 40.1 mEUR in Q2 2023
Net interest-bearing debt was 263.3 mEUR at the end of Q2 2024, a reduction of 28.2 mEUR from end-Q2 2023
Gearing at the end of Q2 2024 was 1.9x, down from 2.2x a year ago
CAPEX ratio was 4.1% at the end of Q2 2024, up from 2.1% in Q2 2023
Special items amounted to 0.8 mEUR in Q2 2024, down from 4.0 mEUR in Q2 2023

Outlook for 2024
We confirm the full-year outlook as communicated in the Annual Report 2023.

The range for organic revenue growth is expected to be 3% to 6%, mainly supported by demand, increased output, a solid order book end-2023, and minor effects of pricing actions. The range for the EBITDA margin before special items is expected to be 13% to 15%. The EBITDA margin is expected to be supported by increased revenue, gross margin expansion, and the structural efficiency improvements realized in 2023.