Year-end report 2020

Good operating margin and strong cash flow in final quarter of the year

Quarter 4, 2020

• Incoming orders amounted to SEK 918m (1,141), equivalent to a currency-neutral decrease of 16.9 percent compared with the same period last year. Compared with previous quarter 2020, incoming orders increased by 11.0 percent.
• Net sales amounted to SEK 940m (1,087), equivalent to a currency-neutral decrease of of 10.4 percent compared with the same period last year.
• Operating profit was SEK 93.8m (108.7), giving an operating margin of 10.0 percent (10.0).
• Adjusted operating profit was SEK 94.0m (113.2), giving an adjusted operating margin of 10.0 percent (10.4).
• Net profit was SEK 55.1m (72.4).
• Earnings per share were SEK 1.57 (2.06).

January – December, 2020

• Incoming orders amounted to SEK 3,480m (4,168), equivalent to a currency-neutral decrease of 13.7 percent compared with the same period last year.
• Net sales amounted to SEK 3,675m (4,308), equivalent to a currency-neutral decrease of 11.8 percent compared with the same period last year.
• Operating profit was SEK 219.0m (343.2), giving an operating margin of 6.0 percent (8.0).
• Adjusted operating profit was SEK 295.6m (349.1), giving an adjusted operating margin of 8.0 percent (8.1).
• Net profit was SEK 110.4m (225.8).
• Earnings per share were SEK 3.15 (6.43).
• The Board’s current proposal is that no dividend be paid but a further statement regarding dividends will be made at the latest in the Q3 2021 report on 22 October 2021.
   

CEO’s comments

” 2020 was a challenging year in several different ways. The most obvious of these was, of course, the enormous effect that the COVID-19 pandemic has had on communities throughout the world, with repeated lockdowns. Protracted Brexit negotiations and the turbulent political situation in the US also had an adverse impact on the business climate. The huge uncertainty that prevailed for most of the past year led to caution among Nederman’s customers regarding major investments. Compared with 2019, our sales declined 15 percent, while the operating margin remained at a good level. Adjusted operating profit was SEK 296m (349), corresponding to an adjusted operating margin of 8.0 percent (8.1). Orders received for the year amounted to SEK 3,480m (4,168).

I am very proud that we were able to maintain a good operating margin during the year despite the large decline in volume. Nederman’s organisation demonstrated an excellent ability to rapidly adjust and adapt its business to a new and unpredictable reality, where at times, it has been impossible to gain physical access to our customers’ plants, even to undertake service work.

Early action to protect Nederman’s margins
After a strong start during the first months of 2020, demand declined dramatically. Nederman reacted rapidly to the new situation that emerged in the wake of the COVID-19 pandemic. In the spring, we implemented significant cost cutting, which entailed that, after successive improvements, we achieved an adjusted operating margin of 10.0 percent (10.4) for the final quarter of the year and 8.0 percent (8.1) for the full year. In the long term, we have higher ambitions for our profitability, but the outcome for 2020 must be viewed in light of a significant decline in sales compared with our original ambitions for the year and negative currency effects. During 2020, we also worked consistently to strengthen our cash flow, which led to continued improvements, a fact that became particularly apparent in the fourth quarter of the year. As we enter 2021, all improvement activities have been completed, meaning that the cost effectiveness in the Group is higher than ever before.

Development by division
The restrictions and lockdowns that were in force for long periods in 2020 impacted the different areas of our operations to varying degrees. The division most affected by the COVID-19 restrictions was Nederman Process Technology. Its operations are characterised by large systems, which represent the type of investments that were postponed to a significant extent. Despite this, the division remained profitable in 2020 and we are now seeing certain signs of improvement in some specific market segments.

Nederman Extraction & Filtration Technology has a base of product sales and is not as dependent on sales of systems as Nederman Process Technology. The fourth quarter of the year was somewhat stronger than anticipated, despite negative currency effects.

Nederman Duct & Filter Technology also had a positive end to the year. During 2020, the division strengthened its operations through efficiency enhancements in production, leading to stronger margins and cash flow. Disruptions to raw materials supplies were very limited in 2020. However, the steel price has now begun to rise since the beginning of the year.

In 2020, Nederman Monitoring & Control continued its intensive development work and its integration with other divisions became increasingly stronger, demonstrated, for example, by the sale of 50 Insight systems during the year. Some projects in Asia and the US were delayed due to lockdowns, but the general trend in 2020 was positive, with steadily growing interest in the division’s digital solutions.

Outlook
Nederman is taking a cautious approach into 2021. In principle, we anticipate that the entire first six months will be dominated by continued lockdowns and restrictions. If the vaccination programmes that are now being initiated throughout the world have the expected effect on the global spread of infection, we anticipate a cautious recovery in the second half of 2021. However, our assessment is that it will take time before we return to pre-pandemic levels. Nederman will monitor developments carefully and will be very thorough in our assessments, so that we can accelerate our operations at the right time.

The successful work that we conducted during 2020 to protect our profitability meant that, despite everything, we are in a strong position, with good opportunities to further advance our positions, not least by launching new products and continuing the development of our digital offering. The problems with poor air quality in the world remain extensive, leading to a large number of people dying prematurely every year. The underlying need for Nederman’s products is therefore very large and we will continue our work to develop new and improved solutions, and work to increase knowledge of this situation, which, over time, is much deadlier than the COVID-19 pandemic.”

Sven Kristensson, CEO
 

For further information, please contact:
Sven Kristensson, CEO                                                                      
Telephone: +46 42 18 87 00                                                            
e-mail: sven.kristensson@nederman.com

Matthew Cusick, CFO
Telephone: +46 42 18 87 00
e-mail: matthew.cusick@nederman.com

This information is information that Nederman Holding 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 agency of the contact person set out above, at 08:00 a.m. CET on February 12, 2021.
 

About Nederman
Nederman is a global leader in industrial air filtration dedicated to capturing, measuring, controlling and cleaning air to make industrial production more efficient, safe and sustainable. Based on industry leading products, solutions and services in combination with an innovative IoT platform we deliver knowledge and facts needed to optimise performance and guarantee emissions compliance.

The Nederman Group is listed on Nasdaq Stockholm. The Group has approximately 2200 employees and presence in more than 50 countries. Learn more at nedermangroup.com

Nederman Holding AB (publ), P.O. Box 602, SE-251 06 Helsingborg, Sweden. 
Corporate registration number: 556576-4205

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