This was probably the decision to separate financing for the investment company period. Now the group operates as a single entity regarding financing: Parent & KH Koneet & NRG. It seems that the strategy is progressing as promised.
In connection with this, I would hope that @Thomas_Westerholm, in connection with company analyses or similar, could challenge KH Group regarding its strategy for NRG. Alternatives/steps could include, for example:
KH Group acquires Teollisuussijoitus Oy’s (Finnish Industry Investment Ltd.) stake in NRG?
NRG expands its offering beyond assembly and maintenance to new industry segments, such as domestic/Nordic companies in the fire safety sector and/or companies in the extinguishing system sector?
So, would NRG have the opportunity to acquire suppliers of niche products used in assembly? Or companies operating in fire safety and equipment maintenance?
Calle and Tommi answered my questions in the Q4 webcast very comprehensively in the chat. Thank you for that. Perhaps in the next webcast, I will have eager inquiries related to this area as well
And now that I’ve gotten into the enthusiastic spirit of giving feedback , I would hope that the CEO of KH Group would participate in investment events, for example, and explain what KH Group is. The company has been quite in the dark after many CEO changes.
Turku’s traditional machinery days were held on March 27-28. Of course, KH Group’s office in Lieto was also present. Here’s something for those who want to see what’s being done in KH Group’s machinery sales field. With humor, of course. Featuring, for example, presentations by KH salespeople, and news about Kobelco service.
So did KH sell Indoor for one euro? What is Sukari rambling about in AlfaTv/Ukkola’s latest YouTube interview, saying he paid millions for Asko and Sotka?
Well, I hope someone didn’t skim off a good amount of money. As a shareholder, it just made me wonder.
Here are Thomas’s preview comments as KH Group releases its Q1 results on Tuesday, May 5th.
We forecast that the company’s revenue and adjusted operating profit grew from the comparison period, driven by both subsidiaries. Although the first quarter is seasonally quiet for KH-Koneet, we expect the report to provide important indications regarding the continuity of the recovery in the Nordic machinery trade and the sustainability of Nordic Rescue Group’s (NRG) strong earnings performance. On the result day, our focus will be on management’s comments regarding the business environment and outlook, following the increased uncertainty during the start of the year.
OP has also provided (on April 28) preview comments ahead of KH Group’s Q1 results:
- The target price was slightly raised to EUR 0.62 (previously 0.60) and the “add” rating was maintained.
- Driven by KH Koneet, the Group is believed to return to the path of earnings growth this year. The company’s outlook as a whole is positive, and as the operating environment strengthens, there is plenty of growth potential.
- In terms of figures, OP forecasts revenue to improve by 3.8% from the comparison period to EUR 43.4 million. Both business operations are expected to have grown. Comparable operating profit is expected to be EUR 0.4 million.
So, slightly more modest Q1 figures are acceptable for OP compared to what Inderes is forecasting. An interesting Tuesday, May 5, is coming up. The Annual General Meeting is also on the same day.
In light of the statistics, the figures look terrible… of course, they don’t tell the whole truth, but it’s been quite difficult again… we’ll be wiser on Tuesday.
Ugly numbers indeed in terms of profitability. Thomas expected a comparable operating profit of €0.9m, while we got -€1.1m. At least the outlook remains unchanged and better things are promised for the future.
Here are Thomas’s quick comments on KH’s Q1 result
KH Group’s profitability fell clearly short of our expectations in a seasonally quiet Q1, even though revenue continued to grow. Profitability weakened from the comparison period, which the company explained was due to, among other things, unfavorable snow conditions for KH-Koneet and a delayed delivery by Nordic Rescue Group (NRG). However, the company reiterated its full-year guidance for earnings growth, as according to management, the outlook for KH-Koneet’s second quarter is quite positive. In our assessment, the earnings disappointment in the early part of the year seems to be partly due to timing, although it naturally leaves more work to be done for the remainder of the year.
Thomas and Calle discussed KH Group’s momentum and future
Topics:
00:00 Introduction
00:10 Q1 Summary
03:11 Impact of the Middle East situation on the customer base
04:45 KH-Koneet development is two-sided
06:27 KH-Koneet inventory situation
07:33 Deliveries from principals
08:05 Credit losses
08:41 NRG development
10:43 NRG development by country
12:44 NRG seasonality
13:31 Production capacity
14:27 Guidance reiterated
17:33 KH Group’s CFO is changing
What a quarter again. After a very strong Q4, a weaker Q1.
