Interim report for January–September 2012

Fri, Oct 19, 2012 12:01 CET

Weaker economy

Net revenues amounted to MSEK 652 (697) for the third quarter and to MSEK 2,101 (2,162) for January – September.
Profit after net financial items totaled MSEK 76.1 (105.3) for the third quarter and MSEK 276.0 (346.4) for January – September.
Earnings per share after tax amounted to SEK 1.84 (2.47) for the third quarter and to SEK 6.46 (8.05) for January – September.
Excluding corporate acquisitions, cash flow totaled MSEK 91.4 (77.6) for the third quarter and MSEK 222.0 (195.5) for January – September.
Continued strong balance sheet. Net debt was MSEK 126 (17). Acquisitions have had an impact of MSEK 137 (72) on cash flow during the year.

President’s comments
Demand deteriorated tangibly during the third quarter in essentially all of the Group’s business areas. For Beijer Alma, the weakening led to a 15-percent decline in invoicing volume in comparable units during the third quarter. However, as a result of invoicing contributions from corporate acquisitions in Lesjöfors and Beijer Tech, the decline was moderated at 6 percent. Order bookings were somewhat lower than invoicing, and the order backlog decreased by MSEK 10. During the quarter, we experienced what was probably an adjustment of inventory levels among major customer groups. This particularly applies to customer groups in the automotive sector. Profit before tax for the third quarter totaled MSEK 76, down MSEK 29 year-on-year. The operating margin was 12.2 percent compared with 15.6 percent in the year-earlier period. The stronger SEK had an adverse impact on earnings. It should be noted that in 2011, the Group companies experienced a positive impact from currency futures. Cash flow remained strong, totaling MSEK 91 before acquisitions, thus resulting in net debt of MSEK 126 at the end of the period.

Lesjöfors’ invoicing declined 2 percent during the third quarter to MSEK 330. For comparable units, the decline was 14 percent. Operating profit for the quarter was MSEK 58, down MSEK 21 year-on-year and the operating margin fell by 5 percentage points. The Chassis Springs business area experienced the greatest decline in margins. In 2011 and 2012, Lesjöfors acquired significant businesses in Germany. The operating margins in the acquired German companies are significantly lower than in Lesjöfors’ other operations. In total, invoicing from these units was about MSEK 80 for the third quarter. Lesjöfors is entering the fourth quarter with a weaker order position than it had at the beginning of the third quarter.

Habia also experienced a substantial weakening in demand during the third quarter. Invoicing declined 19 percent to MSEK 145. Order bookings were in balance with invoicing. Operating profit totaled MSEK 13, down from the year-earlier period, and the operating margin declined by 2 percentage points to 9 percent. The demand scenario from telecom customers improved during the quarter and order bookings were somewhat higher than in the corresponding period in 2011, which contributed to strong capacity utilization in Habia’s Chinese plant.

Beijer Tech’s invoicing decreased 3 percent during the third quarter to MSEK 176. For comparable units, the decline was 12 percent. Both Fluid Technology and Industrial Products experienced weaker demand. Operating profit totaled MSEK 12, which was MSEK 3 lower than in the year-earlier period. The operating margin was 7 percent, compared with 8 percent in the corresponding quarter in 2011. The recently acquired Norspray AS is included in the quarterly figures and made a positive contribution to earnings.

The demand scenario is challenging as we enter the fourth quarter. Several major customer groups have indicated lower volumes and adjustments are being made for inventories and order backlogs. Accordingly, it is reasonable to expect that the weak demand scenario will continue and that the fourth quarter will fall short of the year-earlier period. Cost adjustments are being implemented to adhere to the trend.

Group

During the third quarter, order bookings totaled MSEK 641 (677), down 5 percent. Invoicing declined 6 percent to MSEK 652 (697). In comparable units, invoicing decreased 15 percent. After the summer, demand weakened significantly. The decline is broad and has beleaguered most of the sectors and geographical markets in which Beijer Alma is active. In comparable units, order bookings declined 14 percent.

Operating profit totaled MSEK 79.5 (109.0) and the operating margin was 12.2 percent (15.6). In 2011, Group companies capitalized on beneficial futures contracts to a completely different extent than in 2012, which, combined with the strengthening of the SEK had an adverse impact of about MSEK 8 on earnings compared with the year-earlier period. Profit after net financial items totaled MSEK 76.1 (105.3). Earnings per share amounted to SEK 1.84 (2.47). Cash flow after capital expenditures, excluding corporate acquisitions, totaled MSEK 91.4 (77.6).

