Interim report January—June 2020: Covid-19 impacting operations but fast action mitigates its effects

Second quarter

• Order intake amounted to 335 MSEK (377).
• Net sales were 357 MSEK (381).
• EBIT of 7.9 MSEK (21.5).
• Profit/loss after tax of -0.8 MSEK (13.7).
• Earnings per share amounted to -0.03 SEK (0.48).

First half-year

• Order intake amounted to 741 MSEK (745).
• Net sales were unchanged at 753 MSEK (752).
• EBIT before structural expenses of 31.3 MSEK (51.6). Structural expenses amounted to 15 MSEK. EBIT was 16.3 MSEK
• Profit after tax amounted to 4.4 MSEK (33.7).
• Earnings per share of 0.16 SEK (1.18).
• Westermo signed a supply agreement with estimated value of 80 MSEK.
• Decision on restructuring program, generating annualized savings of 40-45 MSEK.

Comments from CEO Per Samuelsson

“The spread of Covid-19, with global consequences such as closures of whole countries and industries, left its mark on BEIJER GROUP’s operations in the second quarter. Compared to the first quarter, when its impact was fairly limited, as expected, the effects were greater in the second quarter, with lower demand in many regions.

This progress negatively influenced the Group’s order intake and sales. The loss of sales volumes has a direct impact on earnings. However, we were able to mitigate the downturn through a program of measures launched at the end of the first quarter, which had the intended effect, reducing overheads by 13% on the previous quarter. This meant we were able to post positive, albeit lower, EBIT for the period.

What the Group and business entities share, is keeping our organization intact despite these savings, sustaining a high level of customer activities, and maintaining our focus on product development. I’m also especially satisfied with us being able to report positive cash flow despite lower earnings, and reduce net debt in the period. Also, we arranged an increased credit facility that we haven’t needed to use. The Group is in a financially stable position.

Obviously, the pandemic has made the whole organization face new challenges. We have complied with government recommendations on social distancing to slow the spread of infection at all our units worldwide. Wherever possible, this has involved remote working, cancelled physical meetings, conferences, travel, trade events, etc. We were able to get new digital platforms in place quickly for our digital meetings, enabling our colleagues to maintain activity levels and key customer activities at a high level. It’s also important to point out that our supply chains have worked well. Additionally, we’ve been able to benefit from various support packages implemented in different countries, which have been positive contributors to our earnings and cash flow. However, we refrained from making short-term layoffs in Sweden.

The Group’s three business entities have all been affected by Covid-19, but to differing degrees. Westermo, which is less cyclical, was able to perform well in the circumstances, with increased order intake and sales, as well as better earnings. This business entity was also helped along by the previous year’s acquisitions of Neratec and Virtual Access. Neratec is now fully integrated into Westermo, and the process with Virtual Access is continuing to plan. I can also conclude that both companies are good fits with Westermo’s culture and strategic direction.

Beijer Electronics was hit harder, with a relatively large fall in demand, especially on the American market. Low oil prices in the wake of Covid-19 hit the US oil & gas sector hard, resulting in lower demand and investments, impacting the business entity’s sales negatively. Meanwhile, Beijer Electronics succeeded creditably in reducing overheads by nearly 20% in the quarter. This means that it was able to limit the earnings decrease from lost sales volumes. Despite this, the business entity was compelled to report a small EBIT loss.Korenix, with its base in Taiwan, was hit hard as early as the first quarter, and lower demand continued in the second quarter, with significant losses of sales, which impacted earnings negatively. Korenix also did creditable work reducing its overheads sharply, limiting the business entity’s EBIT loss.

But there are still rays of hope worth noting. To date, the Group has not been notified of cancellations of any significant orders. Westermo secured a number of important medium-sized orders in the quarter. Beijer Electronics has commenced regular shipments to Otis on the deal the business entity signed at the end of 2019. The cooperation between Beijer Electronics and Korenix continued in the quarter.

Our ambition is to emerge stronger from this crisis with a smooth-functioning and even leaner organization, and to remain attractive to employees and customers. By focusing on product development, we will also have a broader-based and regenerated product program.

We anticipate no changes in global economic activity in the short term. However, it is possible to discern more positive progress late in the year once Europe starts to open up its economies. The signals we’re getting from our contacts with customers and other activities give cause for optimism. The American economy is more uncertain.

Overall, onward progress is hard to judge, and means that BEIJER GROUP will not be publishing any estimates of underlying financial performance for the full year 2020.”

Invitation to presentation of six-month interim report 2020

Today 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: Tuesday July 14, 09:00 CEST

To participate in the conference please dial:

From SE: +46856642704
From UK: +443333009267

To access the presentation please use this link:

https://www.anywhereconference.com?Conference=301328555&PIN=97254445&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!

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 Swedish Securities Market Act (2007:528). The information was submitted for publication through the agency of the contact persons set out above at 08:00 CEST, July 14, 2020. 

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 1.6 billion SEK in 2019.

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