Beijer Ref Q1 2017
A good start to the year
Net sales in the first quarter of 2017 increased by 13 percent compared with the same period last year, amounting to SEK 2,218 million (1,967). The increase is due to acquisitions and good growth on the European markets.
The OEM and Comfort Cooling market areas have enjoyed a strong start to the year. The Commercial Cooling market area is stable.
The operating profit for the first quarter of 2017 was SEK 107 million (89). This is an increase of 20 percent compared to the same period last year.
The profit for the period was SEK 72 million (61), an increase of 18 percent compared to the same period last year.
Earnings per share amounted to SEK 1.63 (1.35).
Comments by the CEO
A good start to the year
Both sales and operating profit shows a double-digit increase in the first quarter. Although there is uncertainty in market, partly on account of the Presidential elections in France and the Brexit negotiations, we can see generally good growth both macroeconomically and in our own sector. The Purchasing Managers’ Index (PMI) is strong on all our major markets, and the ongoing transition to more environmentally friendly refrigerants is providing good business opportunities with both new and existing customers.
Strong in Europe
Organic growth for the quarter was just over 3%. On the European markets, growth was healthy, and we expect continued positive growth there in the coming quarter. Demand for environmentally friendly carbon dioxide-based solutions continues to increase. This is the result of the EU decision to phase out refrigerants with a high impact on the greenhouse effect.
The summer in South Africa was unusually wet and cold. Sales of air-conditioning equipment are weather-dependent and did not meet our expectations in South Africa on account of the poor weather. The Asia Pacific region is on a par with last year. A decision was recently made in Australia to begin phasing out older refrigerants in 2018, which is expected to have long-term positive market effects.
The delivery of the first environmentally friendly carbon dioxide-based cooling system to Chile was a milestone during the quarter. The order was performed by our subsidiary SCM Frigo and is the Group’s first installation in South America.
Strong growth for OEM and Comfort Cooling
The growth in the OEM and Comfort Cooling market areas is continuing. During the first quarter, sales in Comfort Cooling increased by 20% (of which 10% organic growth).
For the OEM market area, growth was 22% (of which 17% organic growth), and we consider that OEM manufacture has further potential. In recent years, we have seen increased demand for customised, environmentally friendly solutions for large installations, for example large supermarkets. The focus on the OEM range is being enhanced in 2017, partly by expanding the product portfolio with environmentally friendly solutions for small and medium-sized stores.
Work on digitalisation continues
Our new organisation is in place, with country managers for all major markets. This gives us a better opportunity to coordinate purchasing, logistics and marketing. On several markets, we are working with a number of separate brands in stores to allow us to adapt our offering in the best possible way to different customer segments and regions.
We are continuing to digitalise our operations and expect to launch our first Group-wide e-commerce solution during the year. This will offer customers new ways of placing orders and may help us reach new customer groups.
Parallel to this, we are continuing to free up capital by reviewing stocks and credit periods. During the year, we will also intensify our sustainability work and create support systems and procedures for the organisation.
We are accelerating our work on acquisitions and hope to be able to present new ones during the year. The above factors, combined with favourable macroeconomic conditions, mean that we are optimistic about 2017.
Per Bertland
First quarter 2017
Sales
Beijer Ref increased net sales by 12.7 percent to SEK 2,218 million (1,967) during the first quarter of 2017. The increase in sales comes primarily from the acquired company HRP. Adjusted for exchange rate fluctuations and acquisitions, there was a 3.1 percent increase in organic sales. The increase in organic sales is explained primarily by improvement on the majority of the European markets.
Profit
Group operating profit amounted to SEK 107 million (89) during the first quarter, an increase of 20.3 percent. The increase in profit is a result of the good growth on the European markets.
The operating margin for the quarter is slightly higher than the same period last year at 4.8 percent (4.5 percent).
Adjusted for exchange rate fluctuations and acquisitions, there was a 10.2 percent organic increase in operating profit during the quarter. During the first quarter, Group net financial items amounted to SEK -7 million (-4). Profit before tax was SEK 100 million (85). Net profit for the period was SEK 72 million (61). Earnings per share amounted to SEK 1.63 (1.35).
Cash flow
Cash flow from operating activities before change in working capital was SEK 95 million during the first quarter of 2017, compared with SEK 87 million during the corresponding period of the previous year. During the first quarter, the working capital decreased by SEK 88 million, compared with an increase of SEK 95 million during the corresponding period of the previous year. This results in cash flow from operating activities of SEK 183 million, compared with SEK -8 million in the previous year. Working capital at the beginning of 2017 were higher than at the beginning of 2016, which meant lower capital requirements than during the corresponding period of the previous year.
Investments
Group investments in non-current assets amounted to SEK 21 million (21) in the first quarter.
Significant events during the year
As part of Beijer Ref’s objective to be at the cutting edge of the transition to environmentally friendly cooling technology, the first environmentally friendly, carbon dioxide-based cooling system was delivered to Chile during the quarter. This was the Group’s first installation in South America and is in line with Beijer Ref’s focus on carbon dioxide and other environmentally friendly cooling technology to contribute to lower impact on the greenhouse effect.
Risk description
The Beijer Ref Group’s operations are subject to a number of business environment factors, the effects of which on the Group’s operating profit can be controlled to varying degrees. The Group’s operations depend on general economic trends, primarily in Europe, which determine demand for Beijer Ref’s products and services. Acquisitions are normally associated with risks, for example staff departures. Other operating risks, such as agency and supplier agreements, product liability and delivery commitments, technical development, warranties, dependence on key individuals, etc., are analysed continually. Where necessary, measures are taken to reduce the Group’s risk exposure. In its operations, Beijer Ref is subject to financial risks such as currency risk, interest rate risk and liquidity risk. The Parent’s risk profile is the same as that of the Group. For further information, see the Group’s Annual Report.
Malmö, 24 April 2017
Beijer Ref AB (publ)
Per Bertland, President and CEO
For more information:
Per Bertland, CEO – switchboard +46 (0)40-35 89 00
This interim report has not been reviewed by the Company’s auditors.
This information is information that Beijer Ref AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 08.30 CET on 24 April 2017.
Accounting policies
This interim report was prepared in accordance with IAS 34, the Swedish Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 2 ‘Accounting for legal entities’. Beijer Ref continues to apply the same accounting policies and valuation methods as those described in the most recent annual report, except as specified in the following.
New and amended standards applied as from 1 January 2017 are not expected to have any material effect on the Group’s or Parent’s profit or financial position.
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 2017 will be published on 14 July 2017.
• The Interim Report for the third quarter 2017 will be published on 20 October 2017.
Beijer Ref AB
Stortorget 8, SE-211 34 Malmö, Sweden
Telephone +46 40-35 89 00
Corporate ID number 556040-8113
www.beijerref.com
The total amount in tables and statements might not always summarize as there are rounding differences. The aim is to have each line item corresponding to the source and it might therefore be rounding differences in the total.
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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