Interim report January-September 2019: A strong third quarter with continued growth investments
- Order intake increased to 405 MSEK (372).
- Net sales rose by 16% to 391 MSEK (338).
- EBIT up by 69% to 29.9 MSEK (17.7).
- Profi t after tax amounted to 18.8 MSEK (11.0).
- Earnings per share were 0.65 SEK (0.38).
- Acquisition of Neratec boosts Westermo.
- Order intake amounted to 1,150 MSEK (1,141).
- Net sales rose by 10% to 1,143 MSEK (1,036).
- EBIT up by 52% to 81.5 MSEK (53.7).
- Profi t after tax amounted to 52.5 MSEK (31.1).
- Earnings per share were 1.83 SEK (1.08).
COMMENTS FROM CEO PER SAMUELSSON
“BEIJER GROUP accelerated its expansion in the third quarter, and things are moving in the right direction. Order intake increased, while sales returned good growth and EBIT improved. The earnings upturn is due to increased sales volumes, a wider gross margin and good cost control otherwise. Cash flow also started to head in the right direction.
We operate on markets where digitalization is in rapid growth across an increasingly connected world. Thus, our major product development initiatives focused on regenerating and expanding our product range across the Group’s three business entities, are continuing. These investments in future profitable growth also generate costs that are being charged to ongoing earnings. Some way into 2020, over half of our sales will be from products launched after 2016. Our organization has demonstrated very good capacity to transform customer needs into competitive solutions.
The Westermo business entity was the big stand-out in the third quarter, achieving record order intake, sales and earnings for a single quarter. After a long phase of capacity expansion, we can now conclude that our supply chain is working well, with greater delivery capacity and shorter lead-times. Westermo’s goal-oriented focus on initiatives in network solutions for trains was supplemented by the acquisition of Swiss company Neratec, which further enhances Westermo’s customer offering. Meanwhile, product development addressing the new segments of power distribution and rail infrastructure are continuing.
The Beijer Electronics business entity achieved some sales increase and earnings improvement, mainly because of wider gross margins and good cost control. But as previously reported, the pattern from previous quarters is continuing, with effects from the phase-out of four older product generations, which are impacting order intake and sales. Prior to year-end, customers placed exceptionally large orders for products being phased out this year. This irregularity will persist for several quarters yet but will gradually taper off as transition to the new X2 series continues. In the first nine months of the year, the new X2 series represented 50% of business entity sales. Beijer Electronics is also launching its new Internet of Things platform under the proprietary brand Acirro+ in the fourth quarter. This platform consists of software and hardware, which enables secure communication with the cloud for our customers.
The Korenix business entity is following the plan set, making positive progress in terms of order intake and sales in the third quarter. Another positive was its order book, which was 50% larger at the end of the quarter than at the same point of 2018. Additionally, Korenix is still maintaining high product development activity, which will involve the progressive launch of a number of new products. This is also causing higher product development costs, which do exert a short-term profitability impact. However, there is potential for Korenix to approach break-even for the full year 2019.
Our view is that BEIJER GROUP will still be able to increase sales and earnings for the full year 2019 compared to 2018.
The uncertainty regarding economic conditions in our business environment is persisting. We’re noting some slowdown from our customers in the UK due to ongoing Brexit negotiations. German automation customers are also more cautious, but otherwise, we’re not noting any significant demand slowdown from a cyclical downturn. furthermore, we have strong order books, which are significantly larger for all business entities than for the same period of the previous year.
In a longer perspective, and against the background of the initiatives we’re conducting in each business segment, the Group is now well positioned for continued healthy and high growth. With increased sales volumes, we’re now converging on our margin target of 10%.”
INVITATION TO CONFERENCE CALL
Today a conference call will be 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: Monday October 28, 14.00 CET
To participate in the conference please dial:
From SE: +46850558355
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 CET, October 28, 2019.
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 1.4 billion SEK in 2018.
The company is listed on the NASDAQ OMX Nordic Exchange Stockholm’s Small Cap list under the ticker BELE. www.beijergroup.com