Purmo Group Plc | Stock Exchange Release | October 22, 2024 at 08:15:00 EEST
July-September 2024
• Net sales decreased by 2 per cent to EUR 173.3 million (176.1). The organic1 decline in net sales was 2 per cent.
• Net sales for the Climate Product & Systems division increased slightly to EUR 143.6 million (143.0) and net sales for the Climate Solutions division decreased by 9 per cent to EUR 30.3 million (33.2).
• Adjusted EBITDA decreased by 9 per cent to EUR 21.3 million (23.5).
• Adjusted EBITDA margin decreased to 12.3 per cent (13.3) mainly driven by lower volumes and temporarily higher operational costs during the quarter.
• EBIT decreased to EUR 5.3 million (11.2), which included EUR -8.4 million (-6.2) of comparability adjustments.
• Cash flow from operating activities decreased to EUR -12.6 million (1.1).
• The Accelerate PG programme's adjusted EBITDA run-rate improvements amounted to EUR 47.2 million (EUR 42.3 million at the end of Q2 2024), of which periodic impact for the third quarter was EUR 5.7 million (EUR 4.8 million in Q3 2023) compared to the previous year.
January-September 2024
• Net sales decreased by 6 per cent to EUR 532.7 million (568.2). The organic1 decline in net sales was 6 per cent.
• Net sales for the Climate Product & Systems division decreased by 5 per cent to EUR 434.7 million (457.0) and net sales for the Climate Solutions division decreased by 11 per cent to EUR 99.1 million (111.5).
• Adjusted EBITDA decreased by 6 per cent to EUR 66.6 million (71.1).
• Adjusted EBITDA margin remained on the same level at 12.5 per cent (12.5) due to cost-saving actions.
• EBIT was EUR 29.1 million (35.2), which was burdened by EUR -15.3 million (-13.8) of comparability adjustments mainly related to the Accelerate PG programme.
• Cash flow from operating activities decreased to EUR -2.2 million (7.9).
• Adjusted operating cash flow (last 12 months) decreased by 7 per cent to EUR 74.6 million (80.1).
¹ Excluding currency effects and impacts from acquisitions and divestments.
The tender offer
• On 2 August 2024, Project Grand Bidco (UK) Limited announced the final result of Project Grand Bidco (UK) Limited's public tender offer for all the shares in Purmo and that it will complete the tender offer and was commencing a subsequent offer period. According to the final result of the Tender Offer, the 40,341,493 shares validly tendered and not validly withdrawn in the Tender Offer or which the shareholders of Purmo Group had otherwise agreed to sell to the Offeror in connection with the Tender Offer, represented approximately 94.53 per cent of all the Shares in the aggregate. The Subsequent Offer Period commenced on August 5, 2024 at 9:30 a.m. (Finnish time) and expired on August 19, 2024 at 4:00 p.m. (Finnish time).
• On 8 August 2024, Purmo Group announced a new financing arrangement for Purmo Group and the plan for prepayment of existing loans. The Board of Directors of Purmo Group Plc had made a decision upon a loan agreement to be made with Project Grand Bidco (UK) Limited under which Grand Bidco would make available to the Company a term loan that could be at maximum up to EUR 300 million for the refinancing of the Company's existing indebtedness and for working capital and general corporate purposes. The Company's existing syndicated term loan and revolving credit facilities totalling around EUR 290 million from third parties would be prepaid with the loan provided by Grand Bidco.
• On 17 September 2024, Project Grand Bidco announced that the trustee had been appointed for the arbitration proceedings concerning the redemption of minority shares in Purmo Group Plc.
Financial guidance 2024
Adjusted EBITDA in 2024 is expected to be on a similar or higher level than in 2023 (EUR 92.3 million).
Wholesalers' stock levels have stabilised, and the lower interest rates support the expectations of a gradual market activity improvement. Strong margin management actions provide confidence in the guidance for the Group. However, increased geopolitical risks and high overall uncertainties can have an impact on Purmo Group's core markets.
