INTERIM REPORT, JANUARY – JUNE 2023

Second quarter of 2023

• Consolidated net sales increased by 3 percent to SEK 1,292 m (1,255), of which acquisitions 8 percent, currency effects 4 percent and organic development -9 percent
• Net sales in Product & Solutions amounted to SEK 1,001 m (1,021) and in Installation Services to SEK 350 m (291)
• Gross profit decreased to SEK 349 m (379), Gross margin decreased to 27.0% (30.2%)
• EBITDA decreased to SEK 186 m (261), EBITDA margin decreased to 14.4% (17.2%)
• Operating profit (EBIT) decreased to SEK 143 m (180), EBIT margin decreased to 11.0% (14.4%)
• ROCE amounted to 11.4 percent (16.1)
• Cash flow from operating activities amounted to SEK 157 m (38)
• Earnings per share before and after dilution were SEK 4.34 (5.84) and SEK 4.31 (5.80), respectively

January-June 2023 

• Consolidated net sales increased by 2 percent to SEK 2,203 m (2,167), of which acquisitions 7 percent, currency 4 percent and organic development -9 percent
• Net sales in Product & Solutions amounted to SEK 1,702 m (1,794) and in Installation Services to SEK 590 m (462)
• Gross profit decreased to SEK 550 m (616), Gross margin decreased to 25.0% (28.4%)
• EBITDA decreased to SEK 216 m (307), EBITDA margin decreased to 9.8% (14.2%)
• Operating profit (EBIT) decreased to SEK 131 m (236), EBIT margin decreased to 5.9% (10.9%)
• Cash flow from operating activities amounted to SEK 99 m (22)
• Earnings per share before and after dilution were SEK 3.50 (7.49) and SEK 3.48 (7.44), respectively

Message from the CEO
Installation Services EBIT further improves, mixed performance in Products & Solutions
Consolidated net sales in the second quarter increased to SEK 1,292 million compared to SEK 1,255 million last year, with an impact from acquisitions of 8 percent, currency translation of 4 percent and organic development of -9 percent, of which 5 percent were sales price increases and volume development was -14 percent. Organic development was -8 percent in Products & Solutions and -11 percent in Installation Services.

EBIT for the second quarter amounted to SEK 143 million, compared to SEK 180 million last year. The negative development in operating profit is mainly explained by increased competition in the market for synthetic rubber waterproofing membranes that has led to lower volumes and margins from last year’s historically high levels. In addition, in our prefabricated wooden elements business that has a higher exposure to residential new build than the rest of our activities, lower volumes and operational challenges have led to lower operating result. Excluding these two businesses our Group has achieved an operating result on par with last year.

ROCE now stands at 11.4 percent (16.1). Cash flow from operating activities amounted to SEK 157 M (38), the positive development being explained by improved working capital.
 
We have seen continued slightly deflated costs for our input materials. Our expectation for commercial new build remains slightly negative while demand for renovation seems stable. Residential new build is expected to remain depressed in the short-term. We have effected cost reductions throughout our Group to adapt to the current business climate.

The Products & Solutions operating segment decreased Net Sales by -2 percent (20). Organic development was -8 percent (15) of which 4 percent were related to sales price increases and volume development was -12 percent, the impact from acquisitions was 3 percent and currency translation effects were 3 percent.
The Bitumen-based waterproofing business in Sweden showed an increase in Net Sales while the other three Nordic markets had slightly negative development. The volume development, being mid-single digit negative, was almost compensated by the impact from price increases. SealEco, our synthetic rubber waterproofing business, had a decline in sales in all markets.
In our prefabricated wooden elements business, Taasinge group had a decline in sales in Denmark, Norway had a positive sales development while Seikat in Finland saw a good increase in sales. The Taasinge group has had a weak margin development and some operational challenges, a new CEO has been appointed. Order books are on good levels in all three markets, however somewhat lower than previous quarters.
Sales development of our green infrastructure businesses, sold under the brands Veg Tech and Urban Green, had a strong growth compared to the second quarter 2022.

The Installation Services operating segment grew by 20 percent (18) to SEK 350 M. Organic development was -11 percent (5), of which 7 percent was sales price increases and volume development was -19 percent, the impact from acquisitions was 24 percent and currency translation effects were 7 percent. In Finland, which represents the largest part of our Installation Services, we saw continued margin improvement. In Norway, where we face some operational challenges, we had a negative development in Net Sales and weaker margins. In Denmark our franchise network outperformed last year’s EBIT.
 
We continue to focus on growth via organic market share gains and selective acquisitions which our balance sheet continues to allow for. We have a strategic focus to promote sustainable building solutions and enhance our service and product portfolio.
 
Helsingborg, 20 July 2023
  
Martin Ellis,
President and CEO

Conference call
A conference call for investors, analysts and media will be held today, 20 July 2023, at 10:00 am CEST and can be joined online at https://events.teams.microsoft.com/. Presentation materials will be available on https://www.nordicwaterproofing.com one hour before the call.
To participate from computer, use link above. To participate via phone, please use conference id 559 433 554# on any of below numbers:
From Sweden: +46 8 502 428 90
From Denmark: +45 32 72 66 61
From United Kingdom: +44 20 7660 8326
From Finland: +358 9 85 626 548