Solid quarter with signs of reduced demand
Third quarter of 2022
- Consolidated net sales increased by 13 percent to SEK 1,132 m (1,003), of which organic growth amounted to 4 percent, acquisitions 5 percent and currency effects 4 percent.
- Net sales in Product & Solutions amounted to SEK 831 m (746) and in Installation Services to SEK 337 m (281)
- Gross profit increased to SEK 317 m (298), Gross margin decreased to 28.0% (29.8%)
- EBITDA decreased to SEK 162 m (176), EBITDA margin decreased to 14.3% (17.5%)
- Operating profit (EBIT) decreased to SEK 128 m (140), EBIT margin decreased to 11.3% (14.0%)
- ROCE was unchanged 16.6 percent (16.6)
- Cash flow from operating activities amounted to SEK 244 m (101)
- Earnings per share before and after dilution were SEK 4.34 (3.58) and SEK 4.32 (3.56), respectively
- Consolidated net sales increased by 19 percent to SEK 3,298 m (2,774), of which organic growth amounted to 10 percent, acquisitions with 5 percent and currency had an impact of 4 percent
- Net sales in Product & Solutions amounted to SEK 2,626 m (2,159) and in Installation Services to SEK 799 m (680)
- Gross profit increased to SEK 933 m (809), Gross margin decreased to 28.3% (29.2%)
- EBITDA increased to SEK 470 m (418), EBITDA margin decreased to 14.2% (15.1%)
- Operating profit (EBIT) increased to SEK 364 m (323), EBIT margin decreased to 11.0% (11.6%)
- Cash flow from operating activities amounted to SEK 266 m (127)
- Earnings per share before and after dilution were SEK 11.82 (8.89) and SEK 11.75 (8.83), respectively
MESSAGE FROM THE CEO
Solid quarter with signs of reduced demand
Consolidated net sales in the third quarter increased by 13 percent compared to the previous year, from SEK 1,003 million to SEK 1,132 million. Organic growth was 4 percent of which 13 percent were sales price increases and volume development was -9 percent, the impact from acquisitions was 5 percent and currency translation effects were 4 percent. Organic growth was 5 percent in Products & Solutions and 3 percent in Installation Services.
EBIT for the third quarter amounted to SEK 128 million, compared to SEK 140 million last year. The negative development of the operating result is explained by few areas within Products & Solutions not matching the high margins they had previous year when the market situation was more favorable, while Installation Services had a profit well above third quarter last year.
Our ROCE at 16.6 percent (16.6) remains significantly above the threshold of 13 percent. Cash flow from operating activities amounted to a strong SEK 244 M (101), driven by improvements in both operating receivables and liabilities.
Within a relatively fluid macro environment, we are seeing a stabilization of input costs, in some cases a decrease. We have good availability of input materials and short-term see no risk of disturbances in the supply chain. Our forecast for new build on our main markets is now slightly negative, while demand for renovation seems to remain stable. In this macro economic situation there are more uncertainties for the future than normally. Contingency plans are in place to mitigate the consequences of any negative development.
During the quarter we made two acquisitions in Finland and one in Denmark.
The Products & Solutions operating segment grew by 11 percent (7). Organic growth was 5 percent (4) of which 15 percent were related to sales price increases and volume development was -9 percent, the impact from acquisitions was 2 percent and currency translation effects were 3 percent.
The Bitumen-based waterproofing business showed growth on all the four Nordic markets. SealEco, our synthetic rubber waterproofing business, also showed sales growth, however at a lower rate.
In our prefabricated wooden elements business, Taasinge group had a negative development of sales both in Denmark and Norway while Seikat in Finland had a strong positive sales development. We maintain strong order books in all three markets.
Sales development of our green infrastructure businesses, sold under the brands Veg Tech and Urban Green, was on the same level as the same period previous year.
The Installation Services operating segment grew by 20 percent (13) to a quarterly all-time high of SEK 337 M. Organic growth was 3 percent (-8), of which 6 percent was sales price increases and volume development was -3 percent, the impact from acquisitions was 12 percent and currency translation effects were 5 percent.
The majority of this business within Installation Services is conducted in Finland where we saw growth and improved margins for our roofing business.
Our roofing business in Norway had a strong double-digit growth.
Our Danish franchisees continue to experience a strong market and the third quarter EBIT contribution was above last year.
On 1 July we acquired 70 percent of the shares in the VKP Group, a group headquartered in Kajaani in northeast Finland providing roofing and waterproofing services. The acquisition goes towards completing our geographical coverage in Finland.
On 14 September we acquired Annebergs Limtrae A/S, a glulam component manufacturer in Lunde in Southwest Jutland. The acquisition allows us to upstream integrate the glulam supply to the Taasinge Group, and extend our presence in wood-based construction solutions.
On 3 October we acquired 70 percent of the shares in EG Trading, a company headquartered in Tammisaari in southern Finland growing sedum and offers a wide variety of different landscaping products. The acquisition extends our geographic presence in the green infrastructure solutions.
We continue to focus on organic growth, profitability, sustainability, and selective acquisitions. Our balance sheet is strong, and we continue to have the capacity to carry out acquisitions. We have a strategic focus to promote sustainable building solutions and enhance our service and product portfolio.
Helsingborg, 25 October 2022
President and CEO
A conference call for investors, analysts and media will be held today, 25 October 2022, at 10:00 a.m. CET and can be joined online at www.nordicwaterproofing.com. Presentation materials for the call will be available on the website one hour before the call.
To participate, please dial any of below numbers and use pin code 5813738#:
From the United Kingdom: +44 20 31 98 48 84
From US: +1 412 317 6300
From Sweden: +46 8 50 51 63 86