The strategy acceleration programme, Accelerate PG, is performing ahead of plan and further underpins Purmo Group's outlook for 2024. The cumulative targeted adjusted EBITDA run-rate improvements of the programme will be EUR 50.0 million, which are expected to be reached by the end of 2024. The programme also targets cumulative net working capital improvements of EUR 45.0 million by the end of 2024.
Key figures
| EUR million | 7-9/2024 | 7-9/2023 | Change, % | 1-9/2024 | 1-9/2023 | Change, % | 2023 |
| Net sales | 173.3 | 176.1 -2% | 532.7 | 568.2 | -6% | 743.2 | |
| Adjusted EBITDA¹ | 21.3 | 23.5 | -9% | 66.6 | 71.1 | -6% | 92.3 |
| Adjusted EBITDA margin, %¹ | 12.3% | 13.3% | 12.5% | 12.5% | 12.4% | ||
| Adjusted EBITA¹ | 14.7 | 18.3 | -20% | 47.4 | 51.8 | -8% | 66.3 |
| Adjusted EBITA margin, %¹ | 8.5% | 10.4% | 8.9% | 9.1% | 8.9% | ||
| EBIT | 5.3 | 11.2 | -52% | 29.1 | 35.2 | -18% | 9.7 |
| EBIT margin, % | 3.1% | 6.3% | 5.5% | 6.2% | 1.3% | ||
| Profit for the period | -5.2 | 4.5 | 3.5 | 14.1 | -75% | -9.3 | |
| Adjusted profit for the period¹ ³ | 1.2 | 9.6 | -87% | 14.9 | 25.3 | -41% | 32.2 |
| Earnings per share, basic, EUR | -0.15 | 0.08 | 0.02 | 0.27 | -93% | -0.32 | |
| Adjusted earnings per share, basic, EUR¹ ³ | 0.00 | 0.20 | -99% | 0.29 | 0.54 | -46% | 0.68 |
| Cash flow from operating activities | -12.6 | 1.1 | -2.2 | 7.9 | 40.4 | ||
| Adjusted operating cash flow, last 12 months¹ ² | 74.6 | 80.1 | -7% | 75.1 | |||
| Cash conversion¹ ² | 85.0% | 91.6% | 81.4% | ||||
| Operating capital employed¹ | 309.4 | 327.1 | -5% | 294.7 | |||
| Return on operating capital employed, %¹ | 1.2% | 10.5% | 2.9% | ||||
| Net debt¹ | 262.4 | 238.4 | 10% | 219.6 | |||
| Net debt / Adjusted EBITDA¹ | 2.99 | 2.73 | 10% | 2.38 | |||
¹ Purmo Group presents certain measures of financial performance, financial position and cash flows, which are alternative performance measures in accordance with the guidance issued by the European Securities and Markets Authority ('ESMA'). For the detailed definitions and reconciliation of alternative performance measures see page 45 in the January-September 2024 interim financial report.
² Change in net working capital includes assets held for sale. M&A and comparability adjustments totalled EUR 5.5 (9.6) million.
³ Comparative figures for Q3 2023 have been restated due to change in calculation of the key figure, see page 46 in the January-September 2024 interim financial report.
CEO's review
During the third quarter of 2024, we saw signs of pick-up in the Nordics, and we grew in net sales also in Central, Eastern and Western Europe. Despite that low level of demand remained in most of our core markets, we made progress in expanding our product portfolio in our current markets and utilising more sales channels as part of our growth phase in the Accelerate PG programme. After the review period, we completed an acquisition of Unitherm Heating Solutions Ltd, which perfectly supports our solution selling strategy.
During the quarter, Project Grand Bidco (UK) Limited announced that it would complete the tender offer for all shares in Purmo Group. We look forward to working with the members of the consortium in the company's exciting period of growth.
