Interim report January-March 2022: Order intake at new record level, earnings improvement continues
- Order intake increased by 59% to 662 MSEK (417).
- Net sales rose by 25% to 440 MSEK (351).
- EBIT improved to 28.2 MSEK (4.6).
- Profit after tax up to 16.1 MSEK (1.6).
- Earnings per share amounted to 0.56 SEK (0.06).
- Jenny Sjödahl becomes new President and CEO effective 1 March 2022.
COMMENTS FROM CEO JENNY SJÖDAHL
“BEIJER GROUP consolidated its trend of high demand in the first quarter. Order intake was up by nearly 60% in the period, to just over 660 MSEK, a new record level for a single quarter. This was the fifth consecutive quarter that the Group’s order intake increased. This brisk progress of demand was broad based, basically covering all markets and segments where the business entities operate. BEIJER GROUP is well-positioned geographically and in product terms. Our order intake is outperforming the market generally, vindicating the Group’s growth strategy.
Sales increased for the fourth consecutive quarter, and were up by 25% to 440 MSEK in the reporting period. With higher sales volumes, EBIT also improved significantly. This demonstrates the good leverage we have as volumes expand. The effects of previously announced price increases were another contributor to the earnings gains in the quarter. Overall, this meant that we were able to gradually lift profitability, even if the level still remains far from satisfactory.
Simultaneously, EBIT and profitability were negatively impacted by the global shortage of electronic components, which has caused tangible problems. These also persisted through the first quarter. Shipment volumes were limited by the supply of materials, while new Covid-related lockdowns in China also impacted shipments late in the quarter. We think that invoicing could have been some 50 MSEK higher in more normal circumstances.
Additionally, a shortage of certain key components brought generally higher purchasing costs, although not at as high a level as we saw in previous quarters. The Group's cash flow was also impacted by supply chain disruptions, because we were unable to complete products for shipment, thus contributing to increasing inventories and higher capital tied-up.
We’re working intensively on addressing challenges linked to the shortage of electronic components. These include redesigning current products to safeguard shipping capacity, and working continuously with our suppliers to get our component sourcing prioritized. These activities are a top priority, and our organization is doing excellent work in these challenging times.
Order intake and sales progressed well for Westermo and Beijer Electronics in the quarter, with both business entities able to increase profitability. It’s worth noting the positive progress of Beijer Electronics, with a record demand level, simultaneous with profitability performance taking a step forward. This trend brings optimism of converging on the entity’s profitability target.
The Group's order book was its biggest ever at the end of the first quarter, and at the sales level, activity was brisk. We are also noting some alterations to customer behavior in terms of placing orders, especially for Beijer Electronics. Some customers are placing orders over longer time horizons, from planning one month or a quarter ahead, to a half-year or longer. This improves our visibility and extends our planning horizon. At the same time, it is hard to judge how demand and the global business cycle will be impacted by the Ukraine conflict at present. BEIJER GROUP itself has very limited exposure to Russia and the Ukraine.
Disregarding the component shortage, the Group has good capacity to address continued demand gains. Beijer Electronics has also attained better balance in the supply of components to safeguard its shipment capacity for coming periods, whilst Westermo is still facing some challenges.
Implementation of our growth strategies is continuing in our business entities, with operations and new product offerings being developed. We are continuing to screen acquisitions continuously. Our focus segments of energy, rail, infrastructure and manufacturing remain attractive markets whose growth is driven by strong macrotrends like digitalization, electrification, and sustainability. As Covid restrictions are now lifting across much of the world, more direct customer contact is becoming possible, enabling us to address new business customers better—something that was very problematic during the pandemic. This is highly significant to our continued growth in our focus segments. We still think we have excellent potential to increase profitability. Our objective is for our business entities to be capable of achieving minimum yearly growth of 10%, with the potential to achieve an EBIT margin of 15%.
The Group is continuing its sustainability work, focusing on reducing our own, and our customers’, climate footprint. Our focus segments of energy, trains and rail are contributors to reduced fossil fuel emissions by enabling electrification of transportation, for example, and promoting comfort and safety on trains and subway transport. The sustainability concept also includes care for people and the communities we operate in. This is why we put a big emphasis on creating a positive working environment for our co-workers, and always conducting ourselves ethically in everything we do. Information and cybersecurity are also high on our customers’, and our own, agendas. We are working on the introduction of ISO 27001 in the Group’s entities, and Westermo secured certification after the end of the period.
The uncertain macroeconomic conditions, with the conflict in Ukraine, the Covid situation in China, rising inflation and persistent challenges for supply chains mean it’s hard to make an assessment about the immediate future. Nevertheless, we have a record order book, generally positive market conditions for our business entities, which makes us cautiously optimistic for 2022. Accordingly, we’re reiterating our opinion for the full year. BEIJER GROUP has good potential to achieve better financial results in 2022 than in 2021.”
INVITATION TO PRESENTATION OF THE REPORT
Today a conference call will be held for press and analysts, where President and CEO Jenny Sjödahl and EVP and CFO Joakim Laurén present the company and comment on the report.
Time: Wednesday April 27, 13:30 CEST
To participate in the conference please dial:
From SE: +46850558374
From UK: +443333009266
To access the presentation please use this link:
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 to join!
This disclosure contains information that Beijer Electronics Group is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact persons, on 27-04-2022 13:00 CET.