INTERIM REPORT 1 January 2019 – 31 March 2019 for Bergs Timber AB (publ)
- Net sales for the first quarter 2019 amounted to SEK 885 (367) million. The increase mainly relates to the acquisition of the Norvik operations in the Baltic States and the UK that was completed in May 2018.
- Operating profit amounted to SEK 60 (32) million, representing an operating margin of 6.8 (8.7) percent.
- Profit after tax was SEK 52 (26) million. Earnings per share, before and after dilution, was unchanged, SEK 0.15 (0.15).
- Cash flow from operations amounted to SEK -34 (38) million and capital expenditures amounted to SEK 35 (10) million. The cash flow was negatively affected by increased working capital due to seasonality.
- The saw mill operations in Broakulla, Sweden, and in Savi, Estonia, will be closed during 2019, resulting in an estimated positive effect on operating profit of SEK 20-25 million per year.
- In order to refinance the Group’s current term loans and credit facilities, the parent company and group companies are in the process of arranging for new term loans and credit facilities of SEK 650 million with a maturity of three years. The loans and facilities are subject to signing and final documentation.
- A Letter of Intent has been signed regarding a possible acquisition of Fågelfors Hyvleri AB, a wood pellet producer in Sweden.
|The group's key performance indicators||2019||2018||2018/19|
|Amount in SEK million||Jan-Mar
|EBITDA margin, %||9.3||11.7||10.1|
|Operating margin, %||6.8||8.7||7.8|
|Earnings per share, before and after dilution, SEK||0.15||0.15||0.64|
|Equity per share, SEK||3.27||2.61||3.27|
Note: The acquired companies are consolidated from 15 May 2018, which affects the comparability with previous periods.
Profitability remains on a healthy level
Consumption of lumber products stays on a good level. Despite this we have had price reductions during the autumn and winter. The main reason for this is production increases in Europe, mainly due to heavy log supply from spruce beetle damaged forests in central Europe. We also see reduced European export to China and an uncertain situation with Brexit. All this together has given a situation where buyers are more cautious when buying. Prices have been reduced mainly on spruce and lower qualities, whereas redwood prices are more stable.
The price decreases will impact sawmill margins during the second quarter for this year. Swedish mills will benefit from the weak SEK. Declining raw material prices are likely to gradually and partially compensate for the reduced prices. The market for further processed products remains good and margins are stable.
Bergs Timber’s development
On a proforma basis, i.e.including the businesses acquired in the Baltics and the UK, our profitability for the first quarter remains unchanged from last year. For the mid-term we believe that prices will stabilize and that raw material price reductions gradually will compensate for the reduced prices.
We are having good results from our productivity programs. This is related to all areas of the company and due to both small steps as well as investments. The previously announced closing of the saw mills in Broakulla in Sweden and Savi in Estonia proceeds according to plan. The consolidation is expected to give a yearly EBIT improvement of SEK 20-25 million.
There is still a risk that last year’s spruce beetle attack in southern Sweden will develop to a greater extent, which in turn might lead to a change in our production plans for the autumn and winter.
Our operations for further processing show a healthy growth and we work hard to expand this part of our business. We are investing in a new house building factory in Byko – Lat in Latvia. This will at the same time enable us to increase the production of doors and windows. Plans also proceed to increase production at our Bitus operation in Sweden. Further on we are investing in our port Creeksea in UK and we are also establishing a new distribution organization.
We have today announced our intention to enter the Swedish pellet market by acquiring Fågelfors Hylveri. Fågelfors has a brand new pellet factory with annual capacity of about 90,000 tons. Fågelfors suits our strategy to increase further processing of our products and by-products while at the same time being located close to our Swedish saw mills.
Long term development
The global awareness of the need of a more sustainable consumption is increasing at an ever faster rate. This is gradually giving more demand for renewable raw materials where wood is a very good alternative. The development for new wood products and building systems also make the material competitive in commercial buildings.
Productivity improvements in our saw mills and a gradually higher degree of further processing is strengthening Bergs Timber and will position us to be able to handle new opportunities as well as changes in the market.
Chief Executive Officer
Further information regarding the interim report can be provided by the CEO, Peter Nilsson, on telephone number +46 70 315 09 27 or CFO, Anders Marklund, on +46 70 284 47 96.
The information in this interim report is such that Bergs Timber AB (publ) is obliged to disclose pursuant to the EU's Market Abuse Regulation and the Swedish Securities Market Act. The information was released for publication 8 May 2019 at 08:00. The interim report is available on the company's website, www.bergstimber.se