Lindab's Interim Report January - September 2022: Strong growth through acquisitions

GREVIE, Sweden, Oct. 25, 2022 /PRNewswire/ -- Sales remained high during the third quarter. The acquired companies developed well and made a strong contribution to growth. The operating profit was one of the best for a quarter ever. Previous year, Lindab benefited from major changes in material prices, which contributed to a high operating margin. During the third quarter of this year, the effect was the opposite, and raw material prices and high cost inflation put temporary pressure on the operating margin. In addition, the acquired companies joined Lindab with a lower average operating margin than Lindab in general. Despite a more challenging market climate, Lindab meets all its financial targets during the quarter.

As of 2022 Lindab's business consists of business area Ventilation Systems and Profile Systems. Unless otherwise stated the comparative numbers exclude the divested business area Building Systems, which was divested in December 2021.

Third quarter 2022

• Net sales increased by 30 percent to SEK 3,239 m (2,488). Organic growth was 7 percent. Structural changes contributed positively by 20 percent.
• Adjusted¹⁾ operating profit amounted to SEK 361 m (403).
• Operating profit amounted to SEK 358 m (403).
• Adjusted¹⁾ operating margin amounted to 11.1 percent (16.2).
• Operating margin amounted to 11.1 percent (16.2).
• Profit for the period amounted to SEK 267 m (299).
• Earnings per share before dilution amounted to SEK 3.48 (3.92) and after dilution to SEK 3.47 (3.91).
• During the quarter, four acquisitions were finalised, with total annual sales of approximately SEK 570 m.

The comparable numbers for the following key figures include the business divested in previous year.

• Profit for the period amounted to SEK 267 m (-102).
• Earnings per share before dilution increased to SEK 3.48 (-1.33) and after dilution to SEK 3.47 (-1.34).
• Cash flow from operating activities increased to SEK 216 m (202).

January - September 2022

• Net sales increased by 29 percent to SEK 9,143 m (7,088). Organic growth was 14 percent. Structural changes contributed positively by 11 percent.
• Adjusted¹⁾ operating profit increased to SEK 1,103 m (955).
• Operating profit increased to SEK 1,081 m (955).
• Adjusted¹⁾ operating margin amounted to 12.1 percent (13.5).
• Operating margin amounted to 11.8 percent (13.5).
• Profit for the period increased to SEK 803 m (724).
• Earnings per share before dilution increased to SEK 10.49 (9.48) and after dilution to SEK 10.46 (9.46).

The comparable numbers for the following key figures include the business divested in previous year.

• Profit for the period increased to SEK 803 m (316).
• Earnings per share before dilution increased to SEK 10.49 (4.14) and after dilution to SEK 10.46 (4.13).
• Cash flow from operating activities amounted to SEK 164 m (489).

1) Adjusted operating profit/operating margin does not include significant one-off items and restructuring costs.

Lindab's President and CEO, Ola Ringdahl, comments:

"Lindab continues to grow and increased sales by 30 percent in the quarter. Acquisitions contributed strongly to the growth and Lindab is advancing its positions in strategically important markets such as Germany, France and the Netherlands. As expected, cost inflation in Europe and large variations in material prices put pressure on margins in the quarter. Despite this, Lindab delivers one of its best quarters in terms of operating profit.

During the first nine months of the year, Lindab has acquired eight companies, of which four in the last quarter. The divestment of Lindab Russia was also completed during the quarter, which means that from August, Lindab Group no longer has any operations related to Russia.

Challenging times for Europe

Russia's invasion of Ukraine has changed the conditions for the entire European economy in a short time. We expect reduced new construction activity in the future. We can already see a more hesitant market with lower sales in cyclically sensitive Eastern Europe.

For Lindab, the quarter began with unexpectedly weak sales in July. During August and September sales developed however as expected. Sales in the acquired companies have developed well.

Margins in the quarter were under pressure as a result of three factors. The raw material situation with sudden drops in the steel price is disadvantageous to Lindab, as we prioritise high delivery capacity and necessary safety stocks. Secondly, the high energy prices in Europe have created strong cost inflation for vital raw materials. Finally, the acquired companies have joined Lindab with a lower average profitability and they have thereby diluted the Group's operating margin by one percentage point. Lindab works actively with both purchasing and pricing to balance these effects.

Continued investments and acquisitions

We have a clear plan for how Lindab will continue to develop positively, also in a weaker market. After the transformation of the business in recent years, the subsidiaries in the Group are well managed and profitable. A decentralized management structure means quick decisions and great accountability for results.

The investment program will continue with a focus on efficiency. The pace of new investment will slow down as we have completed a large part of the program in recent years.

Acquisitions are an important part of our strategy that will be prioritized. With a strong balance sheet, we have the opportunity to continue to acquire well-managed companies. Increased focus on cash flow will have positive effects in the coming quarters and strengthen us further. Our strategic investments can continue thanks to the transformation that Lindab has gone through in recent years.

Focus on energy efficiency benefits Lindab

In the short term, we expect gradually lower demand and volumes for both business areas, as new construction of buildings suffers from higher costs, increased interest rates and longer decision times.

In the medium term, we are optimistic about both the industry's and Lindab's prospects. The high energy prices put even more focus on well-insulated buildings and energy-efficient ventilation, which benefits Lindab. We expect a longer period of renovation of public and private properties in Europe. As Lindab has half of its sales towards renovation and remodelling, we see good growth opportunities in this segment, as necessary energy efficiency projects are started in Europe. Within new construction, the demands for sustainable and energy-efficient buildings will increase further, also to the advantage of Lindab and our leading product range.

All in all, with our strong local presence, stable supply chain, demanded products and efficient organisation, Lindab has good conditions for continuing to develop the company in a positive direction."

Press and analyst meeting:

A live webcast will be held at 10:00 am (CEST) on October 25. The Interim Report will be presented by Ola Ringdahl, President and CEO, and Jonas Arkestad CFO.

To access the webcast, please call:

Phone +46 (0) 8 505 163 86

Alternatively phone +44 203 198 4884

Pin code 4104349#

The webcast can be followed live at: https://tv.streamfabriken.com/lindab-q3-2022 

This disclosure contains information that Lindab is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 25-10-2022 07:40 CET.

Contacts:

Ola Ringdahl
President and CEO
E-mail: [email protected]
Phone: +46 (0) 431 850 00

Jonas Arkestad
CFO
E-mail: [email protected]
Phone: +46 (0) 431 850 00

Catharina Paulcén
Head of Corporate Communications
E-mail: [email protected]
Mobile: +46 (0) 701 48 99 65

The following files are available for download: