Press release
Bergman & Beving's Interim Report 1 April-30 September 2022
Second quarter (1 April-30 September 2022)
- Revenue rose by 6 percent to MSEK 1,073 (1,014), with delivery problems due to an IT attack on Luna's logistics provider having a negative impact of approximately MSEK 30.
- EBITA increased by 4 percent to MSEK 84 (81) and the EBITA margin was 7.8 percent (8.0). The delivery problems due to the IT attack on Luna's logistics provider had negative impact of approximately MSEK 10 on EBITA.
- Net profit totalled MSEK 49 (50).
- Polartherm Group was acquired during the quarter, with annual revenue of approximately MEUR 12.
Six months (1 April-30 September 2022)
- Revenue rose by 3 percent to MSEK 2,273 (2,207).
- EBITA increased by 10 percent to MSEK 175 (159) and the EBITA margin improved to 7.7 percent (7.2).
- Net profit rose by 6 percent to MSEK 104 (98).
- Earnings per share for the most recent 12-month period increased to SEK 7.75 (6.85) before dilution and SEK 7.70 (6.85) after dilution.
- Three acquisitions have been carried out, with total annual revenue of approximately MSEK 200.
CEO's comments
Two of the Group's divisions, Building Materials and Workplace Safety, increased their earnings by just over 20 percent in the quarter and thus continued to develop according to plan. Nevertheless, the quarter was not without its challenges. The Tools & Consumables division's largest company - Luna Group - was unable to carry out invoicing at the end of the quarter due to an IT attack on its logistics provider. This is estimated to have resulted in a loss of EBITA of MSEK 10 in September, and while the other companies in the division increased their earnings by 30 percent, the division's earnings declined. As a result of its strong customer relationships and our decentralised governance model, which enabled rapid action to be taken close to the customer, Luna was able to minimise the negative impact on its customers during the suspension of deliveries. Thanks to the employee's outstanding efforts, just over half of the invoicing lost in September is expected to be recovered in October. In total, the Group's profit increased by 4 percent in the quarter and the operating margin was 7.8 percent. Although we are not satisfied with this result, our profit growth and margin would have been in line with our plan had Luna not been forced to suspend deliveries.
Demand from industrial customers remained favourable in the quarter. While the construction market showed signs of a slowdown, mainly related to a reduction in new housing construction and a decline in the consumer market, our businesses with customers in the construction sector continued to deliver healthy growth. Several of our companies also secured new customer contracts during the quarter, which over time will strengthen our positions in the markets that they serve. While the ongoing supply chain disruptions eased during the quarter, we still needed to compensate for shipping, material and production costs, which remained at high levels, and for a weaker SEK. The effects of rising inflation and economic uncertainty have not had any major impact on demand for our products.
During the quarter, we acquired the Finnish company Polartherm. The company is considered to have favourable growth prospects and be highly profitable and is expected to give us a market-leading position in powerful heaters for various niches within industry, construction, defence and aviation. 70 percent of the company's products are sold as exports, mainly in Europe and North America. The acquisition is in line with our strategy to establish a presence in new, attractive niches through acquisitions of leading, niche product companies.
We are continuing to focus on profit growth before revenue growth, which entails an increased focus on transactions where we offer higher added value and assigning a lower priority to transactions with weaker margins. We have implemented cost-saving measures to increase efficiency and profitability in our companies. Activities to reduce and optimize inventory levels are being intensified. We are also continuing to strengthen our decentralisation, a governance model that proved its strength during the suspension of Luna's deliveries. Going forward, our focus will be on improving profitability in all divisions and increasing our acquisition rate over time.
We have tangible targets and activities for each company, and I am still confident that we can improve the profitability, earnings and cash flow of all of our divisions. I also feel secure knowing that our decentralised model will enable us to adapt quickly, on a company by company basis, if conditions change. Most of our companies still have the potential to deliver a positive performance, and the suspension of Luna's deliveries has now been rectified. I therefore expect our impressive earnings trend to resume in line with our plan to double the Group's operating profit within four to five years. Overall, I expect the Group's conditions to remain favourable.
Stockholm, October 2022
Magnus Söderlind
President & CEO
For further information, please contact:
Magnus Söderlind, President & CEO, Tel: +46 10 454 77 00
Peter Schön, CFO, Tel: +46 70 339 89 99
This information is information that Bergman & Beving AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 7:45 a.m. CET on 20 October 2022.
Bergman & Beving attracts, acquires and, over the long term, develops leading companies in expansive niches that deliver productive, safe, and sustainable solutions to the industrial and construction sectors. Through our companies, we are represented in over 4,000 sales outlets in more than 25 countries. Bergman & Beving is listed on Nasdaq Stockholm and has about 1,200 employees and generates revenue of approximately SEK 4.5 billion. Read more on the company's website: www.bergmanbeving.com.
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