Ahlsell Q3 2018: The Ahlsell model delivers and brings record sales

Third quarter 2018

• Net sales increased by 15% to MSEK 7,458 (6,492). Organic growth was 7% (10).
• Operating profit (EBIT) was MSEK 524 (510).
• Profit (EBITA) amounted to MSEK 620 (597), with an EBITA margin of 8.3% (9.2). EBITA includes items affecting comparability of MSEK -30. Adjusted EBITA increased by 9% to MSEK 650 (597), with an adjusted EBITA margin of 8.7% (9.2).
• Profit after tax increased by 14% to MSEK 367 (323).
• Diluted earnings per share amounted to SEK 0.86 (0.74).
• Cost-saving measures have been intensified during the quarter. These measures are, in total, expected to give MSEK 160 in savings in 2019.
• Two acquisitions were completed during the quarter, with combined annual sales of MSEK 80, distributed as follows: Norway MSEK 45 and Finland MSEK 35. An agreement was also signed for a further acquisition in Norway, with estimated annual sales of MSEK 45.

Interim period January – September 2018

• Net sales increased by 14% to MSEK 22,675 (19,879). Organic growth was 7% (9).
• Operating profit (EBIT) was MSEK 1,566 (1,423).
• Profit (EBITA) amounted to MSEK 1,852 (1,685), with an EBITA margin of 8.2% (8.5). Adjusted EBITA increased by 11% to MSEK 1,882 (1,697), with an adjusted EBITA margin of 8.3% (8.5).
• Profit after tax increased by 24% to MSEK 1,198 (966).
• Diluted earnings per share amounted to SEK 2.79 (2.21).
• Seven acquisitions, with combined annual sales of MSEK 841, were completed during the interim period. An agreement was also signed for a further acquisition with estimated annual sales of MSEK 45.

Statement from the CEO: The Ahlsell model delivers and brings record sales

Creating value for our customers is by far the most important consideration for us here at Ahlsell and the strong sales growth we achieved during the quarter is further evidence that the Ahlsell model is successful. Once again, we have strengthened our market-leading position in technical installation in the Nordic region.

Sales increased by almost SEK 1 billion compared with the third quarter previous year and amounted to MSEK 7,458. This is an increase of 15%, of which 7% is organic. For the first time, on a rolling twelve months basis, our sales have passed the SEK 30 billion mark. The strong organic growth was driven by a continued high construction investment level, increased infrastructure investments and good development within industry.

For years, we have focused on e-commerce and the response from our customers has always been very positive. Our successful e-commerce channel is showing growth of about 20%, which strengthens our belief that increased effort in digitalization is the right one.

Adjusted EBITA amounted to MSEK 650, corresponding to a margin of 8.7% (9.2). The margin has been adversely affected by both acquisitions and targeted sales initiatives aimed at strengthening our position, mainly in Norway and Finland.

In September, we organised our first capital markets day as a listed company. The event was well-attended and the message from our side was clear: we have a stable and resilient business model and we strive for profitable growth. We see good opportunities to improve our profitability and have a high focus on implementing several cost-saving and efficiency-improving measures in all our main markets. These measures are, in total, expected to give MSEK 160 in savings in 2019.

The good sales trend continues in Sweden, where we achieved organic growth of 6%. In a strong market, with high demand from all market segments, we were successful in further strengthening our positions. We are also gaining ground with our service offering and are involved in several exciting projects, such as Karlatornet in Gothenburg. From the projects we have already won, it is clear that our broad offering enables not only a more efficient process for the customer, but also lower costs. For Ahlsell, this means deeper customer relationships and increased up-selling.

We also achieved a strong sales growth in Norway, with organic and acquired growth contributing 7% and 9% respectively. The high growth is pleasing, while in combination with negative mix effects adversely affects profitability and gives us challenges to handle. We have grown strongly and needed to increase our efforts, primarily within logistics and transportation, in order to maintain a high service level to our customers. Onwards, we must therefore work on adapting operations and optimizing flows to ensure profitable growth. As a consequence, the efficiency enhancing and cost-cutting measures are now intensified and hence, restructuring costs of MSEK 35 will be charged to fourth quarter earnings.

In Finland, where market activity was high, we achieved organic growth of 8%.This indicates that we have strengthened our market position also in this country. As in previous quarters, the southern and western parts of Finland are growing fastest, and our initiatives to strengthen our presence have yielded results.

Sustainability in everything we do - Already today, sustainability is a strong comparative advantage for us, and it helps us to repeatedly win large contracts. For example, our broad offering means that we can co-package our products, which reduces the level of fossil emissions. In some projects, we also offer completely fossil-free deliveries.

Near term outlook - In industry, infrastructure and renovation, which together account for some 70% of our market exposure, everything points to continuing strong demand in the near future. The reduced number of residential building starts has not yet had a noticeable impact on our sales, although it is to some extent expected to in the next few quarters. The demand within non-residential construction is ex-pected to remain at a high level. As I look forward, I am convinced that Ahlsell stands strong with our attractive customer offering, committed employees and broad market exposure.

Johan Nilsson, President and CEO

Webcast & conference call

At 10.00 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.

Link to the webcast: https://financialhearings.com/event/10700

Telephone number for the conference call: SE: +468 5664 2664, UK: +44 203 008 9810, US: +1 855 753 2236.

Financial calendar 2019

• 25 January: Q4 2018 Report
• 26 April: Q1 2019 Report
• 9 May: Annual General Meeting in Stockholm
• 17 July: Q2 2019 Report
• 23 October: Q3 2019 Report

For further information, please contact:
Karin Larsson, Head of IR and external communications
+ 46 8 685 59 24, Karin.Larsson@ahlsell.se

Johan Nilsson, President and CEO Ahlsell AB
+46 705 532 829, Johan.Nilsson@ahlsell.se

Kennet Göransson, CFO
+46 706 211 294, Kennet.Goransson@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 30 and is listed on Nasdaq Stockholm. About 97% of revenue is generated in the three main markets of Sweden, Norway and Finland. With about 5,800 employees, more than 230 branches and three central warehouses, we constantly fulfil our customer promise: Ahlsell makes it easier to be professional!

Press release, October 26, 2018

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