Gunnebo Interim Report April-June 2019
Strong sales development and improved result in the second quarter. Cost-efficiency programme launched to accelerate margins improvement.
President and CEO Henrik Lange Comments on Q2 2019:
Order intake continued to have a positive development of 5% (2% in constant currencies), where both Entrance Control and Safe Storage showed double-digit growth of 14%. For Cash Management order intake in the US and Asia-Pacific was slow. This is expected to improve in the second half of the year. For Integrated Security, which had a contraction of order intake in the quarter, order levels fluctuate between the quarters since this is a project-driven business.
Sales for the Group had a strong development and were up 10% (7% in constant currencies) where growth came from Entrance Control and Safe Storage. Entrance Control had a very strong quarter with big project deliveries in all regions and a reported sales growth of 23% (22% in constant currencies). The continued strong growth within Entrance Control is confirmation that the Business Unit is not only capturing the general 5% annual growth pace in the market, but also gaining market share. In Safe Storage, sales grew 17% year-on-year (13% in constant currencies) while Cash Management sales had a sales decline of -3% (-6% in constant currencies) while sales in Integrated Security were unchanged.
The Group’s overall EBITA of MSEK 73 was up 10% over last year and the EBITA margin for the quarter was 5.3%, which is in line with last year. Entrance Control continues to deliver a strong margin, reporting an EBITA margin of 12.9%. In Safe Storage it is encouraging to experience strong order intake and sales development, while the EBITA-margin of 7.8% is still not satisfactory. In Cash Management order intake and sales contracted in the quarter. In their main market, Europe, order intake and sales grew whereas they contracted both in the US and Asia-Pacific, negatively affecting the EBITA margin. In Integrated Security we had an improvement in EBITA compared to the same period last year. This is still not satisfactory, but we can see completed productivity measures coming through.
The announced cost-efficiency programme, which will have full effect from half-year 2020, will address our cost structure and generate improved profitability.
Acquisition within Entrance Control and Rights Issue
I am pleased to see that the Gunnebo Group continues to develop and adapt into the new routines of the new Business Unit structure as set out about one year ago. As the order intake and sales in the quarter continued on a positive path, we also strengthened our Business Unit Entrance Control for the future with the signing of the acquisition of the Czech company, Cominfo a.s. The acquisition, which was closed 1 July, is an important milestone in Gunnebo’s transformation journey, adding both growth and profitability to an already well performing Business Unit and for the Group total as well. Cominfo is a good strategic fit for Entrance Control since it will extend both its geographical footprint and product offering. Moreover, Cominfo will further strengthen Gunnebo’s position as a world-leading supplier of entrance control solutions for pedestrians.
In connection with the signing of the acquisition we also announced our intention to perform a Rights Issue of some MSEK 360 to be carried out in the third quarter of 2019. This will be used to reduce part of our debt, which is temporarily increased when purchasing Cominfo. As our balance sheet is improved it also allows Gunnebo to better capture future opportunities in the market. Our main owners, Stena Adactum and Vätterleden Invest, are underwriting the Rights Issue, which shows trust and confidence in our strategy and execution.
Cost-efficiency programme will accelerate margins improvement
One year into the transformation journey of focusing our business by four Business Units, it is obvious that this focus is putting the Group on the right track towards profitable growth. We have been successful in making this major shift of focus in our business in Europe, while generating good growth in order intake and net sales alike throughout the past twelve months. With the announced cost-efficiency programme, we will now enter into the final stage of dismantling the matrix organisation, where we will reduce unnecessary overhead costs following the leaner and simplified way of operating our business. The programme will generate cost savings of MSEK 100 where the initial effects will be seen from the beginning of 2020, with full effect after the first six months of 2020. The programme will bring non-recurring charges of MSEK 60, of which the majority will be recognised in the second half of 2019. The programme will comprise a mix of overhead cost reductions in Europe, mainly within the Safe Storage and Integrated Security Business Units, as well as management changes in the Group Executive Team and the dismantling of regional structures in Asia-Pacific and the Americas as of year-end. Charges connected to the programme will mainly be people-related and be reported as IAC costs.
Stefan Syrén appointed new President and CEO and changes to the Group Executive Team
We have earlier today announced that I have decided to step down as President and CEO by latest in November 2019. Stefan Syrén will at that point, in addition to his current duties as SVP for Business Units Safe storage and Integrated Security, take over as President and CEO. With the new business focus and structure in place, Gunnebo’s transformation journey will now enter a new phase of executing on new sales opportunities in combination of delivering efficiency improvements. Therefore this is the right time for me to hand over the leadership to Stefan, who I am fully confident will, together with the Group Executive Team, take Gunnebo to the next level.
