Interim report January—March 2020: Stable underlying progress but Covid-19 having an impact and causing uncertainty
- Order intake increased by 10% to 406 MSEK (368).
- Net sales up by 7% to 395 MSEK (371).
- Decision on restructuring program, generating annualized savings of 40-45 MSEK.
- EBIT before structural expenses of 23.4 MSEK (30.1). Profit after structural expenses of 15 MSEK was 8.4 MSEK.
- Profit after tax amounted to 5.2 MSEK (20.0).
- Earnings per share of 0.19 SEK (0.70).
- Westermo signed a supply agreement with estimated value of 80 MSEK.
- The Board of Directors is proposing a dividend of 0 SEK per share, and has decided to defer the AGM until 26 June 2020.
COMMENTS FROM CEO PER SAMUELSSON
“The coronavirus is overshadowing most of what’s happening across society, and featured strongly in our operations in the first quarter. We complied with the recommendations of the authorities, including social distancing to mitigate the spread of infection at all our units worldwide. Wherever possible, we’ve used remote working, and cancelled physical meetings, conferences, travel, trade events etc., which presented our organization with new challenges.
So far, I can say that our employees have kept activity levels up, coping with these challenges professionally and competently. With minor interruptions, the whole production and supply chain functioned in the quarter. This is also reflected in our financial performance for the period, though the Group was impacted by the effects of Covid-19. We think the associated loss of sales amounts to 7-9% of total. Overall, we were still able to report increased order intake and sales in the quarter, mainly driven by last year’s acquisitions. This loss of sales did impact negatively on earnings, and on expenses for structural measures.
The Westermo business entity remained convincing, with rising order intake, sales and earnings, and a strong EBIT margin for a single quarter. The acquisitions we completed last year also contributed to our positive progress. Meanwhile, operations have been impacted to an extent by postponed deliveries, but we did not see any cancellations of previous orders. But Westermo did sign a new supply agreement with a major North American train operator, with estimated value of some 80 MSEK. This deal corroborates Westermo’s international competitiveness, and shipments start shortly.
The Beijer Electronics business entity was also impacted by Covid-19 with effects including delayed shipments. The phase-out of old products, and selling new products previously announced, also affected operations. Sales of the new X2 series were up by some 40% in the quarter on the corresponding period of 2019, to represent 65% of the business entity’s sales. However, the sales level did not fully match expectations, although increased order intake in the first quarter was positive.
The Korenix business entity was hit hard by Covid-19, due to factors including closures in China and across parts of Asia earlier in the year. This disrupted supply chains and reduced sales.
To adapt costs, in March, we decided to execute a program of measures involving downsizing staff by about 40 people in the Korenix and Beijer Electronics business entities. Most of these layoffs are in Taiwan, as well as some in Sweden. Expenses for this program are 15 MSEK, which have been charged to earnings for the first quarter 2020. We estimate the savings at 25-30 MSEK in 2020, followed by 40-45 MSEK annualized.
We also increased contingency to take action to counter the consequences of the spread of the coronavirus. A number of steps have been enabled by various programs to support the business community in various countries. The Board of Directors also decided to propose that the forthcoming AGM cancels the dividend to protect the Group’s financial stability for the long and short term.
It’s also worth noting that so far, the Group has not seen any cancellations of previously placed orders. The Group’s cash flow remained positive in the quarter, and at present, we see no increased risks in terms of inventory or accounts receivable, although shipping costs are increasing sharply.
What the future will hold remains difficult if not impossible to predict at present. But we’re preparing for tougher times ahead. beijer group is endeavoring to adapt cost levels to prevailing market conditions, while the Group protects its long-term skills. Once the crisis is over, our organization will remain intact, and we will still be attractive to employees and customers.
The considerable uncertainty regarding onward progress means that beijer group is not publishing any estimates of underlying financial performance for the full year 2020.”
INVITATION TO CONFERENCE CALL
Today a conference call is held for press and analysts, where President and CEO Per Samuelsson and EVP and CFO Joakim Laurén present the company and comment on the report.
Time: Tuesday April 21, 14.00 CEST
To participate in the conference please dial:
From SE: +46850558356
From UK: +443333009265
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.
For more information please contact:
President and CEO, Per Samuelsson, tel 46 (0)40 35 86 10, mobile 46 (0)708 58 54 40
Executive VP and CFO Joakim Laurén, tel 46 (0)40 35 84 96, mobile 46 (0)703 35 84 96.
This information is such that Beijer Electronics Group AB (publ) is required to disclose in accordance with EU's Market Abuse Regulation (MAR). The information was submitted for publication through the agency of the contact persons set out above at 13:00 CEST, April 21, 2020.
Beijer Electronics GroupAB (publ) is a growing powerhouse of innovators within mission-critical industrial digital technology and IIoT. With a strong focus on the connection between people, technology and data, we share a pride in having some of the world's leading global companies as our core customers. Since its start-up in 1981, BEIJER GROUP has evolved into a multinational group of complementary business entities with sales over 1.6 billion SEK in 2019.
The company is listed on the NASDAQ OMX Nordic Exchange Stockholm’s Small Cap list under the ticker BELE. www.beijergroup.com