Weak performance during the first half of the year as anticipated - improvement expected for the rest of the year
SEK million | 1 April 2024- 30 June 2024 | 1 April 2023- 30 June 2023 | 1 January 2024- 30 June 2024 | 1 January 2023- 30 June 2023 | 1 January 2023- 31 Dec 2023 | 1 July 2023- 30 June 2024 |
| Net revenue | 242.4 | 246.7 | 474.0 | 463.9 | 956.1 | 966.1 |
| Adjusted EBITDA | 24.4 | 38.0 | 48.1 | 60.6 | 112.0 | 99.6 |
| Adjusted EBITDA margin, % | 10.1% | 15.4% | 10.2% | 13.1% | 11.7% | 10.3% |
| Adjusted EBITA | 8.9 | 24.9 | 18.4 | 35.5 | 58.3 | 41.2 |
| Adjusted EBITA margin, % | 3.7% | 10.1% | 3.9% | 7.7% | 6.1% | 4.3% |
| Operating profit (EBIT) | 3.9 | 18.2 | 9.6 | 21.5 | 41.8 | 29.9 |
| Net earnings | 0.0 | 28.9 | 4.2 | 1.7 | 17.2 | 19.7 |
| Net debt | 218.3 | 44.1 | 218.3 | 44.1 | 135.8 | 218.3 |
| Adjusted EBITDA R12 | 108.5 | 124.2 | 108.5 | 124.2 | 115.9 | 108.5 |
| Net debt/adjusted EBITDA R12 | 2.0 | 0.4 | 2.0 | 0.4 | 1.2 | 2.0 |
| Average No. of shares outstanding in the period, before and after dilution | 13,726,779 | 13,644,343 | 13,755,043 | 13,644,343 | 13,678,259 | 13,734,831 |
| No. of shares outstanding at end of period | 13,817,291 | 13,644,343 | 13,817,291 | 13,644,343 | 13,817,291 | 13,817,291 |
| Treasury shares | 141,493 | - | 141,493 | - | - | 141,493 |
| Basic and diluted earnings per share by average number of shares, SEK | 0.00 | 2.12 | 0.30 | 0.12 | 1.26 | 1.43 |
INTERIM PERIOD 1 APRIL-30 JUNE
- The Group's net revenue amounted to SEK 242.4 million (246.7), adjusted EBITDA amounted to SEK 24.4 million (38.0) corresponding to an adjusted EBITDA margin of 10.1% (15.4), and adjusted EBITA amounted to SEK 8.9 million (24.9) corresponding to an adjusted EBITA margin of 3.7% (10.1). For comparable entities, revenue declined -11.0% (8.2) adjusted for currency.
- The quarter continued to be characterised by a cautious market primarily in contracting services in pipe relining in Sweden and Finland as well as duct sealing and geothermal energy.
- Operating profit (EBIT) amounted to SEK 3.9 million (18.2). Items affecting comparability during the quarter totalled SEK 2.1 million (3.7) and primarily pertained to restructuring costs, contingent earnout revaluations, costs for the change of system and implementation, and transaction costs.
- The Group's net earnings amounted to SEK 0.0 million (28.9).
- The Group's basic and diluted earnings per share amounted to SEK 0.00 (2.12).
SIGNIFICANT EVENTS DURING THE QUARTER
- Wall to Wall Group has appointed André Strömgren as the new CFO and member of the company management. André will assume his role no later than 1 September 2024. The company's current acting CFO, Linus Marmstedt, will remain in his current role until André takes over.
- At the Annual General Meeting, Anders Böös was elected as new Chairman and Maria Sidén as a new Board member.
- On 30 April 2024, Molins i Kalmar AB, whose main business is pipe flushing, was acquired.
- Wall to Wall Group continued its expansion in Denmark by appointing Heine Buhl as the new head of Greenpipe A/S. Heine assumed his new role on 1 June 2024.
- Wall to Wall Group also continued to strengthen its competitiveness in Finland through the merger of Reliner Oy and Sukittajat Oy into a joint company under the name Sukittajat. Through this merger, Sukittajat has become the market leader in pipe relining in the Finnish market.
- By virtue of the authorisation granted by the Annual General Meeting on 15 April 2024, on the same date, the Board resolved to repurchase a maximum of 1,317,372 own Class A shares for a total maximum amount of SEK 120 million.
- During the quarter, the company repurchased its own shares, corresponding to 77,136 shares, and as of 30 June 2024, treasury shares amounted to 141,493.
1 JANUARY-30 JUNE
- The Group's net revenue amounted to SEK 474.0 million (463.9), adjusted EBITDA amounted to SEK 48.1 million (60.6) corresponding to an adjusted EBITDA margin of 10.2% (13.1), and adjusted EBITA amounted to SEK 18.4 million (35.5) corresponding to an adjusted EBITA margin of 3.9% (7.7). For comparable entities, revenue declined -7.7% (12.3) adjusted for currency.
