Interim report January – June 2020
Second quarter 2020
- Net sales for the second quarter amounted to SEK 2,741m (3,751).
- Organic growth was -25% (-1).
- Operating profit amounted to SEK -43m (391), corresponding to an operating margin of -1.6% (10.4).
- Operating profit was impacted by restructuring costs of SEK -93m and IFRS9 bad debt provisions of SEK -15m.
- Total currency impact on Group operating profit was negative SEK 5m.
- Profit after tax amounted to SEK -56m (290), corresponding to earnings per share after dilution of SEK -0.33 (1.71).
- Operating cash flow increased to SEK 716m (244) and net debt, excluding IFRS16 lease liabilities and pensions, declined to SEK 231m (1,221).
Comments from the President and CEO
It has been a challenging quarter in unprecedented times. We came from a situation with relatively good demand and orderbook in March, to an escalating corona pandemic with national lockdowns, closure of factories and distribution etc., preventing us from operating in a normal manner. I will take this opportunity to thank all Nobia employees for the contributions made during this turbulent period. I am impressed with how quickly everyone acted to take control of the new situation with safety first in mind, adjusting the business when needed and taking operations and business digital, while at the same time keeping focus on cashflow and liquidity.
Even though our operations are normalizing, the pandemic still has a large negative impact on the Global economy, and we need to continue with measures to safeguard the health of our employees, customers and partners. On a positive note, demand for home renovation, and thus also the demand for kitchens, has gradually improved after the steep decline in April, giving us the opportunity to allocate more resources to sales again. By mid-June we had reopened most of our physical stores and further strengthened our digital sales capabilities to better service consumers online.
Despite an organic sales decline of 25% for the Group, driven by an unprecedented 56% drop in the UK on the back of the business restrictions, we successfully delivered a strong cash flow and strengthened our financial position. The Nordic region delivered a stable result despite the challenging environment, with sales almost on par with last year and an operating margin of 13.0 percent (14.7). Operating income for the Group excl. one-time items declined to SEK 50m (391). Cash flow increased to SEK 716m (244) taking down net debt excluding pensions and leases to SEK 231m (1,221).
At the same time as we have managed the consequences of the pandemic, we have continued to plan ahead and to execute on our strategy. To enable investments and collaboration across our strong brands and provide a stronger platform for business decisions, we carried out organisational changes in the quarter by decentralising central functions and regionalising local functions. In addition, we are taking further measures to increase efficiency in the UK, which will impact around 240 employees across the UK store network and supply chain. Earnings for the second quarter 2020 were charged with one-time costs of SEK 93m relating to these measures.
Although our operations are normalizing, we foresee that the short-term performance will continue to be impacted by the global recession, albeit not to the same extent as during the second quarter. Having said that, I am certain that the structural measures we have put in place, the continued execution on our strategic priorities and the strong balance sheet will provide solid financials and opportunities both short- and long term.
President and CEO,
This interim report is information such that Nobia is obliged to make public pursuant to the EU’s Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, on 20 July 2020 at 14:00 CET.
For further information
Kristoffer Ljungfelt, CFO
+46 8 440 16 00
Tobias Norrby, Head of Investor Relations
+46 8 440 16 07