Pick-up in demand in many sales regions, the acquisition of Unitherm in the Climate Solutions division completed after the review period
In the Climate Products & Systems division, a low-demand environment remained, although sales activities were at a good level in Finland, Central and Eastern Europe in addition to Western Europe, including Germany and Austria. As a result, the division's net sales were slightly above last year, EUR 143.6 million. In Western Europe, we expanded our long-standing customer relationships to cover more of our heating and cooling solutions. The adjusted EBITDA improved compared to the second quarter of 2024. However, we saw price pressure in all our markets and temporarily, our operational costs were also higher mainly due to the production transfer of operations from Zonhoven to Rybnik. This led to a decline of 9 per cent in adjusted EBITDA to EUR 20.3 million compared to the previous year.
In the Climate Solutions division, demand remained sluggish, whereas improvement in demand was visible in Emmeti's French and Spanish businesses. In France, we achieved solid growth thanks to heat pump sales during the quarter and the expansion of the distribution network for installers in the previous quarters. Furthermore, we introduced our Emmeti air-to-air heat pump range in Brazil. At the end of the third quarter, our adjusted EBITDA was at EUR 3.0 million, a decrease of 18 per cent from the previous year, driven mostly by lower volumes. The adjusted EBITDA margin decreased to 9.8 from 10.9 percentage points compared to last year.
An important milestone in growing our solutions business was achieved after the review period. We completed the acquisition of Unitherm Heating Systems Ltd, a provider of holistic climate solutions, mostly build around heat pumps. The solutions are sold mainly through wholesalers. The company is headquartered in Dublin and provides, among others, design and supply of heating systems solutions for residential and commercial buildings. I want to thank our Purmo Group team for this fine acquisition and warmly welcome Unitherm employees to the Purmo Group family.
Accelerate PG programme target EUR 50 million expected to be reached
Accelerate PG programme's cumulative adjusted EBITDA run-rate improvements of EUR 50.0 million are expected to be reached by the end of 2024. This is thanks to the strong execution of the programme, which has been proceeding ahead of plans. The execution of the growth phase is also proceeding as planned, including increased utilisation of different sales channels, such as with our Swedish customer, Ahlsell. Purmo Group's underfloor heating and water distribution solutions will be soon available in around 20 Ahlsell stores around Sweden. We also expanded our radiator and underfloor heating offerings to our existing customers in Western Europe, as part of the programme initiatives.
Sale of the Russian business
On 11 September 2024, we completed the sale of our Russian business to a Russian investment company. Following this divestment, we do not have any activities in Russia.
Continued improvement in health and safety
We continued our dedication to improving health and safety in Purmo Group. As a result, we were able to reduce our Lost Time Injury Frequency Rate to 2.5 compared to 4.0 in the previous year. As part of the initiatives, we launched a trial for Exoskeleton vests to avoid injuries for personnel working in the production lines, and also identified software for monitoring and acting more rapidly on health and safety issues.
Full year guidance 2024 unchanged
Thanks to strong execution by our team, we expect to reach the target for our strategy acceleration programme, Accelerate PG, for 2024. Combined with slight optimism in a few markets and customer expansions we are keeping our guidance for 2024 unchanged. The adjusted EBITDA in 2024 is expected to be on a similar or higher level than in 2023 (EUR 92.3 million).
Purmo Group Plc
Further information:
Jan-Elof Cavander, Chief Financial Officer, Purmo Group Plc
Katariina Kataja, Head of Investor Relations, Purmo Group Plc, Tel. +358 40 527 1427
Distribution:
Nasdaq Helsinki Ltd
Principal media
investors.purmogroup.com
About Purmo Group:
Purmo Group is at the centre of the global sustainability journey by offering full solutions and sustainable ways of heating and cooling homes to mitigate global warming. We provide complete heating and cooling solutions to residential and non-residential buildings, including underfloor heating and cooling systems, a broad range of radiators, heat pumps, flow control and hydronic distribution systems, as well as smart products. Our mission is to be the global leader in sustainable indoor climate comfort solutions. Our approximately 2,760 employees operate in 23 countries, manufacturing and distributing top-quality products and solutions to our over 100,000 customers in more than 100 countries. Purmo Group's shares are listed on Nasdaq Helsinki with the ticker symbol PURMO. More information: www.purmogroup.com.