- Operating profit (EBIT) amounted to SEK 9.6 million (21.5). Items affecting comparability during the period totalled SEK 2.8 million (8.1) and primarily pertained to costs for the change of system and implementation, contingent earnout revaluations, transaction costs and restructuring costs.
- The Group's net earnings amounted to SEK 4.2 million (1.7).
- The Group's basic and diluted earnings per share amounted to SEK 0.30 (0.12).
PERFORMANCE IN THE SECOND QUARTER OF THE YEAR
There were signs of market optimism during the quarter with an increase in inquiries noted, although this had a limited impact on the level of activity in the quarter. The interest rate and cost situation faced by important customer groups over the past year has had a significant impact on the Group's contracting and project operations in pipe relining, duct sealing and geothermal energy. Adjusted for currency, net revenue for comparable entities declined 11% during the quarter, with duct sealing and geothermal energy together accounting for almost half of the reduction while nearly 3% was attributable to discontinued operations.
A number of measures have been implemented to compensate for the decline in net revenue and general cost increases. Adjusted EBITA amounted to SEK 8.9 million (24.9) corresponding to an adjusted EBITA margin of 3.7% (10.1). The decline in earnings was mainly the result of a weak trend for duct sealing and geothermal energy compared with the year-earlier period, which combined with the continuing pipe relining operations in Finland accounted for SEK 13.7 million of the decrease. In addition, ongoing development projects, primarily related to sustainability and Group-wide business systems, entailed a higher cost increase at the Group level, which is having a short- term negative impact on economies of scale. These costs are expected to decline substantially in the second half of the year.
POSITIVE UNDERLYING TREND IN DENMARK AND NORWAY
Over the past few quarters, measures taken in Danish operations resulted in a positive sales trend and improved earnings, even if the trend was impacted in the second quarter by temporarily higher costs related to a particular project. The Norwegian operations continued to perform well with healthy growth and earnings.
JOINT ORGANISATION IN FINLAND CREATING CONDITIONS FOR CONTINUED PROFITABILITY
The operations in Finland were combined during the quarter to form a single joint organisation. Together with favourable new sales during the quarter, this is expected to lead to positive earnings for the Finnish operations from the second half of the year.
INCREASED MARKET ACTIVITY AND ORDER STOCK INDICATE A STRONGER END TO THE YEAR
An uptick in market sentiment was noted in the second quarter, with increased levels of inquiries and business activity compared with previously. The order stock continued to develop positively, with a number of major orders in pipe relining in Sweden and Finland. All in all, the assessment is that the increased order stock will result in a gradually improved sales trend in the second half of the year.
COMMENTS FROM JOACHIM WELIN, MANAGING DIRECTOR AND CEO
"The second quarter of the year was characterised by intense work in a challenging market. We implemented major changes in Finland and Denmark, and as a result we now have the right prerequisites to gradually achieve improved earnings. In Finland, we discontinued the operations in RPL and completed the merger of Reliner and Sukittajat. In Denmark, we noted a positive sales trend and underlying earnings moving in the right direction.
In Sweden, we continued to experience challenges related to the aftermath of a weak market for our contracting and project operations in the past year. However, a growing level of market activity and an improvement in new sales, primarily in pipe relining, have boosted our confidence ahead of the second half of the year."
OUTLOOK FOR THE CURRENT YEAR
Signs of increased market activity were noted in the second quarter. A projected continued positive interest rate trend together with pent-up demand for investments in planned maintenance among housing cooperatives and property owners is expected to contribute to a recovery in demand. At the same time, measures continue to be implemented to optimise the organisation and reduce indirect costs, which are expected to strengthen economies of scale and positively impact profitability.
In light of the performance in the first two quarters of the year, the company's assessment remains firm: while sales and profitability will gradually improve during the second half of the year, over the full year it could be challenging for the company to compensate for the loss of revenue in the first half of the year compared with the year-earlier period. This is a more reserved assessment than previously when the company predicted cautious growth for comparable entities during the year.
For full interim report, see appendix.
Contacts
Linus Marmstedt, Acting CFO
+46 768 08 03 01
linus.marmstedt@walltowallgroup.com
About Wall to Wall Group AB
Wall to Wall Group is primairly active within property related pipe flushing and relining. Wall to Wall's customers mainly consist of commercial property managers and housing cooperatives. Wall to Wall Group has a clear growth strategy with a focus on both acquisitions and organic growth, including through greenfieldings in new locations. The head office is located in Stockholm.
This information is information that Wall To Wall Group is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-08-14 08:00 CEST.
