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Nordic Waterproofing

Nordic Waterproofing

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INTERIM REPORT, JANUARY - SEPTEMBER 2021

08:00 / 2 November 2021 Nordic Waterproofing Press release

Stable returns in spite of headwinds from input price inflation and job sites delays

Third quarter of 2021                                    

  • Consolidated net sales increased by 10 percent to SEK 1,003 m (916), of which organic growth amounted to 1 percent, acquisitions with 9 percent and currency had a negative impact of -1 percent
  • Net sales in Product & Solutions amounted to SEK 746 m (694) and in Installation Services to SEK 281 m (249)
  • Gross profit increased to SEK 298 m (283),
    Gross margin decreased to 29.8% (30.9%)
  • EBITDA increased to SEK 176 m (164),
    EBITDA margin decreased to 17.5% (17.9%)
  • Operating profit (EBIT) increased to SEK 140 m (133),
    EBIT margin decreased to 14.0% (14.6%)
  • ROCE increased to 17.1 percent (15.6)
  • Cash flow from operating activities amounted to SEK 101 m (250)
  • Earnings per share before and after dilution were SEK 3.58 (4.10) and SEK 3.56 (4.07), respectively

January-September 2021

  • Consolidated net sales increased by 9 percent to SEK 2,774 m (2,534), of which organic growth amounted to 4 percent, acquisitions with 8 percent and currency had a negative impact of -2 percent
  • Net sales in Product & Solutions amounted to SEK 2,159 m (1,986) and in Installation Services to SEK 680 m (628)
  • Gross profit increased to SEK 809 m (722),
    Gross margin increased to 29.2% (28.5%)
  • EBITDA increased to SEK 418 m (361),
    EBITDA margin increased to 15.1% (14.3%)
  • Operating profit (EBIT) increased to SEK 323 m (272),
    EBIT margin increased to 11.6% (10.7%)
  • Cash flow from operating activities amounted to SEK 127 m (279)
  • Earnings per share before and after dilution were SEK 8.89 (8.28) and SEK 8.83 (8.21), respectively


Message from the CEO
Stable returns in spite of headwinds from input price inflation and job sites delays
Consolidated net sales in the third quarter increased by 10 percent compared to the previous year, from SEK 916 million to SEK 1,003 million. Organic growth was 1 percent, the impact from acquisitions was 9 percent and currency translation effects were -1 percent. Organic growth of 1 percent is the result of +4 percent in Products & Solutions, all due to sales price increases, and -8 percent in Installation Services in Finland. The latter is predominantly caused by delays on job sites due to component shortages, and a disciplined approach towards not accepting lower margin business.
 
EBIT for the third quarter amounted to SEK 140 million, compared to SEK 133 million for the corresponding period last year. The positive development of the operating result is explained by the implementation of our turnaround plan in the Prefabricated Elements business, in spite of some margin compression due to input price inflation in other parts of our Products & Solutions segment and lower returns in the Installation Services segment. Our Return on Capital Employed at 17.1 percent (15.6) remains significantly above the threshold of 13 percent. Operational cash flow has been negatively affected by the build up of inventory due to both the securing of raw material availability and job sites delays.
 
Dramatic increases in input prices have had a negative effect on both business segments. In Products & Solutions we are in the process of absorbing these through a series of sales price increases, allbeit with a time lag of several weeks. In Installation Services, we expect a degree of margin compression to remain in the foreseeable future.
 
We have acquired the Finnish company Ripatti during the quarter, bringing the total number of acquisitions this year to 7.
The net sales organic growth of 1 percent (2) in the third quarter are explained by good sales in the Products & Solutions operating segment, which organically grew 4 percent (7) while the Installation Services operating segment decreased organically by -8 percent (-2).
 
In the Products & Solutions operating segment, the Bitumen-based waterproofing business showed double-digit growth in Sweden while growth in Denmark, Norway and Finland were on a lower level.
SealEco, our synthetic rubber proofing business, had net sales on level with same period previous year. Most major markets show growth while the Distripond-business had a weaker development in the quarter.
The Taasinge group, our prefabricated wooden elements business, had a strong double-digit growth compared to the previous year. The profit improvement program has resulted in a turn-around within the Taasinge Group. In both Denmark and Norway, we have a good level in the order books and are fully booked for 2021. Also Seikat, our Finnish entity within this business, have a strong order book and are fully booked into the second quarter 2022.
The sales development for our green urban environment businesses, sold under the brands Veg Tech and Urban Green, were organically on level with same period previous year.
 
In the Installation Services operating segment, where sales are mainly generated in Finland, net sales decreased organically by -8 percent, mainly because of delays on job sites due to component shortages. The activities within roof maintenance showed good growth.
Our Danish franchisees continue to experience a stable and strong market and during the third quarter had an EBIT contribution somewhat below last year and an order book well exceeding the level of last year.
 
During the quarter we have closed the acquisitions of Rakennusliike Ripatti Oy, a specialist in metallic façade construction, metal profiling and machining and pre-made eaves system with integrated fall protection under the brand RipRap. This resulting in a total of seven acquisitions so far during 2021.
 
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, 2 November 2021
 
Martin Ellis,
President and CEO

Conference call
A conference call for investors, analysts and media will be held today, 2 November 2021, at 10:00 a.m. CEST 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:
From the United Kingdom: +44 33 33 00 92 74
From Denmark: +45 78 15 01 07
From Sweden: +46 8 566 427 07

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