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2020-10-27

Beijer Electronics Group: Interim report January-September 2020: Impact of Covid-19 continues, but signs that the bottom has passed

Third quarter

  • Order intake amounted to 310 MSEK (405).
  • Net sales were 335 MSEK (391).
  • EBIT of 4.7 MSEK (29.9). Currency effects had a negative -8.4 MSEK impact on earnings.
  • Profit after tax of 1.2 MSEK (18.8).
  • Earnings per share amounted to 0.05 SEK (0.65).

Nine months

  • Order intake amounted to 1,052 MSEK (1,150).
  • Net sales of 1,088 MSEK (1,143).
  • EBIT before structural expenses of 36.0 MSEK (81.5). Structural expenses amounted to 15 MSEK. After structural expenses, EBIT was 21.0 MSEK.
  • Profit after tax amounted to 5.6 MSEK (52.5).
  • Earnings per share of 0.21 SEK (1.83).
  • Westermo signed a supply agreement with estimated value of 80 MSEK.
  • Restructuring program implemented, generating annualized savings of 40-45 MSEK.

 

COMMENTS FROM CEO PER SAMUELSSON

"Our financial performance for the third quarter was in line with what we indicated in our Half-year Interim Report. The effects of Covid-19 continued to feature in BEIJER GROUP's business, negatively impacting the Group's order intake, sales and earnings.

We were early in mitigating the effects of Covid-19, which primarily, affected demand on the market, and thus the Group's sales volumes. In March, we decided on a program of measures to reduce overheads by 25-30 MSEK this year and 40-45 MSEK annualized thereafter. We took action to strengthen our liquidity. Meanwhile, we were eager to safeguard our selective product development initiatives, and maintain customer activities at a high level.

While clearly, the loss of sales volumes is having an inevitable impact on EBIT for the short term, our actions are having the intended effect. The program of measures concluded at the beginning of the third quarter, and has reduced overheads, thus arresting the EBIT downturn.

Meanwhile, due to a stronger Swedish krona, EBIT was impacted by negative currency effects totaling 16 MSEK during the second and third quarters. Nevertheless, the Group is still reporting positive earnings. Cash flow increased in the first nine months of the year compared to the corresponding period of 2019. The Group's financial position is healthy. Readers should also note that we have not lost any accounts, and so far, have not experienced any significant customer losses in accounts receivable.

In this context, I'd like to point out that we're obviously not satisfied with our current sales and earnings levels, which essentially, are due to external factors that we now have the experience to deal with. As the negative effects of the pandemic gradually taper off, we have good potential to return to our growth target of 7% and our earnings target of a minimum EBIT margin of 10% fairly quickly. There are also clear signs that we passed the bottom in the third quarter. The order intake of the Beijer Electronics and Korenix business entities increased in the third quarter compared to the second. Although Westermo's order intake did reduce, this business entity did secure a number of major orders, and we still see good potential in the coming quarters.

Despite what are challenging market conditions at present, we are continuing to build a stronger organization. What the Group and business entities all share is holding our organization intact, keeping our focus on product development and maintaining a high level of customer activities. Our organization has done great work on its digital seminars, customer encounters and meetings.

In the quarter, Westermo opened an extension of its production plant at Stora Sundby, offering room to further increase manufacturing capacity going forward. Product development and initiatives in the new power distribution and rail infrastructure segments are going as planned. The integration of acquired company Neratec has gone smoothly and is now complete. The integration of Virtual Access is also progressing well.

Beijer Electronics commenced batch shipments of display solutions to Otis in the third quarter. Deliveries will gradually increase, contributing to sales and earnings. This business entity also passed a milestone in the period, when total sales of the X2 series since launch in fall 2016 passed 1 billion SEK.

The partnership between Beijer Electronics and Korenix has evolved and is continuing as planned. Developments include Korenix now being able to use Beijer Electronics' distribution warehouse in Malmö. Korenix is in the final phase of its new and upgraded product range, which will be launched progressively from late-2020.

We are maintaining our long-term strategy. The pandemic is also likely to accelerate digitalization, and favor BEIJER GROUP. We reiterate our positive view of the market in the longer term, and this has actually accentuated. We will emerge stronger from this crisis, with a smooth-functioning and even leaner organization, and remain attractive to employees and customers. By focusing on product development, we will also have a broader-based and
regenerated product program.

Uncertainty remains substantial, even if we believe we've put the worst behind us. Rising Covid-19 infection rates, mainly in Europe and the US, do remain a cause for some concern. Overall, this means that beijer group will not be making any assessments regarding underlying financial performance for the full year 2020."

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: Tuesday October 27, 14:00 CET

To participate in the conference please dial:

From SE: +46856642692
From UK: +443333009264

To access the presentation please use this link:
https://www.anywhereconference.com?Conference=301333552&PIN=50373481&UserAudioMode=DATA 

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!

  
 

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