Beijer Ref Q1 2016
Stable start to the year
Net sales increased by 6.6 per cent compared with the corresponding quarter of the previous year and amounted to SEK 1,967M (1,846). The increase is largely due to the previous year’s acquisitions and organic growth in the Southern Europe market region as well as within the air-conditioning segment.
Operating profit amounted to SEK 89M (94). The lower result is mainly due to negative currency effects in South Africa and Norway.
Net profit was unchanged, SEK 61M (61).
Profit per share amounted to SEK 1.35 (1.39).
Comments by the CEO
Stable start to the year
The year has started with organic growth in most of our geographic markets and with a positive sales development of air-conditioning products.
Our largest region, Southern Europe, reports organic growth of six per cent compared with the first quarter of 2015. In Germany, we also saw a better than expected sales development, whilst our Nordic markets started the year slightly weaker than the previous year. This year, Easter fell in the first quarter which gives slightly fewer sales days than the corresponding quarter last year. We saw negative currency effects due to the weaker NOK. However, especially in Africa the result is affected by negative currency effects. Here, the ZAR has weakened so strongly that, in spite of organic growth of 13 percent, our sales was 15 per cent lower counted in SEK compared with the same period in the previous year. In Asia Pacific, the integration work of our new operations in Australia and New Zealand is proceeding in line with the plan and will contribute positively to sales and results during the year.
During the period, we have seen a sales increase within air conditioning, where Toshiba and other brands are developing well with Southern Europe as the engine. During the period, sales of air conditioning increased by 19 per cent compared with the first quarter of 2015. Demand for air-conditioning products is to some extent cyclical and we now see the effect of the strengthened market development in Southern Europe.
During the first quarter, we continued our work of developing our offer related to eco-friendly and energy-efficient refrigeration systems. We are also continuing our work of making our logistics flows more efficient, which will involve continued capital rationalisation. During 2015, the work on making our logistics flows more efficient generated a net decrease of SEK 140M in the working capital. During the first quarter of 2016, capital tied up continues to decrease.
During Q1, the UK Competition & Markets Authority (CMA) has initiated an examination of our acquisition of HRP Ltd with 15 branches in the United Kingdom. Our assessment is that the examination will be completed during the second quarter of this year and that the integration of the operation can then be initiated.
April has started strongly and we enter the second quarter with confidence. We enjoy stable organic growth in many of our key markets. Our integration work in Asia Pacific is proceeding well, which could reduce the seasonal variations in the Group’s sales in the long term. Taken together, 2016 looks like being an exciting year for Beijer Ref.
Per Bertland
CEO, Beijer Ref
First quarter of 2016
Sales
Beijer Ref increased its net sales by 6.6 per cent to SEK 1,967M (1,846) for the first quarter of 2016. Adjusted for exchange rate fluctuations and acquisitions, the organic change in sales was 3.3 per cent. Behind the sales increase lies a good development in the Southern Europe market region and stable organic growth in several other markets.
Results
The Group’s operating profit amounted to SEK 89M (94) for the first quarter. The result decrease can partly be explained by currency effects in Africa and Norway, one-off expenses for legal advice in connection with CMA’s examination of the acquisition of HRP Ltd in the United Kingdom and a slightly calmer first quarter in the Nordic countries. The newly-acquired companies in Australia and New Zealand have contributed positively to the result. When adjusted for exchange rate fluctuations, the organic decrease in operating profit was 5.3 per cent.
The Group’s financial income/expense amounted to SEK -4M (-9) for the first quarter. Profit before tax was SEK 85M (85). Net profit was SEK 61M (61). Profit per share amounted to SEK 1.35 (1.39).
Cash flow
Cash flow from the current operation before change in working capital was SEK 87M for the first quarter of 2016 compared with SEK 83M for the corresponding quarter in the previous year. The increase emanated mainly from lower tax payments in the current year. During the first quarter, the working capital increased by SEK 95M compared with SEK 74M in the previous year. This gives a cash flow from the current operation of SEK -8M compared with SEK 9M in the previous year. The first quarter of every year normally has a negative cash flow due to the build-up of working capital ahead of the strongest part of the year.
Investments
Consolidated capital expenditure amounted to SEK 21M (154) for the first three months of 2016. No acquisitions were made during the period.
Significant events during the year
During the first quarter, the UK Competition & Markets Authority (CMA) has initiated an examination of our acquisition of HRP Ltd with 15 branches in the United Kingdom. Our assessment is that the examination will be completed during the second quarter of this year and that the integration of the operation can then be initiated.
Risk assessment
The operation of the Beijer Ref Group is affected by a number of external factors, the effects of which on the Group’s operating profit can be controlled to a varying degree. The Group’s operation is dependent on the general economic trend, especially in Europe, which controls the demand for Beijer Ref’s products and services. Acquisitions are normally linked with risks such as, for example, staff defection. Other operating risks, such as agency and supplier agreements, product responsibility and delivery undertaking, technical development, warranties, dependence on individuals, etc., are continually being analysed and, when necessary, action is taken to reduce the Group’s risk exposure. In its operation, Beijer Ref is exposed to financial risks such as currency risk, interest risk and liquidity risk. The parent company’s risk picture is the same as that of the Group. For further information see the Group’s Annual Report.
Accounting principles
This interim report has been prepared in accordance with IAS 34, the Annual Accounts Act and RFR 2. Beijer Ref continues to apply the same accounting principles as those described in the latest Annual Report, with the exception of what is stated below. New and amended standards applied from 1 January 2016 are not deemed to have any significant effect on the Group’s or the parent company’s results or financial position.
Malmö, 20 April 2016
Beijer Ref AB (publ)
Per Bertland, CEO
For further information, please contact:
Per Bertland, CEO – switchboard +40 35 89 00
Jonas Lindqvist, CFO – switchboard +40 35 89 00
This interim report has not been the subject of examination by the Company’s Auditors.
Beijer Ref in short
The Beijer Ref Group is focused on trading and distribution operations within refrigeration products, air conditioning and heat pumps. The product programme consists mainly of agency products from leading international manufacturers and, in addition, some manufacture of own products, combined with service and support for the products. The Group creates added value by contributing: technical competence to the products; accounting for knowledge and experience about the market; and by providing efficient logistics and warehousing.
Operations are carried out by region within the Beijer Ref, which comprises Beijer Ref ARW (Air conditioning, refrigeration, wholesale) and Toshiba’s distribution operation within air conditioning and heating. The Beijer Ref Group is a leading operator within the refrigeration sector in Europe and has a significant position within air conditioning in Europe. The operation is split into six geographic segments: Nordic countries, Southern Europe, Central Europe, Eastern
Europe, Africa and Asia Pacific. Growth is achieved both organically and through the acquisition of companies which supplement existing operations.
Seasonal effects
Beijer Ref’s sales are seasonally dependent as demand for refrigeration and air conditioning is at its peak during the warm months of the year. It means that demand in the northern hemisphere is at its peak during the second and third quarters whilst demand in the southern hemisphere is at its peak during the first and fourth quarters.
Financial calendar
- The Interim Report for the second quarter will be published on 15 July 2016.
- The Interim Report for the third quarter will be published on 19 October 2016.
- The Year-End Report for 2016 will be published in February 2017.
- The Annual Report for 2016 will be published in March 2017.
Stortorget 8, SE-211 34 Malmö, Sweden
Telephone +46 40-35 89 00
Corporate ID number 556040-8113
www.beijerref.com
This document is a translation of the Swedish language version.
In the event of any discrepancies between this translation and the original Swedish document, the latter shall be deemed correct.
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