When now entering into the next phase of our journey, we have also decided to discontinue the regional structures in Asia-Pacific and Americas as of year-end 2019. With this, Sacha de La Noë, SVP Region Asia-Pacific, Middle East and Africa and Dan Schroeder, SVP Region Americas, will leave the Group Executive Team by year-end 2019. I would already now like to thank Sacha and Dan for an excellent contribution to the Gunnebo Group.
Gunnebo is now well positioned for growth and earnings improvements
In the second quarter we can clearly see the positive impact from our transformation journey coming through, where good growth in both order intake and sales in Entrance Control and Safe Storage are the strongest evidence. Adding a good acquisition, a fully underwritten Rights Issue and the initiated cost-efficiency programme, I am confident that Gunnebo, with its new management and strategy, is well positioned for both growth- and earnings improvements ahead.
Gothenburg 19 July, 2019
President & CEO
Second Quarter 2019
- Order intake amounted to MSEK 1,363 (1,293), equaling a year-on-year growth of 5% (2% in constant currencies)
- Net sales amounted to MSEK 1,368 (1,248), equaling a year-on-year growth of 10% (7% in constant currencies)
- EBITA amounted to MSEK 73 (66) and the EBITA margin to 5.3% (5.3)
- IAC costs net amounted to MSEK -3 (-9)
- Operating profit (EBIT) amounted to MSEK 68 (52)
- Net profit for the period amounted to MSEK 24 (20)
- Earnings per share amounted to SEK 0.32 (0.25)
- Free cash flow amounted to MSEK -6 (-63)
- Cost-efficiency programme launched to accelerate margins improvement
- Signing of the acquisition of Cominfo and announcement of the intention to carry out a fully underwritten Rights Issue during the third quarter of 2019
- Stefan Syrén appointed new President and CEO and changes in the Group Executive Team announced on July 19, 2019
- Order intake amounted to MSEK 2,795 (2,575), equaling a year-on-year growth of 9% (5% in constant currencies)
- Net sales amounted to MSEK 2,574 (2,405), equaling a year-on-year growth of 7% (4% in constant currencies)
- EBITA amounted to MSEK 120 (132) and the EBITA margin to 4.7% (5.5)
- IAC costs net amounted to MSEK -9 (-11)
- Operating profit (EBIT) amounted to MSEK 108 (110)
- Net profit for the period amounted to MSEK 31 (42)
- Earnings per share amounted to SEK 0.41 (0.56)
- Free cash flow amounted to MSEK 21 (-24)
Full report is attached to this press release.
Invitation to Telephone Conference on 19 July 09.30 (CET)
To participate in the conference call, please dial in to one of these numbers:
+46 8 5055 8358
+44 33 3300 9274
Agenda for the Telephone Conference
09:25 Call in
09:30 Review of the interim report by Gunnebo’s President and CEO, Henrik Lange, and CFO, Susanne Larsson
09:55 Questions and answers
10:15 Closing of telephone conference
Copies of the presentation will be available latest 30 minutes prior to the telephone conference on www.gunnebogroup.com. Attending from Gunnebo AB are President and CEO Henrik Lange,
CFO Susanne Larsson and SVP Marketing & Communications Karin Wallström Nordén.
A recording of the telephone conference will be available on www.gunnebogroup.com from late afternoon 19 July.
GUNNEBO AB (publ)
For more information, please contact:
Henrik Lange, President & CEO Gunnebo AB, tel. +46 10 2095 026, or
Susanne Larsson, CFO Gunnebo AB, tel. +46 10 2095 026, or
Karin Wallström Nordén, SVP Marketing & Communications Gunnebo AB, tel. +46 708 28 33 39
This information is information that Gunnebo 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 above contact persons, at 08.01 CET on 19 July 2019.
Gunnebo AB (publ) is a leading, global security provider offering a range of sustainable security products, services and software to retail, mass transit, public and commercial buildings, industrial and high-risk sites, and banks. Gunnebo operates within four core Business Units: Safe Storage (38% of Group sales), Cash Management (21%) Entrance Control (20%), and Integrated Security (21%).
Gunnebo’s share (GUNN) is traded on NASDAQ Stockholm under Mid Cap and Industrials.