Ladies and gentlemen, welcome to the GARO Interim Report, January-September 2024 Conference Call. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Patrik Andersson, CEO. Please go ahead, sir.
Thank you, and welcome everyone to the presentation of GARO' s report for Q3 2024. My name is Patrik Andersson, and I'm the CEO of GARO. With me today, I have Helena Claesson, our CFO, to present the financial performance. Next slide, please. Let's start with an introduction. GARO is a company founded in 1939 that develops, manufactures, and sells innovative products and systems for electrical installation under its own brand in the European market. Developing products that are at the forefront has always been a significant aspect of our success. Our focus is on developing user-friendly and safe products with a modern design and long service life. Next slide, please. We have two business areas: GARO E-Mobility, which consists of the e-mobility product area, and GARO Electrification, which includes electrical distribution products, project business, and temporary power.
As you can see on the chart, we have operations in several countries on the European market to meet the demand and to serve the customer in the best way. We also sell in other European countries where we do not have our own subsidiaries. We have production facilities in Gnosjö and Hillerstorp in Sweden and in Szczecin in Poland, where we have invested the last years to meet the long-term demand for both GARO Electrification and e-mobility, and we are approximately 400 employees in the group. Next slide, please. In the e-mobility product area, we develop and market all types of chargers for rechargeable vehicles. We have products and turnkey solutions for destination charging for various locations, including at home, in public, at workplaces, and along the highway.
To make the e-mobility business even more complete, we also offer a service agreement to assist our customers in a good way. We believe it's important to make life easier for the user, to make it possible to charge in locations where people live and work. This area accounted for 28% of the total sales. Next slide, please. The largest product area in the GARO Electrification business area is electrical distribution products, which consist of approximately 3,500 products as well as turnkey solutions for the electrical installation markets. Products used daily in different applications such as for new buildings, renovations, marina, camping sites, industry, and e-mobility solutions. This product area contributed for 46% of the total sales. Our product business area provides complete and customized solutions for all types of power supplies for apartments, single-family homes, industry, and e-mobility solutions and accounted for 23% of the sales.
The temporary power product area, which has a product portfolio consisting of temporary electricity, lighting, heating, and charging products used on construction sites and events, accounted for 3% of the sales. These four product areas make GARO's offer unique and easy for the customer. An example is when the customer requires charging solutions with different charges and load balancing from e-mobility, and also requires power supply from the project business, as well as safety installation products from electrical distribution products. This makes it easy, simple, and safe for the customer and end user. Now, over to Helena for some financial updates. Next slide, please.
Thank you, Patrik. I will start by looking at the financial summary for the third quarter. Net sales amounted to SEK 270 million, a decrease of 11% compared with the same quarter last year. Sales within GARO Electrification decreased by 4%, while GARO E-Mobility posted a decrease in sales of 26%. The markets for both business areas continue to remain cautious, where the lower sales in the quarter were mainly due to the cool market within e-mobility. The adjusted operating profit amounted to SEK 0.4 million compared with SEK 5 million for the same quarter last year. During this quarter, we have made a write-down of SEK 48 million for slow-moving inventory. The write-down was mainly attributable to the business area GARO E-Mobility and pertains to previous generation charging boxes and development costs for an older outgoing DC range.
Quarter on quarter, however, adjusted EBIT for the third quarter of 2024 improved with approximately SEK five million. Operating profit for the quarter came in at negative SEK 48 million. Now, over to you, Patrik, for some operational highlights and other news. Next slide, please.
Thank you, Helena. And before the operational highlights, we also announced this morning through a press release that we have recruited Jonas Klarén as the new President and CEO for the GARO Group. Most recent, the position was CEO of Infratek Sweden AB , which is a part of the French Vinci Group listed on the Paris Stock Exchange. Jonas has also extensive experience from the energy and power supply industry and successfully developed Infratek within VINCI Energies. He has also worked at ABB earlier in his career. Jonas will assume the position as President and CEO as soon as possible, but in the six months at latest. Next slide, please. And operational highlights, and let's start with the GARO E-Mobility.
Overall, sales in the field of new technology encompasses products and services, for example, solar, batteries, e-mobility, where there is a considerable need in the Nordic region and in the European transition to the new technology. The prevailing macroeconomic situation has led to a considerably slower transition than expected, leading to us taking significant actions, which I will return to later in this presentation. However, we have chosen to focus on the business available in the market. Through our sales activities and providing customers with the top-level support that they require, we'll create the conditions for our customers and GARO to generate business. Demand for public charging points drives sales in the business area. GARO Entity Pro accounted for half of the sales noted in the business area during the quarter, which clearly indicates that GARO's new platform is appreciated in the markets.
