Interim report January—March 2016: Lower sales but earnings somewhat above plan, new financial targets
- Order intake of 265.0 MSEK (343.5*).
- Net sales were 280.5 MSEK (351.8*).
- Operating profit/loss -55.5 MSEK (26.7). Profit was charged with non-recurring expenses of 50 MSEK (0).
- Profit/loss after-tax was -41.9 MSEK (15.1).
- Earnings per share were -2.19 SEK (0.80).
- An Extraordinary General Meeting (EGM) on January 28, 2016, resolved to divest operations in the Baltics.
- The Board of Directors decided on a restructuring program in the IAS business area, which will reduce costs by 50 MSEK annually. The cost of this package amounts to 50 MSEK, and was charged to profit in the first quarter 2016.
- The Board of Directors has adopted new financial targets.
*Includes distributor volumes that have been discontinued.
COMMENTS FROM PRESIDENT AND CEO PER SAMUELSSON
“Intensive efforts to create what to some extent is a new platform for the group continued in the first-quarter. As reported, sales decreased, mainly due to the conclusion of our partnership with Mitsubishi Electric at year-end. As expected, the group also reported a loss in the quarter, mainly due to non-recurring expenses of 50 MSEK which were charged to profit. Otherwise, the quarter included results that were better and worse than plan.
The IDC business area’s order intake and sales decreased in the quarter after a long period of healthy growth. But we view this downturn as temporary. Due to its focus on the train segment in Westermo, IDC’s business has got a far greater content of projects. Usually, individual orders are substantial, which often mean long lead-times, and sometimes, delays. This has a big impact on order intake, sales and profits in individual quarters. We can conclude that we underestimated the time from making a sale to completing the deal and delivering.
Since Westermo initiated its far-reaching investment program in fall 2014, it has accumulated some 30 potential new business accounts in the train segment worldwide. The sales process is multi-stage, involving customer enquiries, testing and specification phases. Of 23 different projects at present, 18 have been specced, and 5 are in the testing phase. If the outcome is positive, these projects would generate additional sales of over 100 MSEK annually.
The lead-time from the specification phase to order varies widely, from a few months to several years. This lead-time is hard to state exactly, and it is impossible to be certain about outcomes until complete. But we’re really hopeful of completing the projects now in processing, and securing several more. Meanwhile, this greater project content means that taking a longer perspective becomes more important. We are retaining our long-term positive growth outlook and overall investment plan for Westermo and the IDC business area, while we view departures from plan as temporary.
As previously reported, the IAS business area’s sales were down significantly, while it also reported a deficit for the quarter, due to the loss of Mitsubishi Electric products and profits being charged with 50 MSEK of restructuring expenses.
Meanwhile, IAS was able to discern some positive signs. Sales stabilized, especially in the US, even if there was some continued downturn in the oil and gas sector. One positive was IAS achieving successes in segments outside the US oil and gas sector, and good order intake in Europe at the end of the quarter. Adjusted for sales of Mitsubishi Electric products in 2015, sales were almost unchanged in the quarter, and were up by 7% on the fourth quarter of 2015.
The savings programs from the previous year had the planned effect. IAS’s overheads reduced by 16%, or 12 MSEK, in the quarter. These actions will continue to generate effects for the rest of the year. Our work in 2016 is focused on creating a more robust platform for long-term positive and profitable growth for the group, simultaneous with the various business areas balancing each other out. Our sights are set on 2017 and the years beyond.
Accordingly, the Board of Directors has adopted new financial targets for the whole of Beijer Electronics. The objectives are for the group to achieve minimum yearly organic growth of 7%, and in the first stage, a minimum EBIT margin of 10% measured as an average over a business cycle. Work on strategies to achieve these targets has already begun, will continue and be determined in 2016. As previously communicated, Beijer Electronics expects to report lower sales in the first half-year. Overall, Beijer Electronics expects to post somewhat lower sales and somewhat higher operating profit excluding non-recurring expenses for the full year 2016 compared to the results for 2015.”
INVITATION TO CONFERENCE CALL
Today, a conference call will be held for press and analysts, where President and CEO Per Samuelsson and CFO Joakim Laurén present the company and comment on the report.
Time: Tuesday April 26, at 2.30 p.m. CET
To participate in the conference please dial:
From Sweden: +46 856642669
From UK: +44 2030089802
To access the presentation please use this link: http://www.anywhereconference.com?UserAudioMode=DATA&Name=&Conference=131670692&PIN=41600634
The report and the presentation will be available at Beijer Electronics’ website www.beijerelectronics.com/ir . A recording of the conference call will also be available here after the event.
For more information please contact:
President and CEO, Per Samuelsson, tel +46 (0)40 35 86 10, mobile +46 (0)708 58 54 40
CFO Joakim Laurén, tel +46 (0)40 35 84 96, mobile +46 (0)703 35 84 96.
Beijer Electronics is a fast growing technology company with extensive experience of industrial automation and data communication. The company develops and markets competitive products and solutions that focus on the user. Since its start-up in 1981, Beijer Electronics has evolved into a multinational group with sales of 1,375 MSEK in 2015. The company is listed on NASDAQ OMX Nordic Stockholm Small Cap list under the ticker BELE. www.beijerelectronics.com