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Ahlsell - Fourth quarter and year-end report 2018

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Fourth quarter 2018

  • Net sales increased by 13% to MSEK 8,616 (7,606). Organic growth was 8% (11).
  • Operating profit (EBIT) amounted to MSEK 571 (620). EBIT includes items affecting comparability of MSEK -37. Fewer trading days in the quarter had a negative effect of just over MSEK 30 on operating profit.
  • Profit (EBITA) amounted to MSEK 668 (709), with an EBITA margin of 7.8% (9.3). Adjusted EBITA amounted to MSEK 705 (709), corresponding to an adjusted EBITA margin of 8.2% (9.3).
  • Profit after tax was MSEK 383 (462).
  • Diluted earnings per share amounted to SEK 0.89 (1.07).
  • The acquisition of a business in Norway, with annual sales of approximately MSEK 45, was closed during the quarter. An agreement to acquire another business in Finland, with estimated annual sales of MSEK 75, was signed during the period.
  • In December, Quimper AB, a private limited liability company that has been or will be indirectly invested in by CVC Funds, announced a public offer to the shareholders of Ahlsell AB to acquire all shares in Ahlsell. The acceptance deadline is 11 February.

January – December 2018

  • Net sales increased by 14% to MSEK 31,291 (27,484). Organic growth was 7% (9).
  • Operating profit (EBIT) amounted to MSEK 2,138 (2,043).
  • Profit (EBITA) amounted to MSEK 2,520 (2,394), with an EBITA margin of 8.1% (8.7). Adjusted EBITA amounted to MSEK 2,587 (2,405), with an adjusted EBITA margin of 8.3% (8.8).
  • Profit after tax was MSEK 1,582 (1,428).
  • Diluted earnings per share amounted to SEK 3.68 (3.28).
  • Eight acquisitions with combined annual sales of approximately MSEK 886 were completed during the year. An agreement was also signed for a further acquisition with estimated annual sales of MSEK 75.
  • The Board proposes a dividend of SEK 1,84 (1.65) per share for 2018, corresponding to a payout ratio of 50%.

Statement from the CEO

STRONG GROWTH AND INTENSIFIED FOCUS ON INCREASED PROFITABILITY

“Good market conditions with growth in all market segments, combined with successful initiatives, contributed to sales growth of 13% during the final quarter of the year. Organic growth accounted for 8% of this growth. Several years of strategic initiatives in sales have brought us continuing strong growth, both with our existing customers, but also with new customers, who appreciate the value of our customer offering. This means that we have yet again proven our position as Nordic market leader in technical distribution. Acquisitions contributed an additional 5% during the quarter and we continue to deliver on our acquisition strategy.

However, the strong growth does not just have advantages. We noted a weakening of the gross margin during the quarter, which is mainly an effect of strong growth in customer and product segments with lower profitability and increased costs for handling high volumes in Norway. This means that, in addition to ongoing efficiency-improving measures, we will also intensify our focus on an improved sales mix.

Our adjusted EBITA amounted to MSEK 705, corresponding to a margin of 8.2%. As previously communicated, we have taken extra costs in connection with restructuring in Norway. These measures are expected to yield results from 2019. Our Group-wide focus on cost savings and efficiency measures continues according to plan, and we are already seeing positive effects of this in our Swedish operations. Our acquisitions, which previously had a dilutive effect on the margin, now report profitability in line with the average for the Group.

Sweden
The good sales trend continues in Sweden, where we achieved organic growth of 7%, indicating a strengthened market position. The high level of activity in the construction sector continues, but we note a shift from private new residential construction to public investments and increased activity in renovation.

Norway
Norway also showed strong sales growth, with organic growth of 9%. Acquisitions contributed a further 13%. The high growth is pleasing, while at the same time placing pressure on profitability. The positive economies of scale that we expect as a result of the growth have not yet been realised and instead, the strong growth achieved in the second half of 2018 has resulted in a short-term increase in logistics and transport costs. Improved profitability is therefore top of the agenda in the Norwegian operations. During the quarter, we took MSEK 37 in restructuring costs and we expect savings of MSEK 60 in 2019, well aware of that the choice of route to increased profitability may affect the growth rate.

Finland
Finland showed the highest organic growth among our main markets during the quarter, with all product segments developing well. Total organic growth was 10%. As in previous quarters, southern and western parts of Finland are growing fastest, and initiatives to strengthen our presence have yielded results.

Outlook
Our broad exposure to several market segments with different cyclical patterns means that we enter the new year in a strong position. I am confident of continuing positive development within industry and infrastructure. The current good development in construction is also expected to continue, with stronger growth in renovation and new construction of premises than in new residential construction, which is expected to slow down. Overall, I expect good demand and continuing growth for 2019, albeit at a somewhat lower level than in recent years.”

Webcast & conference call

At 15.00 CET on the report issue date, the Company will host a webcast, 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 conference call.

The full report is attached to this press release.

This information is information that Ahlsell AB (publ) is required to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of Johan Nilsson, on 24 January 2019 at 14.00 CET.

For further information please contact:
Johan Nilsson, President and CEO, Ahlsell AB
+46 8 685 70 00, johan.nilsson@ahlsell.se

Kennet Göransson, CFO
+46 8 685 70 00, kennet.goransson@ahlsell.se

Karin Larsson, Head of IR and external communications
+46 8 685 59 24, karin.larsson@ahlsell.se

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 just over BSEK 31 and is listed on Nasdaq Stockholm. About 97% of revenue is generated in the three main markets of Sweden, Norway and Finland. With about 5,700 employees, more than 230 branches and three central warehouses, we constantly fulfil our customer promise: Ahlsell makes it easier to be professional!

Press release, 24 January, 2019

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acquisition karin larsson Johan Nilsson Ahlsell AB publ Kennet Göransson

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