INTERIM REPORT, January-September 2020

Continued growth with a strong financial position

Third quarter of 2020

• Consolidated net sales increased by 2 percent to SEK 916 m (901), of which organic growth amounted to 5 percent
• Net sales in Product & Solutions amounted to SEK 694 m (671) and in Installation Services to SEK 249 m (262)
• Gross profit increased to SEK 282 m (243), Gross margin increased to 30.8% (27.0%)
• EBITDA increased to SEK 164 m (137), EBITDA margin increased to 17.9% (15.3%)
• Operating profit (EBIT) increased to SEK 133 m (109), EBIT margin increased to 14.6% (12.1%)
• ROCE increased to 15.9 percent (12.9)
• Cash flow from operating activities increased to SEK 250 m (142)
• Earnings per share before and after dilution were SEK 4.10 (3.28) and SEK 4.07 (3.25), respectively

January-September 2020

• Consolidated net sales increased by 7 percent to SEK 2,534 m (2,359), of which organic growth amounted to 8 percent
• Net sales in Product & Solutions amounted to SEK 1,986 m (1,805) and in Installation Services to SEK 628 m (635)
• Gross profit increased to SEK 723 m (614), Gross margin increased to 28.5% (26.0%)
• EBITDA increased to SEK 361 m (279), EBITDA margin increased to 14.3% (11.8%)
• Operating profit (EBIT) increased to SEK 272 m (198), EBIT margin increased to 10.7% (8.4%)
• Cash flow from operating activities increased to SEK 279 m (158)
• Earnings per share before and after dilution were SEK 8.28 (5.63) and SEK 8.21 (5.59), respectively

 
Message from the CEO

Continued growth with a strong financial position

Nordic Waterproofing had yet another strong quarter with good growth in both sales, financial results and basically all KPI’s. Consolidated net sales for the quarter rose by 2 percent compared with last year, from SEK 901 m to SEK 916 m. Organic growth was 5 percent, no impact from acquisitions and the currency exchange rate effect was -3 percent.

EBIT in the quarter increased to SEK 133 m compared to SEK 109 m previous year, an increase of 22 percent, mainly driven by the increased volume, good cost control and some cost avoidance due to reduced travelling. In the quarter we also had a very good cash flow driven by the strong operating result and favorable changes in the working capital.

So far the Covid-19 pandemic has had limited impact on our operations and business. Thanks to pro-active and resolute management and a highly responsible approach and behaviour among our colleagues in this situation, we have fortunately seen very few cases of Covid-19 among our personnel. As we enter the part of the year when weather conditions have a large impact on our business and we still see it is difficult to predict the long-term impact from the pandemic on our markets, we don’t give further guidence on expectations on operating profit (EBIT).

We have in the quarter worked extensively to prepare for the redomiciling of the parent company from Denmark to Sweden. At an extraordinary general meeting on 15 October it was decided to approve the cross-boarder reverse merger between the Danish parent company and the wholly-owned Swedish subsidiary Nordic Waterproofing Holding AB. The merger is scheduled to be completed in November after which Nordic Waterproofing Holding AB will become the new Swedish parent company and its shares will be listed on Nasdaq Stockholm in connection with the completion of the merger.

The consolidated net sales growth of 2 percent in the quarter was driven by our Products & Solutions segment that grew 7 percent organically while the Installation Services segment decreased 2 percent organically.

Within the Products & Solutions segment the bitumen-based business developed well. Growth in sales was in particular strong in Norway but also Denmark had a good development, Sweden was on level with a strong third quarter previous year and in Finland we saw a decline in sales. We believe that we in total have seen a continued market share gain in the Nordics.
Our SealEco rubber membrane business, which had some Covid-19 impact mid-spring, had a really strong third quarter. All units showed growth and most of them double-digit growth. Distri Pond, which was acquired in February 2019, had another good quarter with growth in sales above 30 percent.
Our prefabricated elements business had net sales in the quarter on level with previous year while our Veg Tech green infrastructure business had a decline in sales. In prefabricated elements our orderbook remains at a high level and all available capacity for 2020 is now booked.

Within the Installation Services segment, where most sales are generated in Finland, the market development continues to vary by region. We see positive market development in the Helsinki area while the market is weaker in the more rural areas of Finland. In the flooring segment, sales were slightly above third quarter of the previous year.
Our Danish franchise companies continue to experience a strong market and performed very well in the third quarter with order books above previous year and an EBIT contribution above the corresponding quarter last year.

As communicated earlier, a comprehensive profit improvement program is being implemented in the Taasinge Group, our prefabricated elements business. After the vacation period EBIT showed an improvement over the first six months, but is still not on a satisfactory level. In both Taasinge Elementer in Denmark and RVT in Norway we have strong order books at the end of the quarter.

Given the uncertain situation regarding the impact from the Covid-19 outbreak, we have continued to have a high focus on monitoring order intake, cost and customer credit control. We have also continued to keep a higher level of inventory to guarantee supply capabilities to our customers. I am pleased to see that this pro-activeness seems to have paid off with good business development, basically no disruption in the supply chain, good cost control and no increase in bad debts. Going forward we continue to monitor the potential impact from Covid-19 carefully. We will continue to prioritize to safeguard the health of our employees, to take responsibility for communities and for our customers.

We continue to focus on organic growth, profitability and selective acquisitions. Our balance sheet is strong, we are well financed and we have the capacity to make acquisitions in line with our strategic direction of promoting sustainability and enhance our product and service offering.

Vejen, 3 November 2020

Martin Ellis,
President and CEO

 
Conference call
A conference call for investors, analysts and media will be held today, 3 November 2020, at 10:00 a.m. CET and can be joined online at www.nordicwaterproofing.com. Presentation materials for the call will be available on the website one hour before the call.

This information is information that Nordic Waterproofing Holding A/S is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 3 November 2020, 08:00 a.m. CET.

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