All_in_aina was right, and it is particularly difficult in the Finnish machinery trade. Although KH-Koneet’s 12-month rolling revenue turned to growth after Q1’24 and the machinery market grew in terms of units in both Finland and Sweden last year, the company’s profitability is still looking for its bottom in this cycle. This is naturally due to growth in Sweden and front-loaded growth investments, the benefits of which cannot yet be fully realized due to the weak market. However, profitability (and return on capital!) must follow suit in the long run.
It’s hard to improve on the previous year’s Q4, so strong earnings growth is now needed in Q2-Q3 to avoid a profit warning (negari). The company seemed confident regarding Q2, but visibility for KH-Koneet into Q3 is already significantly weaker. It remains to be seen how much impact the inflationary pressure caused by the war in Iran will have on the construction sector this year. In the case of NRG, the strong order book extends into next year, so predicting it is easier.
Thomas has written a company report on KH Group following the Q1 results.
KH Group’s Q1 profitability was at a weak level, partly due to timing factors. However, management’s comments regarding the outlook and Q2 were positive. Despite the weak start to the year, the company reiterated its guidance pointing towards an improving result. Achieving this requires a strong performance in the coming quarters, although inflationary pressures and elevated interest rates increased by the war in Iran add uncertainty to the business environment. We reiterate our reduce recommendation and adjust our target price to EUR 0.55 (prev. EUR 0.60).
Quote from the report:
The balance sheet has strengthened following the Indoor exit, but there is still room for improvement
KH Group’s balance sheet has strengthened following the Indoor Group exit carried out last year. At the end of Q1, the group’s net debt stood at EUR 75.7 million (Q1’25: EUR 142.5 million), which is 4.1x the previous 12-month EBITDA. The balance sheet position is therefore leveraged, but NRG is steadily paying down its debt, and KH-Koneet can deleverage quickly by adjusting its inventory levels. In our view, the balance sheet does not leave significant room for maneuver for M&A. This is a constraint, considering the challenges in the machinery trade and the potentially attractive restructuring opportunities they may open up.
Well.. I watched the interview .. inventory was €60m and leasing liabilities were €40m if I understood correctly. This is okay, but then came the comment “we have verified the value from several parties.”
This is a red flag … a company should know the fair value themselves.. if they’ve had to seek assessments from elsewhere for that view.. then I see a very high risk of a write-down..
likely gone through this because of refinancing.. on paper the value can be anything, but if everything had to be sold right here and now, I guess that 25-30% is likely what you’d actually get in cash..
In principle, those others have no expertise to evaluate it…
There are new units at purchase price, which is clear… but the trade-ins… A salesperson might think they’ll get €70k for this and take the machine in for €60k.
The machine might sit in inventory for a couple of years until a write-down, and then it’s sold at the actual market price, say €45k, which is what it actually sells for.
In this scenario, a 15k profit was first made on paper… until it wasn’t. I follow used machinery quite actively; I don’t know for sure what price they are booked at, but the asking prices are high (pitkänä) if a used one costs the same as a new one..
Juha Karttunen, Chairman of the Board of the listed company KH Group, has received a suspended prison sentence for aggravated drunk driving and endangering traffic safety. The district court sentenced Karttunen to 60 days of suspended imprisonment and supplementary fines totaling 18,550 euros.
According to the charges, Karttunen lost control of his vehicle while intoxicated and veered into a ditch on the right side of the road. The right side of the car was damaged.
Following the drive, Karttunen’s blood alcohol content was measured at 1.66 per mille.
Not exactly the best publicity for a company that sells various heavy machinery and rescue equipment.
Over the past few years, one has certainly had to ponder whether the company’s board has exercised the best possible judgment when making various decisions, but I certainly didn’t see this coming.
This hasn’t exactly increased confidence in the management’s sense of judgment.
, I would hope that the CEO of KH Group would participate in investment events, for example, and explain what KH Group is. The company has been quite in the dark after many CEO changes.