In order to strengthen our offering for the home market, GARO launched a new version of Entity, GARO Entity Home, which is a fitting complement to our previous version of Entity Pro and Compact. The wallbox is specially developed for the home market and for the connected homes and customized functionality. It's cost-efficient charging, which we have compromised on safety and has been well received in the markets. In addition, GARO also launched a payment terminal, creating a complete range for the customers' needs to comply with the requirements of AFIR regulations. GARO's efforts to achieve an Eichrecht approval, GARO Entity's platform, as well as certification of the production facility in Poland to meet the demand for Eichrecht requirements, are continuing according to plan and is a part of the establishment of the German markets. We go further on with GARO Electrification.
The construction of new housing in the Nordic region has declined considerably, and new production of single-family homes and apartments is expected to be weak throughout 2024. Positive signs such as lower inflation and falling interest rates are expected to lead to a gradually recovering housing construction during 2025, which means that we now assess that the bottom has been reached and that GARO's housing-related products. In Ireland, which is an important market for GARO, both the market and GARO performed strongly during the quarter. This was a result of the success of the market initiatives and expanded product range. We are noting continuing healthy demand in the public sector, commercial properties, industry, and infrastructure, combined with the investment for renovation and energy enhancements, and the market connected to the electrification of society is also assessed to be stable.
Sales has now stabilized, and GARO noted several positive signs in discussions with customers that strengthen our assessment that the market has bottomed out. We expect the market situation to gradually improve moving forward. Growth and profitability. In September, we announced that GARO would expand its action program in the GARO E-Mobility business with annual savings of approximately SEK 40 million. In October, we completed the trade union negotiation, reducing the number of employees in the group by 28, which primarily involved white-collar employees. The savings from personnel expenses achieved full effect in the first quarter of 2025. In addition to the organizational changes, we also implemented a number of other cost-saving measures, largely involving the considerable reduction of purchased consulting services. During the quarter, GARO has incurred SEK 48.4 million non-recurring costs primarily related to GARO E-Mobility business area.
This write-down mainly pertains to components and inventories for earlier generations of wallbox and outgoing DC range. Helena will return to this for more aspects of the business area. The three product areas, including electrification together with e-mobility, create a major synergy effect and provide a stable foundation for GARO operation, which is particularly important during times of sluggish demand in some product areas. And now, over to Helena. Next slide, please.
Yes, and I will continue with the two business areas separately, starting with GARO E-Mobility. Net sales amounted to SEK 70 million for the quarter, giving us, as I said before, a negative growth of 26% compared with last year. The current market situation with macroeconomic uncertainty continues to affect purchasing behavior and investments, particularly in the Swedish market. Our established sales office in Germany has had a challenging quarter. The market in Germany is slow, and sales of electric cars have experienced a dramatic dip. Nevertheless, GARO continues to work for an Eichrecht approval for the GARO Entity products, as well as the certification of the production facility in Poland for the production in accordance with Eichrecht standards. The adjusted operating profit for the quarter came in at negative SEK 20 million compared with negative 15% the same quarter last year.
During the quarter, GARO has made a write-down of SEK 40 million for this business area regarding inventory for previous generation charging boxes and development costs for an older outgoing DC range. Besides this, a combination of low sales, a weaker gross margin, production redundancies, and an organization built for growth explains the negative adjusted results. Next slide, please. And now, looking into the GARO Electrification business area, net sales amounted to SEK 200 million for the quarter, giving us a negative growth of 4% compared with SEK 210 million for last year. Additionally, we usually have a lower turnover in the third quarter within this business area, where the holiday season with less working days affects sales volumes. This was also the case for this year.
Net sales for new construction of single houses and apartments remain at a low production rate in Sweden and in the rest of the Nordic region due to the continued weak economy influenced by macroeconomic factors. However, it is still our opinion that the market has bottomed out. Positive signs, such as falling interest rate levels combined with political financial incentives, are expected to lead to a rebound in housing construction in 2025. In Ireland, which is an important market for GARO, both the market and GARO continue to develop strongly also during this quarter. The development is partly explained by a broadened product range that can meet a price-sensitive market, but also creates the opportunity to strengthen margins. Adjusted operating profit amounts to SEK 20 million compared with SEK 21 million in the year-earlier quarter, giving us an adjusted operating margin of 10 million.
