Ahlsell - Interim first quarter report 2018
First quarter 2018
- Net sales increased by 9% to MSEK 7,161 (6,568). Organic growth, which was negatively affected by the Easter effect* compared with the same period the previous year, amounted to 7% (9).
- Operating profit (EBIT) increased by 4% to MSEK 461 (443). Fewer trading days in the quarter had a negative effect of just over MSEK 40 on operating profit.
- Profit (EBITA) increased by 5% to MSEK 554 (530), with an EBITA margin of 7.7% (8.1).
- Profit after tax was MSEK 324 (334).
- Basic and diluted earnings per share amounted to SEK 0.75 (0.77).
- During the quarter, three businesses were acquired, with estimated combined annual sales of MSEK 691, distributed as follows: Sweden MSEK 276 and Norway MSEK 415.
- After the end of the quarter, an agreement has been signed to acquire Sentrum Motor och Verktøy AS in Norway with annual sales of approximately MSEK 40.
Statement from the CEO
The year begins with continued strong organic growth
We continued our strong development in the first quarter of 2018, with a 9% increase in sales, including organic growth of 7%. We achieved this growth despite fewer trading days, Easter effect and a cold winter. Market conditions remained good in our main markets and I am convinced that we have successfully strengthened our customer relationships further. Our consistent efforts to make our customers’ everyday lives easier led to results. All geographical segments showed positive organic sales growth in the quarter and profitability remained good. In total, we achieved an EBITA of MSEK 554 (530), corresponding to a margin of 7.7% (8.1).
The fact that 4 percentage points of our quarterly growth come from acquisitions reflects our high acquisition activity. While we are fully focused on realising acquisition synergies in line with what we historically have done, we also continue our work, with a high ambition level, for further acquisitions.
In Sweden, our work on several successful initiatives aimed at increasing customer value contributed to organic growth of 9%. We saw strong overall demand in the market, but a snowier winter than usual resulted in weaker demand from, for example, electrical, water and sewage infrastructure projects. Demand from customers in industry and construction, including renovation, continued to show strong growth. In new residential construction, we noted a slightly slowing, but still good, growth rate. The acquisition of Proffsmagasinet, a leading player in e-commerce, was closed in mid-January. The company has annual sales of approximately MSEK 260 and will be operated under a separate brand within Ahlsell. About 25% of the Ahlsell Group’s sales already occur through e-commerce and the acquisition is aimed at further improving the customer offering through a mutual exchange of skills and shared initiatives.
Just as expected, we were negatively affected both by fewer trading days and Easter effect in Norway. A severe winter contributed further to reduced activity in the market. Despite this, we still achieved organic growth of 2% and underlying demand remained good. Several new customers were added during the quarter as a direct result of targeted initiatives. Among other things, the successful launch of the “efficient construction site” concept means that Ahlsell will supply products within both Electrical and HVAC & Plumbing to several large prestige projects in the future. In February, we closed the acquisition of Bekken & Strøm, with annual sales of approximately MSEK 415, which made Ahlsell a market leader in personal protective equipment (PPE) in Norway. After the end of the quarter, an agreement was signed to acquire Sentrum Motor och Verktøy AS in Alta, giving us a strong foothold in Tools & Supplies and improving our prerequisites for growth in northern Norway.
In Finland, market activity was good during the quarter. The market developed positively, and we achieved organic growth of 5%. Following the reorganisation carried out in 2017, conditions for meeting customers’ needs are now improved. Initiatives have included strengthening the organisation with recruitments and several targeted investments in growth regions, including the establishment of yet a new branch in Helsinki.
Our customers have high expectations of us and our delivery capacity. This in combination with prolonged strong demand has resulted in prioritisation of high availability and therefore a higher inventory level. Similarly, our work on developing the branch network in Norway and Finland with full-range branches and a wider range of private label products has led to increased inventory levels. Reliability of delivery to our customers is a top priority for us, but we also aim to be a world-class distributor, which also means managing working capital in an efficient way.
Outlook - Demand has been strong in the early part of the year, and our broad exposure to several market segments with different cyclical patterns means that we have a broad and stable demand base. Looking ahead, I see continuing positive demand from industry and infrastructure. We have seen a high activity level in new residential construction so far this year, but this is expected to gradually ease off. However, our exposure to new residential construction is small, and the renovation, maintenance and improvement (RMI) sector has historically had a balancing effect on both sales and earnings in periods of declining new construction. My assessment is that this will not be any different in the future.
President and CEO
Webcasted conference call
At 10.00 on the report issue date, the Company will host a webcasted conference call, with President and CEO Johan Nilsson and CFO Kennet Göransson presenting the report. The presentation will be conducted in English and can be followed via webcast and telephone.
Link to the webcast: http://www.financialhearings.com/event/10698
Telephone number for the conference call: SE 08 5055 6453, UK: +44 203 008 9811, US: +1 855 831 5944.
The full report is attached to this press release.
For further information please contact:
Karin Larsson, Head of IR and external communications
+46 8 685 59 24, firstname.lastname@example.org
Johan Nilsson, President and CEO Ahlsell AB
+46 8 685 70 00
Kennet Göransson, CFO
+46 8 685 7040
Ahlsell is the Nordic region’s leading distributor of installation products, tools and supplies for installers, construction companies, facility managers, industrial and power companies and the public sector. The unique customer offer covers more than one million individual products and solutions. The Group has a turnover of over SEK 28 billion and about 97 percent of revenue is generated in the three main markets of Sweden, Norway and Finland. With about 5,600 employees, more than 230 branches and three central warehouses, we constantly fulfil our customer promise: Ahlsell makes it easier to be professional!
Press release, April 27, 2018