During the January-September period, order bookings declined 5 percent to MSEK 2,079 (2,199). Invoicing totaled MSEK 2,101 (2,162), down 3 percent. In comparable units, order bookings fell 10 percent and invoicing 7 percent.

Operating profit totaled MSEK 276.0 (364.4) and the operating margin was 13.1 percent (16.0).
The combination of the use of futures contracts in 2012 and the strong SEK had an adverse impact of about MSEK 19 on earnings compared with the year-earlier period. Profit after net financial items totaled MSEK 266.8 (337.1), corresponding to earnings per share of SEK 6.46 (8.05).

Cash flow after capital expenditures, excluding corporate acquisitions, totaled MSEK 222.0 (195.5).

Including corporate acquisitions of MSEK 136.9 (71.9), cash flow was MSEK 85.1 (123.6). Net debt at the end of the period was MSEK 126.0 (17.3).

Subsidiaries

Lesjöfors
Lesjöfors AB is a full-range supplier of standard and specially produced industrial springs, wire and flat strip components. The company is a dominant player in the Nordic region and one of the largest companies in its industry in Europe. Lesjöfors has manufacturing operations in Sweden, Denmark, Finland, Germany, Latvia, the UK and China.

Lesjöfors’s operations are conducted in three business areas: Industrial Springs, Flat Strip Components and Chassis Springs. Industrial Springs and Flat Strip Components sell to the engineering industry, while Chassis Springs targets the aftermarket for vehicles. Demand from the engineering industry deteriorated significantly during the third quarter. In the aftermarket for vehicles, prices have been pressured and demand has been weak all year.

During the third quarter, order bookings totaled MSEK 320 (337), down 5 percent. Invoicing declined 2 percent to MSEK 330 (336). In June, the German spring manufacturer Stumpp + Schüle was acquired. In comparable units, order bookings declined 17 percent and invoicing 14 percent. Operating profit was MSEK 58.1 (78.8).

During the January-September period, order bookings declined by 5 percent to MSEK 1,043 (1,100). Invoicing totaled MSEK 1,054 (1,087), down 3 percent. In comparable units, order bookings fell 10 percent and invoicing 8 percent. Operating profit amounted to MSEK 215.1 (276.0).

Habia Cable
Habia Cable AB is one of Europe's largest manufacturers of custom-designed cable for customers in the telecom, transport, nuclear power, defense and other industries. Manufacturing is carried out in Sweden, Germany, China and Poland and sales are conducted worldwide.

Habia has noted a weaker economic scenario. Demand from the engineering sector is lower than in early 2012 and sales to the telecom sector are irregular. It should be noted that invoicing and order bookings were very high during the year-earlier period.

During the third quarter, order bookings declined 9 percent to MSEK 145 (159). Invoicing totaled MSEK 145 (180), down 19 percent compared with a very strong year-earlier period. Operating profit was MSEK 13.1 (20.2).

During the January-September period, order bookings totaled MSEK 449 (527), down 15 percent. Invoicing declined 9 percent to MSEK 460 (503). Operating profit amounted to MSEK 40.5 (43.2).

Beijer Tech
Beijer Tech AB specializes in industrial trading in the Nordic region and represents several of the world’s leading manufacturers. The company's operations are conducted in two business areas: Industrial Products and Fluid Technology/Industrial Rubber.

The demand scenario for both Fluid Technology and Industrial Products weakened during the quarter, due to a more measured and cautious approach from customers.

During the third quarter, order bookings and invoicing amounted to MSEK 176 (181), down 3 percent. In comparable units, order bookings and invoicing fell 12 percent. Operating profit amounted to MSEK 12.3 (14.5).

During the January-September period, order bookings and invoicing rose 3 percent to MSEK 587 (571). In comparable units, order bookings and invoicing declined 4 percent. Operating profit amounted to MSEK 38.7 (45.8).

Parent Company
The Parent Company, Beijer Alma AB, is a holding company that does not conduct external invoicing. During the second quarter, the Parent Company reported an operating loss of MSEK 3.9 (loss: 4.8). The operating loss for the January-September period was MSEK 18.3 (loss: 18.6).

If you have any questions, please contact:
Bertil Persson, President and CEO, Telephone +46 8 506 427 50, bertil.persson@beijeralma.se
Jan Blomén, Chief Financial Officer, Telephone +46 18 15 71 60, jan.blomen@beijeralma.se

Interim report for January–September 2012

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