During the quarter, GARO made a write-down within the business area of SEK 9 million for slow-moving inventory. To summarize, one could say that GARO Electrification has had yet another stable quarter, while GARO E-Mobility continues to face challenging market conditions. Next slide, please. Then, from a cash flow and balance sheet point of view, as a result of seasonal variation, cash flow within GARO is typically weaker during the third quarter, followed by strong cash flow during the fourth quarter and the first quarter of the next following year. Cash flow from operating activities before changing working capital amounted to SEK 12 million. Cash flow from operating activities after changes in working capital amounted to negative SEK 20 million. Tied-up capital in inventories decreased net by SEK 7 million. Furthermore, we have a deposit with a supplier for materials ordered but not yet called off.
At the end of the period, the deposit amounted to SEK 45 million, where no additional deposits have been made in this quarter. Our net debt position amounted to SEK 319 million compared with SEK 293 million in the year-earlier quarter. We had an equity-asset ratio of 47.3% and available liquidity, including overdraft facilities, of SEK 60 million. And now, back to you, Patrik. Next slide, please.
We go further on with the outlook. In the short term, the recovery of the e-mobility markets is proceeding slower than expected. Therefore, we have completed an additional action program and, at the same time, are fully focused on the available business in the markets. In the long term, we anticipate a continued good trend with further expansion of charging infrastructure and the market for charging infrastructure growing structurally in line with the number of plug-in vehicles. GARO has a good position in the market with capacity, knowledge, and a strong product range for destination charging in the European markets. The construction of new housing in the Nordic region has declined considerably, and a new production of single-family homes and apartments is expected to be weak throughout 2024.
The initiated interest rate cuts most recently, now in November, by 0.5%, combined with political initiatives, will increase purchasing power in 2025, which is expected to positively impact housing construction and investment willingness in Sweden. GARO has noted several positive signs in discussions with customers that strengthen our assessment that the market has bottomed out. We expect the market situation to gradually improve moving forward. The demand for other commercial and public construction, combined with renovation requirements and energy efficiency, remains favorable. We believe that the market will gradually improve for both business areas and that the outlook for 2025 is more positive. GARO has both the capacity and the product portfolio to provide the market with the right product and service. And we are also glad that we have finalized our recruitment of a new President and CEO and welcome Jonas to the GARO team. Next slide, please.
Thank you, everyone, for listening, and we are now ready for questions.
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. Once again, to register for a question, you may press star and one. Our first question comes from Anton Lund with Kepler Cheuvreux. Please go ahead.
Morning, Patrik. Helena, can you hear me?
Yes, we can hear you. Morning.
Morning, morning. We have previously discussed inventory levels among your resellers. Can you please explain what the situation is like now?
The situation with the resellers, as we spoke the last time, is on low levels, so to say. So with the improved market situation, they will start to increase the level, which is positive for GARO. So it's still on a low level.
Good. Is that for both e-mobility and electrification, or?
Yes, correct.
Good. And then, I mean, we're now halfway into Q4, and you mentioned an uptick in inquiries. What can you say about the quarter so far for e-mobility?
For the Q4?
Yeah.
We are not communicating any numbers for the Q4, so sorry,F I can't give the indication for that.
That's fine. And then you mentioned that the GARO Entity Home product has been appreciated by the market. How much has it generated in sales in Q3?
In Q3, it's not much sales because we launched it during Q3, and we have discussed with all the retailers and installers. Therefore, we have got good information from the market, and hopefully, we now can see during Q4, Q1, and Q2 an increased sales with the Entity Home, so we have not so much sales in Q3.
Got it. And then one last question from my side. Despite the inventory write-down, you're still at quite elevated levels. How do you view the risk for additional write-downs going forward?
At this point, we don't foresee any additional risk. We have made a thorough calculation and believe that this is the number, so to say.
All right. Very good. That's all for me. Thanks.
Thank you.
Thank you.
As a reminder, if you wish to register for a question, you may press star and one. It seems like we have no more registrations for questions. So I will hand over back to Patrik Andersson for any closing remarks. Sir.
Thank you, everyone, for listening, and I wish you a great day.