Financial Statement 2020: Demand recovery creates potential for better performance in 2021

Fourth quarter

• Order intake amounted to 397 MSEK (407).
• Net sales were 350 MSEK (415).
• EBIT of -5.2 MSEK (22.0).
• Loss after tax of -11.7 MSEK (12.5).
• Earnings per share amounted to -0.41 SEK (0.44).
• Positive free cash flow of 45 MSEK.
• In January, and after the end of the reporting period, Westermo signed a five-year supply agreement worth at least 250 MSEK with train manufacturer Alstom.
      

Full year

• Order intake amounted to 1,449 MSEK (1,557).
• Net sales of 1,438 MSEK (1,559).
• EBIT before structural expenses of 30.8 MSEK (107.4). Structural expenses amounted to 15 MSEK. After structural expenses, EBIT was 15.8 MSEK.
• Loss after tax of -6.1 MSEK (65.0).
• Earnings per share of -0.20 SEK (2.27).
• Positive free cash flow of 70 MSEK.
• Decision on restructuring program generating annualized savings of 40-45 MSEK.
• The Board of Directors is proposing a dividend of 0 SEK (0) for the financial year 2020.

COMMENTS FROM CEO PER SAMUELSSON

“BEIJER GROUP's business was still impacted by the effects of Covid-19 in the fourth quarter. Early in the quarter, operations progressed positively, but as the second wave of infection accelerated, and countries implemented tighter restrictions, the market slowed mid-period, to then stabilize towards year-end.

Accordingly, demand saw some fluctuations in the period, but overall, the Group’s order intake—its most important lead indicator—increased by 28% in the fourth quarter on the third. At the same time, the Group’s sales increased by 5%. Our progress substantiates our previous view that the bottom was passed in the third quarter. The Westermo business entity reported positive earnings right through the year, and in January 2021, also entered a significant supply agreement worth at least 250 MSEK over five years with train manufacturer Alstom. Overall, we can have confidence in better times after poor financial performance in the pandemic year of 2020.

We also have some positive factors. Actions and initiatives implemented in the year have created a solid platform for profitable growth and increased demand. The Group’s cash flow performed strongly, even if the Group did report a small net loss for the full year. Our financial position improved and net debt reduced. The program of measures initiated in March, whose aim was to reduce our overheads by 25-30 MSEK in 2020 and 40-45 MSEK annualized subsequently, has gone as planned and had the intended effect. Accordingly, more savings will be generated in 2021. Our selective product development initiatives have gone to plan, and we sustained a high level of customer activities. We should also point out that the Group did not lose any key customers in the year.

Despite the challenges, Westermo was able to demonstrate good stability. Order intake and sales increased in the year, because of acquisitions in 2019. Although earnings did decrease somewhat, Westermo still reported an acceptable operating margin in the circumstances of just over 11%. This business entity finished the year strongly, with order intake increasing by 17%. The supply agreement announced with Alstom also demonstrates Westermo’s international competitiveness.

Beijer Electronics had a difficult year with decreased demand, especially in the USA. Sales were also down in Europe, but up in Asia. This caused an unfavorable product mix, resulting in a lower gross margin. So earnings were impacted by lower volumes and a reduced margin. The savings were unable to fully compensate for the earnings downturn, so the business entity reported a loss for the full year.

Korenix showed improvement in the fourth quarter, with order intake and sales increasing on the third quarter, even if order intake and sales were down somewhat on the corresponding quarter of 2019. Korenix was also able to turn a loss into positive earnings in the fourth quarter. The positive earnings are due to a notable decrease in costs.

For the full year, Korenix’s overheads reduced by 25%, and Beijer Electronics’ by 16%. This has resulted in a lower long-term breakeven level for both business entities, so with higher sales volumes going forward, the potential to restore profitability is good, which could also be accentuated by a more favorable product mix.

Overall, we’re not satisfied with our current sales and earnings levels, which essentially, are due to external factors. At the same time, I’d like to emphasize how our organization has coped well with the challenges of the pandemic. What the Group and business entities share is that we’ve safeguarded our organization’s competence, maintained our focus on product development, and sustained a high level of customer activities. At the same time, the pandemic may accelerate digitalization and benefit BEIJER GROUP. Accordingly, our positive view of the market for the longer term has actually strengthened.

Our long-term strategy remains unchanged. Our strategy is that BEIJER GROUP’s current, and any future corporate holdings should offer products and services with high technology content. The Group has a strong presence on expanding markets and segments. Digitalization is the primary driver behind the Group’s organic growth, which is keeping pace with investments in infrastructure, transportation solutions, real estate, energy recovery and power distribution. The need for superior, more resource-efficient control and optimization of processes for greater sustainability are other contributors to a growing business.

BEIJER GROUP’s revenue model builds on close collaboration with customers in long-term development projects. Finished products, which comprise software and hardware, are specific to, and embedded in, customers’ complete solutions, with lifecycles of up to ten years. This generates repeat and stable revenues for extended periods, without any further major sales efforts. In addition, future software upgrades offer opportunities for business expansion. Overall, this translates to all BEIJER GROUP's various holdings having the capacity to return minimum yearly organic growth of 10%, and the potential to achieve an EBIT margin of 15%.

Although there is short-term uncertainty regarding ongoing progress, with the information currently available, we think that the market may recover in 2021. This offers BEIJER GROUP good potential to achieve better financial performance in 2021 than in 2020, thus enabling dividends to resume.”
   

INVITATION TO PRESENTATION OF THE REPORT

Today, day a conference call will be held for press and analysts, where President and CEO Per Samuelsson and EVP and CFO Joakim Laurén present the company and comment on the report.

Time: Thursday January 28, 14:00 CET

To participate in the conference please dial:

From SE: +46850558355
From UK: +443333009262

To access the presentation please use this link:
https://www.anywhereconference.com?Conference=301336407&PIN=94551427&UserAudioMode=DATA

The report and the presentation will be available at the company’s website www.beijergroup.com. A recording of the conference call will also be available here after the event.

Welcome to join!

For more information please contact:

President and CEO, Per Samuelsson, tel 46 (0)40 35 86 10, mobile 46 (0)708 58 54 40
Executive VP and CFO Joakim Laurén, tel 46 (0)40 35 84 96, mobile 46 (0)703 35 84 96.

This information is such that Beijer Electronics Group AB (publ) is required to disclose in accordance  with EU's Market Abuse Regulation (MAR). The information was submitted for publication through the agency of the contact persons set out above at 13:00 CET, January 28, 2021.
   

Beijer Electronics Group AB (publ) is a growing powerhouse of innovators within mission-critical industrial digital technology and IIoT. With a strong focus on the connection between people, technology and data, we share a pride in having some of the world's leading global companies as our core customers. Since its start-up in 1981, BEIJER GROUP has evolved into a multinational group of complementary business entities with sales over 1.4 billion SEK in 2020.

The company is listed on the NASDAQ OMX Nordic Exchange Stockholm’s Small Cap list under the ticker BELE. www.beijergroup.com