Cabka N.V.: Navigating Challenging Markets with Resilience and Margin Expansion

As an investor, keeping a pulse on the performance of companies in your portfolio is crucial. Today, we're taking a closer look at Cabka N.V., a company that has demonstrated remarkable resilience and margin expansion in the face of challenging market conditions. Let's dive into the key takeaways from Cabka's 2024 preliminary update and explore how the company has managed to thrive in a difficult environment.



Cabka N.V. is a leading player in the recycling industry, transforming hard-to-recycle plastic waste into innovative Reusable Transport Packaging (RTP) and eco-friendly products. The company's integrated approach, closing the loop from waste to recycling to manufacturing, has positioned it as a leader in its industry and has contributed to its financial stability even in challenging market conditions.

One of the standout aspects of Cabka's 2024 preliminary update is the company's ability to maintain a healthy underlying growth of 4.5%, despite a decline in sales in the US Customized Solutions and Contract Manufacturing segments. This underlying growth is a testament to Cabka's strategic focus on recycling and sustainability, which has enabled it to tap into a growing demand for eco-friendly products and reduce its reliance on virgin materials.



Another notable achievement is Cabka's significant improvement in gross margin, which increased by 3 percentage points (pp) to 51.3% in 2024. This improvement can be attributed to several specific initiatives, such as focusing on internal production capacities, strategic cost management, growth in the Portfolio business, and improving the sales organization. The sustainability of these improvements is supported by the stabilization of the gross margin towards the end of the year and the company's healthy underlying growth.

Cabka's commercial strategy, particularly the strengthening of its sales force, has also contributed to the growth of its US Portfolio business. In 2024, the US Portfolio business grew by 10%, reflecting the success of this strategy. This growth was made possible by the company's concerted efforts to win new customer deals, which started to bear fruits in the second half of the year. The strengthening of the sales force in the region has allowed Cabka to regain market share, as evidenced by the 13.8% increase in sales in the US Portfolio business.

In conclusion, Cabka N.V. has demonstrated remarkable resilience and margin expansion in challenging markets. The company's strategic focus on recycling and sustainability, combined with its effective commercial strategy and operational initiatives, has enabled it to maintain a healthy underlying growth and significantly improve its gross margin. As an investor, it's essential to keep an eye on companies like Cabka that are well-positioned to capitalize on growing demand for eco-friendly products and services. By doing so, you can build a more sustainable and resilient portfolio that is better equipped to navigate challenging market conditions.