Interim report January-September 2015: Intensive initiatives and actions taken—platform for future profitable growth
- Order intake of 309.0 MSEK (341.4).
- Net sales were 322.3 MSEK (334.6).
- Operating profit was 12.0 MSEK (17.8).
- Earnings per share were 0.44 SEK (0.41).
- Per Samuelsson appointed as CEO and President on September 1
- Order intake of 989.5 MSEK (1,039.5).
- Net sales increased to 1,041.6 MSEK (1,036.2).
- Operating profit was 62.9 MSEK (99.7 and 66.8 excluding capital gain in 2014).
- Earnings per share were 1.91 SEK (2.77).
- The Westermo initiative is proceeding according to the previously reported plan.
COMMENTS FROM CEO AND PRESIDENT PER SAMUELSSON
"Progress in the third quarter basically followed the assessments and actions that Beijer Electronics previously announced. In the third quarter, the Group reported somewhat lower sales and lower operating profit. The aggressive initiatives in the IDC business area are in an intensive phase. Simultaneously, the savings program executed in the IAS business area in late-2014 produced savings of 27 MSEK in the first three quarters.
The Group’s short-term challenges center on the IAS business area. The effects of the terminated agreement were notable, with sharply lower sales in the quarter. Simultaneously, the restructuring of our operation has proceeded rapidly. A new pan-Nordic organization was in place in September. Our workforce will be progressively downsized by year-end, from 105 to 60 employees, which will have an effect on profits in 2016. A letter of intent has been signed for the sale of our operation in Finland, which is scheduled for sale at year-end. Our operations in the Baltics are also scheduled for sale in the coming months. Our restructuring is scheduled to be fully complete by year-end. This means that our pan-Nordic organization can fully focus on sales of proprietary products and products under the Group’s own brands.
IAS’s second challenge this year has been the drastic demand downturn from the US oil and gas sector. The third quarter continued the same trend, although other business in the US made positive progress. Sales increased in Asia, despite the troublesome macro situation in China, while markets in Europe headed in a somewhat differing direction. Adjusted for non-recurring items, IAS’s operating profit was unchanged, despite the lower sales volume. Previously initiated cost savings in Q4 2014 and Q2 2015 will reduce the cost base by some 60 MSEK in 2016 compared to 2014. We should also point out that product development, which will raise the share of proprietary products, will increase sales through the coming years.
The IDC business area reported continued growth in the third quarter. Meanwhile, expenses for product development and the marketing organization increased, in accordance with the significant expansion plan set in fall 2014. This means that, as expected, IDC reported lower profit in the period. Order intake was unchanged in the quarter, due to a number of major customers delaying orders. Beijer Electronics expects these orders to be placed in 6-9 months. Westermo also secured a major order from a new business customer in the US in the Train segment, which underscores the company’s international competitiveness. IDC also launched several new products in the quarter including a 4G industrial router, which gained a positive market reception.
IDC has a good list of prospects and its potential for major new orders is positive. Large-scale project business is inherently irregular, which does affect order intake in individual quarters. The long-term plans are retained, and IDC has good potential of reaching its targets for 2017.
The Group’s policy is not to hedge currencies. However, we do note that operating profit in the quarter was negatively affected by 7.1 MSEK compared to the previous year. For the first three quarters, the negative currency effect was 17 MSEK. The negative currency effects are due to a high share of Beijer Electronics’ costs being US dollar denominated, while only about one-third of revenues are in the same currency.
Despite its lower profits, Beijer Electronics improved its financial position. Net debt has reduced and the equity ratio is stronger. In the fourth quarter, operations are expected to follow the pattern set in previous quarters. This means that for the full year 2015, Beijer Electronics expects to report largely unchanged sales and some decrease to underlying operating profit compared to 2014."
INVITATION TO CONFERENCE CALL
Today, a conference call will be held for press and analysts, where President and CEO Per Samuelsson and acting CFO Joakim Nideborn present the company and comment on the report.
Time: Wednesday October 21, at 10.30 a.m. CET
To participate in the conference please dial:
From Sweden: +46 85 66 42 669
From UK: +44 20 3428 1409
To access the presentation please use this link:
The report and the presentation will be available at Beijer Electronics’ website www.beijergroup.com under Investors/Presentations. 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
Acting CFO, Joakim Nideborn, tel 46 (0)40 35 84 49, mobile 46 (0) 707 72 29 83
Beijer Electronics is a fast growing technology company with extensive experience of industrial automation and data communication. The company develops and markets competitive products and solutions that focus on the user. Since its start-up in 1981, Beijer Electronics has evolved into a multinational group present in 19 countries and sales of 1,402 MSEK 2014. The company is listed on the NASDAQ OMX Nordic Stockholm Small Cap list under the ticker BELE. www.beijerelectronics.se