Creams, semis and oil
Kaufman & Broad, Novartis, Nokia, Soitec, Carmat, Autoliv, K+S, SKF and OMV
Kaufman & Broad (KOF) Steady in the storm, ready for what’s next
Kaufman & Broad just released their 2024 results, and while the real estate market has been anything but easy, they’ve managed to stay strong. Sales took a hit—no surprise there, given the overall slowdown—but the company still landed pretty close to expectations. Revenue was a little lower than expected, but nothing drastic.
What really stands out is how they kept profitability in check, with their operating margin holding steady at the higher end of expectations. That’s not an easy feat when the market is cooling down.
A big win for them was in housing pre-sales. While the broader real estate sector has been struggling, Kaufman & Broad still managed to increase their pre-sales by a few percentage points. That might not sound like much, but when the rest of the market is down significantly, it’s a clear sign that their projects are still in demand.
The company’s cash reserves more than doubled compared to last year, giving them plenty of breathing room. They’re using some of that for a major project, but even after that, they’re in a solid position. Plus, shareholders got a nice bonus with a slightly higher-than-expected dividend, always a good sign of confidence.
Looking into 2025, the bigger challenge is going to be navigating some upcoming changes in the real estate landscape. The phase-out of a key tax incentive that’s helped boost sales in the past could have an impact, and big institutional investors aren’t exactly rushing in to buy up housing. On top of that, with local elections on the horizon, there’s some uncertainty about whether new building permits will slow down.
Novartis (NOVN) Crushing Q4, and 2025 looks even stronger
Another quarter, another beat on expectations—this pharma giant is on fire.
Their latest Q4 numbers came in ahead of forecasts. The company’s top-selling drugs continue to drive growth, with standout performances across its portfolio. Kisqali—a breast cancer treatment—is seeing huge momentum thanks to its recent launch for early-stage patients.
Operationally, things are looking even better. Core EBIT (earnings before interest and taxes) jumped by 29%, with profit margins expanding thanks to strong operational leverage. The strong performance was driven by a lineup of blockbuster drugs that are continuing to gain traction in the market.
But the real excitement comes from their 2025 guidance, which blew past expectations. The company is forecasting mid-to-high single-digit revenue growth and double-digit earnings growth, which is better than what analysts had penciled in.
There are some challenges ahead, including generic competition for some key drugs, but management has factored that in—and they’re still projecting strong growth.
With the stock trading at a discount compared to its peers, the story remains interesting. Novartis also highlighted an exciting pipeline of clinical trials coming in 2025, including new treatments in oncology and cardiovascular medicine. If those results go well, this company could have even more upside in the near future.
Nokia (NOKIA) A promising 2025, but is it already priced in?
Nokia just reported its Q4 2024 results, and they were better than expected. Sales were driven by strong demand in its Network Infrastructure division and a big revenue boost from its licensing business, Nokia Technologies. The company performed particularly well in North America, helping push its gross margin higher.
Nokia remains optimistic into 2025. The company expects growth in its Network Infrastructure segment, which covers IP, fixed, and optical networks, and sees its Cloud and Network Services division expanding as more telecom operators roll out standalone 5G technology. However, Mobile Networks—the division that works directly with telecom carriers—will likely remain flat. A big reason for that is the loss of a major AT&T contract, which will cut about 4 percent off sales growth.
Nokia is also forecasting EBIT of between €1.9 billion and €2.4 billion, slightly below market expectations, mostly due to a planned €100 million investment in data centers. While that might put some short-term pressure on profits, Nokia is making a calculated bet that demand for AI-driven cloud infrastructure will be a key growth driver in the coming years.
During its latest investor call, Nokia’s management sounded confident about its expansion into data centers and network APIs. The recent acquisition of Infinera will give it a stronger position in optical networking, making it even more competitive in this rapidly growing sector. Meanwhile, the acquisition of Rapid’s technology assets will boost Nokia’s ability to help telecom operators monetize their networks more efficiently.
These moves set Nokia up for long-term success, but the big question remains—how much of this future growth is already priced into the stock? Nokia is trading at a higher valuation than its historical average.
Soitec (SOI) Signs of stabilization ahead of a potential rebound
Soitec will soon release its third-quarter sales figures. After a challenging period of inventory adjustments in its RF-SOI business, the company appears to be on the verge of stabilizing sales in Q3, setting the stage for a return to real growth in Q4—the first in two years. The results could confirm that the worst of the inventory destocking is behind the company and that demand is beginning to normalize.
Soitec’s full-year 2024-2025 guidance, reiterated back in November, pointed to stable sales along with a modest increase in its EBITDA margin. For Soitec, delivering strong results this fiscal year is key, particularly since its largest market—mobile communications—has been performing well.
The smartphone market, which accounts for over 60 percent of Soitec’s revenue, saw better-than-expected volume growth in 2024 and is projected to stay in positive territory in 2025. While the AI-driven smartphone boom hasn’t materialized yet, steady demand should provide a strong foundation for the company’s recovery.
The story remains interesting. The company has successfully diversified its customer base, expanding beyond its traditional reliance on just a handful of buyers. Photonics, a key technology for AI and data centers, remains a promising growth driver. Also, unlike many semiconductor firms, Soitec also has limited exposure to the struggling automotive sector, which accounted for just 17 percent of sales last year.
