Nexam Chemical: Navigating Challenges, Delivering Growth in Q4 2024

Nexam Chemical Holding AB (STU:NC4) wrapped up the fourth quarter of 2024 with a solid performance, demonstrating the company's resilience and strategic progress amidst a challenging market environment. The Swedish specialty chemicals company reported earnings results that highlighted its ability to navigate headwinds and deliver growth, despite softer volumes and reduced production levels among some of its largest customers.

Key highlights from Nexam Chemical's Q4 2024 earnings call include:

1. Improved margins and profitability: Nexam Chemical's gross margin increased to 47% in the fourth quarter, up from 44% in the same period last year. This marked the eighth consecutive quarter of margin improvement, reflecting the company's commitment to cost-saving measures and insourcing efforts implemented during 2023 and early 2024. The operating profit before depreciation (EBITDA) for the quarter was SEK 2,039 million, up from SEK 1,611 million in the fourth quarter of 2023.
2. Stabilized cash flow: Despite a challenging market environment, Nexam Chemical successfully stabilized its cash flow in 2024. Cash flow from operating activities for the full year amounted to SEK 7,426,000, compared to -352,000 in 2023. This improvement in cash flow is another indication of the positive impact of the company's cost-saving measures and strategic initiatives.
3. Growth in key areas: Nexam Chemical experienced growth driven by strong customer retention and new business wins across all its key areas. In the fourth quarter, sales increased by 4% compared to the corresponding quarter in 2023, despite a weakening market. The company's focus on high-temperature polymers, lightweighting, aesthetic applications, and plastic recycling has contributed to its growth trajectory.
4. Strategic progress and patent portfolio: Nexam Chemical made significant strides in its strategic progress, obtaining a European patent in recycled polypropylene (PP). This patent can help drive growth in the plastic recycling market, as the company continues to expand its presence in under-owned sectors like energy. Additionally, Nexam Chemical's patent strategy proactively applies for patents to protect its technology and products, providing a competitive advantage and driving long-term growth.



Nexam Chemical's positive outlook for 2024 and 2025 is driven by several specific factors, including improved profitability and margin trends, growth in key areas, expansion into new focus areas, strategic progress, and a strong patent portfolio. Investors can capitalize on these trends by allocating a portion of their portfolio to companies with strong growth potential, while maintaining a balanced portfolio with value stocks that offer stable earnings and dividends.

In conclusion, Nexam Chemical's Q4 2024 earnings call highlights the company's ability to navigate challenges and deliver growth, despite a weakening market. The company's focus on cost-saving measures, insourcing efforts, and strategic initiatives has contributed to its improved profitability, stabilized cash flow, and growth in key areas. As Nexam Chemical continues to expand its presence in under-owned sectors like energy, investors can expect the company to maintain its positive outlook for 2024 and 2025.