Systemair AB (Publ) INTERIM REPORT Q1 1 May – 31 July 2019
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Systemair AB (publ) INTERIM REPORT Q1 Net sales Q1 1 May – 31 July 2019 SEK 2,254 m. First quarter, May – July 2019 Net sales increased by 12.0 percent to SEK 2,254 million (2,013). Organic growth was 4.1 percent (5.4). EBIT Q1 Operating profit (EBIT) totalled SEK 173 million (145). The operating margin was 7.7 percent (7.2). Profit after tax amounted to SEK 128 million (72). SEK 173 m. Earnings per share totalled SEK 2.44 (1.39). Cash flow from operating activities amounted to SEK 169 million (75). Significant events after the period under review In early August, Systemair acquired the ventilation business of Australian company Pacific HVAC. The company has sales of around SEK 130 million and 60 employees. Also in August, Systemair received an order for ventilation equipment for three cruise liners to be built by the MAC shipyard in Hamburg. The order is valued at EUR 3.3 million. Again in August, Systemair acquired 60 percent of the shares in Moroccan sales company Systemair Maroc. The company has sales of around SEK 70 million and 27 employees. 2019/20 2018/19 2018/19 May–Jul May–Jul May-Apr 3 mths 3 mths 12 mths Net sales, SEK m. 2,254.0 2,012.7 8,326.5 Growth, % 12.0 9.6 14.0 Operating profit, SEK m. 173.0 144.9 528.1 Operating margin, % 7.7 7.2 6.3 Profit after tax, SEK m. 128.5 72.0 321.2 Earnings per share, SEK 2.44 1.39 6.20 Operating cash flow per share, SEK 3.25 1.44 7.43 A good start to the year During the first quarter, growth was firm at 12.0 percent, of which 4.1 percent was organic. Growth was especially positive in the Eastern Europe and North America regions. In the Middle East and Asia organic growth was 9 percent . In the Nordic region, we witnessed a slowdown during the quarter. Operating profit improved to SEK 173 million, as against SEK 145 million in the same quarter last year. Profit after tax increased by 78 percent to SEK 128 million compared to SEK 72 million the preceding year. The market Investments Market developments were relatively favourable in During the period, Systemair continued to invest in several regions over the quarter. However, growth in machinery in a number of factories in order to increase the Nordic region was somewhat weak during the productivity. Work on certain modifications to production quarter. Sales in both Sweden and Norway were down at Skinnskatteberg started in the period. on sales in the same quarter last year. In Western Europe, growth was good above all in France, Italy, Outlook Portugal and the UK. The German market contracted Activity and demand remain strong in several of our slightly, as was also the case in Austria and the major markets and so we are confident of further Netherlands. Region Eastern Europe, with Russia at the organic growth in the quarters ahead. We are keeping a forefront, reports organic growth of 22 percent. In North close watch on developments in the market in order to America, it was sales in the USA above all that are be ready to take action if the market will decline. increasing, while the Canadian market fell back slightly. The partnership with Panasonic is advancing In the Middle East and Asia, demand was good in according to plan. In September, the first deliveries of Turkey, India and Malaysia. heat pumps will be made from our factories to Panasonic. Demand on the refrigeration side was good Acquisitions during the first quarter this year, and profitability In August, after the end of the interim report period, showed clear improvement. Systemair acquired the ventilation business of Australian We are continuing to focus intensively on the company Pacific HVAC. The company has sales of companies with profitability and volume problems and around SEK 130 million and 60 employees and its are reviewing how we can increase the efficiency of our headquarters in Melbourne. It also operates in Sidney, production platform on an ongoing basis with our long- Adelaide, Brisbane, Perth and Auckland in New Zealand. term goal of achieving an operating profit of 10 percent The company has a strong market position and is the remains in place. second-largest operator in Australia’s ventilation sector. On completion of the acquisition, the company is to be renamed Pacific Ventilation. We identify good opportunities to expand sales of Systemair’s products in Roland Kasper the region. President and CEO Also in August, we acquired 60 percent of the shares in Systemair Maroc, which distributes Systemair’s products in Morocco. The company has sales of around SEK 70 million and 27 