Carmat (ALCAR) A lifeline for now, but more funding needed
Carmat, the medical technology company specializing in artificial hearts, just completed a capital raise of €9.7 million, selling shares at a 29% discount to the previous closing price.
While this fresh injection of funds will help the company sustain its operations until May 2025, it’s only a temporary solution—Carmat will need another ~€35 million to cover expenses for the next year.
The company’s 2024 sales came in at €7 million, a number that might seem small, but Carmat is aiming to double that in 2025. This is an ambitious target, and success will depend on commercial adoption of its artificial heart technology. The medtech space is notoriously capital-intensive, and while Carmat is making progress, it still has significant funding needs to keep its momentum going.
For investors, the big question is: can Carmat secure enough financing to sustain its growth, or will dilution continue to be a concern?
With the current cash infusion, the company has bought itself some time, but all eyes will be on its ability to raise additional capital and execute on its ambitious sales targets.
Autoliv (ALV) Cautious guidance
Autoliv’s latest earnings report was a mix of solid execution and cautious optimism. The company’s fourth-quarter results landed pretty much where analysts expected, but what really stood out was how well they managed their margins. Even with revenue taking a slight dip, Autoliv pulled off a record-high EBIT margin of 13.3 percent. That’s impressive, especially in an industry still dealing with supply chain hiccups and shifting market dynamics.
For 2025, the company’s outlook came in a little below what the market was hoping for, particularly when it comes to profit margins.
But that doesn’t mean things aren’t moving in the right direction. Autoliv is still expecting LSD% organic growth, which is better than the overall automotive market. A big part of that will come from expanding its market share with Chinese automakers.
Meanwhile, ongoing cost-cutting efforts, including a workforce reduction plan that’s already saved $50 million, should help keep the bottom line strong.
Even after adjusting forecasts slightly downward, Autoliv still looks interesting. The stock is trading at a discount compared to its historical average. With strong financials, smart cost management, and a growing presence in key markets, the company is in a good position for the year ahead.
K+S (SDF) US tariffs could shake up the market
A potential 25% import tariff on Canadian potash is making waves in the agricultural sector, and K+S might end up coming out ahead.
Right now, the US relies on Canada for about 90 percent of its potash, and if that supply suddenly gets hit with a heavy tax, prices could jump. That would mean higher costs for US farmers, potentially making American crops less competitive on the global market.
For K+S, the direct impact of this tariff wouldn’t be huge since only about 4% of its shipments go to the US. But the bigger picture is where things get interesting.
If US farmers struggle with higher fertilizer costs, Brazil—one of the biggest players in the global soybean market—could benefit. That, in turn, could drive up demand for potash in South America, where K+S has a much stronger foothold. Something similar happened in 2018 when trade tensions between the US and China gave Brazilian soybean exports a major boost at the expense of American farmers.
It’s still unclear how exactly the US will roll out this tariff, but if history repeats itself, K+S could be looking at an indirect win.
Higher potash demand from Brazil would be a plus, and with markets already fairly balanced, potash producers might have some pricing power. Bottom line, K+S is in a good spot to benefit from these shifting trade dynamics.
SKF (SKFB) Managing challenges while looking ahead
SKF’s latest earnings report showed that the company is holding up better than expected despite a tough market.
The industrial side of the business did relatively well, especially in North America, where demand picked up in sectors like rail, marine, and off-highway vehicles. On the other hand, the automotive division struggled, with sales slipping by 4 percent, and China remains a weak spot overall.
Profit margins came in slightly below expectations, with an operating margin of 11.1 percent versus the 11.3 percent forecast. That dip was mainly due to seasonal factors and the costs of ramping up production in China and Mexico.
While the industrial division managed to hold steady, the automotive segment had a rougher time, which isn’t too surprising given the current state of the car market. Still, SKF managed to beat expectations on operating earnings, showing that tight cost controls are helping soften the blow from weaker sales.
SKF also decided to stop giving full-year guidance. That might sound concerning, but it’s probably a smart move given how unpredictable things have been. Over the last couple of years, the company has had to adjust its forecasts multiple times, so they’re likely trying to avoid setting expectations they can’t meet.
For the first quarter of 2025, they’re expecting a slight dip in organic sales. The stock is currently trading at a discount compared to its historical averages.
OMV (OMV) and ADNOC eye expansion
OMV and ADNOC are taking another step toward their ambitious plan to create one of the world’s largest players in the polyolefins industry.
The two companies have been in discussions for over 18 months about merging Borealis and Borouge, two major chemical producers in which they hold joint stakes. Now, they’re considering adding Canadian-based Nova Chemicals into the mix, a move that could give their future joint venture a stronger foothold in North America.
The potential merger of Borealis and Borouge would create a massive, publicly listed entity with an estimated market capitalization of around €30 billion.
Combining OMV’s expertise in specialty chemicals with Borouge’s leadership in polyolefins could create significant value, not just through scale but also by securing access to cutting-edge technology and low-cost feedstock. The addition of Nova Chemicals, currently owned by Mubadala Investment Company, would further expand the group’s reach, particularly in North America, where cheap natural gas provides a cost advantage.
While there’s no finalized deal yet, both OMV and ADNOC have confirmed that negotiations are progressing well. This latest development underscores the companies’ commitment to expanding their chemicals business and unlocking synergies.
With regulatory approvals and final agreements still pending, all eyes will be on how this potential mega-merger unfolds in the coming months.
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