H+H International (HH) Update / Briefing Transcript

Summary of H+H International (HH) Update / Briefing July 30, 2025 Company Overview - Company: H+H International (HH) - Industry: Building materials, specifically focusing on the German market Key Points and Arguments 1. Market Conditions in Germany: The German market is experiencing very low volumes, with building starts at historically low levels, leading to a negative impact on the company's results and necessitating a change in outlook [2][5][29] 2. Price and Volume Dynamics: Initial expectations for price increases did not materialize, resulting in lost market share and unsustainable pricing levels, which negatively affected margins [4][12] 3. Reorganization Strategy: The company plans to reorganize its operations in Germany from a nationwide coverage to a regional business setup, creating six profit centers to improve efficiency and reduce costs [7][19][20] 4. Restructuring Costs: The reorganization will incur restructuring costs in the second half of the year, with an expected cash outflow of 80 to 100 million Danish kroner [25] 5. Impairment of Assets: The company will take significant impairments on fixed and intangible assets, including a write-off of 250 million Danish kroner on goodwill due to the loss-making status of the German business [26][27] 6. Financial Performance: The company reported flat organic growth and adjusted its full-year outlook down to around 4% due to price deterioration in the German market [12][29] 7. Regional Market Focus: The new regional setup aims to enhance customer relationships and operational efficiency, allowing the company to better respond to local market demands [20][62] 8. Long-term Market Potential: Despite current challenges, the company views Germany as an important market with potential for future growth, emphasizing the need for market consolidation [60][62] 9. Comparative Performance: Other regions, such as the UK and Poland, are performing better, with the UK showing strong demand and capacity utilization improvements [13][71] Additional Important Content 1. Strategic Review: A strategic review of the business will be conducted to explore options for long-term profitable growth, including potential joint ventures or market consolidation [11][24][62] 2. Cash Flow Neutrality Goal: The immediate goal for the German operations is to achieve cash flow neutrality, with a focus on reducing cash drain from the business [10][50] 3. Market Recovery Expectations: There is skepticism about a quick recovery in the German market, with expectations for slight growth in the coming year not justifying the current operational setup [37][41] 4. Capacity Utilization: The company maintains that while capacity has not changed, there is significant room for improvement in utilization, especially as market conditions improve [66][69] This summary encapsulates the critical insights from the conference call, highlighting the challenges faced by H+H International in the German market and the strategic steps being taken to address these issues.