employees. It formerly held licensing agreements to operate under the Systemair brand. Systemair AB Interim report Q1 2018/19 2(14) Sales and markets Eastern Europe and CIS Group sales for the first quarter of the 2019/20 financial Sales in Eastern Europe and the CIS rose by 25 percent year totalled SEK 2,254.0 million (2,012.7), up 12.0 during the quarter. Adjusted for foreign exchange percent from the same period last year. effects and acquisitions, sales rose by 22 percent. Sales Adjusted for foreign exchange effects and in Russia increased by 17 percent during the quarter, acquisitions, net sales rose by 4.1 percent. Growth in compared with the same period in the preceding year. acquired operations was 5.3 percent, while foreign The Russian market accounts for 6 percent of exchange effects increased sales by 2.6 percent over Systemair’s total sales, as against 5 percent a year the period. earlier. Other major markets showing growth during the period include Kazakhstan, Slovenia and Hungary. Geographic breakdown of Q1 sales North and South America Nordic region Sales in the North and South America region over the During the first quarter, sales in the Nordic region were quarter were 33 percent higher than in the same period 10 percent lower than in the same period last year. The last year. The American market performed well in the Swedish, Norwegian and Danish markets declined during quarter, while the Canadian market declined slightly. the quarter, while sales in the Finnish market showed Adjusted for foreign exchange effects and acquisitions, good growth. Adjusted for the effects of foreign sales increased by 16 percent in the region. exchange and acquisitions, sales declined 11 percent. Middle East, Asia and Africa Western Europe Sales in the Middle East, Asia and Africa rose by 9 During the quarter, sales in the West European market percent compared with the same period in the were 14 percent higher than in the corresponding period preceding year. Overall, exchange rate effects and last year, when the acquisition of Koolair in Spain had acquisitions did not materially affect sales during the major impact. Adjusted for foreign exchange effects and quarter. Sales in Malaysia, Turkey and India increased acquisitions, sales rose by 1 percent. Several markets in during the quarter but declined in parts of the Middle the region performed well during the period, including East. France, Italy, Portugal and the UK, while sales declined in Germany, Austria and the Netherlands. 2019/20 2018/19 May–Jul May–Jul Sales – Of which, 3 mths 3 mths change organic Nordic region 367.6 408.8 -10% -11% Western Europe 988.9 868.9 14% 1% Eastern Europe & CIS 405.4 323.9 25% 22% North and South America 242.8 182.7 33% 16% Middle East, Asia and Africa 249.3 228.4 9% 9% Total 2,254.0 2,012.7 12% 4% (Sales figures are based on geographical domicile of customers.) Net sales per quarter compared with same period previous years Net sales Growth: 15.4% 13.8% 17.3% 12.0% 2500 2500 9500 2250 2250 8500 2000 2000 1750 7500 1750 1500 6500 1500 1250 1250 5500 1000 1000 750 4500 750 500 3500 500 MSEK Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 MSEK Q2 Q3 Q4 Q1 2016/17 2017/18 2018/19 2019/20 Aug-Oct Nov-Jan Feb-Apr May-Jul 2017/18 2018/19 2019/20 Quarter Trailing 12 months Systemair AB Interim report Q1 2018/19 3(14) Sales by market, 3 months 2019/20 long-term receivables, loans and bank balances totalled (2018/19) SEK +14.8 million (-28.7) net. The foreign exchange impact derived for the most part from a rise in the 11% (12) Turkish lira against the euro. Interest expenses for the Nordic region 16% (20) quarter totalled SEK -10.1 million (-6.9). Adjusted for the 11% (9) Western Europe effect of adoption of IFRS 16, interest expenses for the quarter totalled SEK -7.9 million. Eastern Europe & CIS Tax expense North and South Estimated tax for the quarter totalled SEK -48.5 million America 18% (16) (-37.5), corresponding to an effective tax rate of 27.4 Middle East, Asia and 44% (43) Africa percent based on profit after net financial items. Acquisitions and new operations Results for the first quarter No acquisitions were made during the period. The gross profit for the first quarter amounted to SEK 767.1 million (651.0), an increase of 17.8 percent over Investments, depreciation and amortisation the same period in the preceding year. The gross margin Investments for the quarter, excluding disposals, totalled rose to 34.0 percent (32.3). SEK 61.7 million (108.1), including SEK 55.5 million Operating profit for the first quarter amounted to SEK (96.5) in new construction and machinery.