INTERIM REPORT for Bergs Timber AB (publ) 1 January 2019 – 30 September 2019
Third quarter (1 July – 30 September)
- Net sales for the third quarter 2019 amounted to SEK 721 (805) million. The decrease is due to lower sales volumes and prices for the sawmills.
- Operating profit amounted to SEK 2 (66) million, representing an operating margin of 0.3 (8.2) percent. Adjusted for income from fair valuation of earn-out payment related to the acquisition of the Norvik operations and restructuring costs in the UK, the operating profit was SEK -8 million.
- Profit after tax was SEK -3 (58) million. Earnings per share, before and after dilution, was SEK -0.01 (0.17).
- Cash flow from operations amounted to SEK 151 (87) million and capital expenditures amounted to SEK 40 (24) million.
Interim period (1 January – 30 September)
- Net sales for the interim period amounted to SEK 2,519 (1,883) million. The increase relates to the acquisition of the Norvik operations in the Baltics and the UK that was completed in May 2018.
- Operating profit amounted to SEK 100 (153) million, representing an operating margin of 4.0 (8.1) percent. Adjusted for income from negative excess value and transaction costs related to the acquisition of Fågelfors Hyvleri and one-off items in the third quarter, the operating profit was SEK 79 million.
- Profit after tax was SEK 77 (126) million. Earnings per share, before and after dilution, was SEK 0.22 (0.53).
- Cash flow from operations amounted to SEK 145 (188) million and capital expenditures amounted to SEK 96 (130) million.
|The Group's key performance indicators||2019||2018||2019||2018||2018/19|
Amount in SEK million
|EBITDA margin, %||3.9||10.4||6.7||10.2||7.2|
|Operating margin, %||0.3||8.2||4.0||8.1||4.5|
|Earnings per share, before and after dilution, SEK||-0.01||0.17||0.22||0.53||0.35|
|Equity per share, SEK||3.30||3.03||3.30||3.03||3.30|
Note: The acquired companies from Norvik are consolidated from 15 May 2018 and Fågelfors Hyvleri is consolidated from 27 June 2019, which affects the comparability with previous periods.
Challenging market conditions
Despite the high demand for timber, we have had further price reductions for sawn and planed timber during the third quarter. Spruce beetle damaged forests are still influencing the market. High harvesting volumes results in full utilization of sawmilling capacity with oversupply of timber as a consequence. Prices for beetle damaged raw material in Central Europe is today at levels close to harvesting cost and the focus is to clear the forests from damaged trees. Part of Sweden is also affected by the spruce beetles, especially in the south east, where harvesting is mainly focused on damaged forests. We are optimistic that all activities in Sweden will help to reduce damages and avoid the same disaster as in Central Europe.
Prices have dropped for all products and especially for lower grades. Trading in the UK has been really challenging with all uncertainties in connection with Brexit. The US market has during the last months recovered and prices are today higher than 12 months ago. Part of the sawmilling industry is now loss making and there are signs that production volumes will reduce. This could help to improve market conditions.
Bergs Timber’s development
The margins for our Swedish sawmills have reduced significantly during the third quarter. Stocks are on the high side and we have, as earlier announced, decided to reduce production during the winter. Prices for raw material are coming down and will during the fourth quarter partly compensate for lower sales prices.
Our Estonian sawmill Savi has been closed during October. The remaining Estonian sawmill Sauga will from January 2020 be integrated with our Latvian operation Byko-Lat. This will give cost reductions and positive market synergies.
Our Latvian sawmill Vika Wood is facing better raw material conditions than our Swedish mills and margins are at reasonable levels.
Byko-Lat, our Latvian further processing company, has despite challenges in the UK been able to keep normal margins. The new house building factory is now ready for production.
Trading conditions for our UK company have been challenging during the last sixth months. We have restructured the company in order to prepare for expanded volumes through our own port. This includes new management. We have also decided to sell our own vessel and go for time chartered vessels. Changes are now coming into place and we have a strong position to meet the market and develop our concept.
Fågelfors Hyvleri, which was acquired during this summer, is now fully integrated. Production volumes in the new pellet factory are according to plan and we expect to reach full capacity of about 100,000 tons per year during 2020. The market for wood pellets remains good.
Bergs Timber is, after recent year’s expansion, in a consolidation period and we are working with several projects to improve margins and performance:
- Start sales on the Swedish market for doors, windows, houses and garden products from our Latvian company Byko-Lat
- Exploit market synergies between our existing companies
- Integrate our Estonian operation with Byko-Lat
- Work out a strategy for our Swedish sawmills in order to have a long term competitive cost level
- Increased focus on sustainability
- Company profiling and market communication
The market for sawn timber will probably remain uncertain and challenging for some time. Bergs Timber has today six sawmills, planing mills, pellet production, doors and windows production, house production, garden products and logistics. This gives us increased flexibility to handle various market situations.
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 30 October 2019 at 13:00. The interim report is available on the company's website, www.bergstimber.se