• Retail Sales Growth: Increased by 14% in the second half of 2024.
• Financial Debt: Reduced to EUR474 million, a 44% drop from previous levels.
• Liquidity: EUR1 billion at the end of 2024.
• Operating Profit: Positive at EUR2 million, impacted by transformation costs.
• Revenue: EUR3.5 billion, down 12% excluding divested activities.
• Net Financial Debt: EUR474 million, significantly reduced by EUR369 million.
• Free Cash Flow: Positive at EUR79 million.
• Recurring Operating Profit: EUR120 million loss for 2024 under new Nexity and IFRS.
• WCR Reduction: Down EUR301 million to EUR1.039 billion.
• Backlog: EUR16.6 billion, equivalent to 5.6 years of business.
• Net Capital Gain from Divestments: EUR435 million.
• Gross Financial Debt: EUR1.147 billion, down by 31%.
• Carbon Reduction Target: 42% drop by 2030, ahead of regulatory requirements.

• Warning! GuruFocus has detected 7 Warning Signs with FRA:NQ9.

Release Date: February 27, 2025

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

Positive Points

• Nexity SA (FRA:NQ9) successfully executed its transformation plan, reducing financial debt by 44% to EUR474 million, ahead of its target.
• Retail sales showed strong performance with a 14% growth in the second half of 2024, driven by first-time buyers and effective marketing campaigns.
• The company secured its medium-term banking funding until February 2028, ensuring liquidity and financial stability.
• Nexity SA's liquidity stands at EUR1 billion, providing confidence for future operations and investments.
• The company has a robust pipeline with a developable volume of 61,000 homes, positioning it as a leader in the sector.

Negative Points

• Total reservations were down 8% in 2024, reflecting challenges in the market despite a recovery in retail sales.
• Operating profit was only EUR2 million, heavily impacted by transformation costs of EUR218 million.
• Recurring operating profit showed a loss of EUR120 million, indicating ongoing financial challenges.
• The office space segment is experiencing a low point in the cycle, with a backlog reflecting reduced market activity.
• The company faces potential delays in planning permissions due to upcoming local elections in France, which could impact future projects.

Q & A Highlights

Q: Can you provide an update on the commercial offering and potential price drops? A: Jean-Claude Bassien, Deputy CEO, explained that the price drops were initially estimated between 6% and 8%, but the actual impact was less severe due to a drop in interest rates, which improved purchasing power. The company has adjusted prices dynamically based on market conditions and does not foresee further significant price cuts.

Q: Why were adaptation costs higher in the second half of 2024, and what should we expect for 2025? A: Pierre Henry, Secretary General and Head of Finance, noted that adaptation costs were not linear due to adjustments in pricing and work costs. The bulk of these costs were booked in 2024, and fewer non-current termination costs are expected in 2025 as the transformation plan concludes.

Q: What is the rationale behind setting a maximum net debt of EUR380 million for 2025? A: Pierre Henry explained that the EUR380 million figure provides leeway for potential investments and liquidity management. The company aims to maintain flexibility to invest in profitable growth while continuing to deleverage.

Q: How does Nexity plan to manage its debt and liquidity in 2025? A: Nexity plans to use existing cash and undrawn revolving credit facilities (RCF) to manage debt maturities. The company aims to continue deleveraging and optimizing its financial structure to reduce financial expenses.

Q: What is the outlook for recurring operating profit in 2025? A: Veronique Bedague, CEO, stated that the focus is on achieving positive recurring operating profit, driven by recalibrated margins and cost savings. The company expects a gradual improvement, with significant gains anticipated in 2026 and beyond.

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