Unless stated otherwise, the figures in this report concern continuing operations.
Q4 2024
- Net sales amounted to SEK 211 (227) million. Growth was -7 percent, of which organic growth was -7 percent, compared with the same period in 2023
- Adjusted EBITA amounted to SEK 6 (3) million, corresponding to a margin of 3 (1) percent
- EBITA amounted to SEK 1 (17) million, corresponding to a margin of 0 (7) percent. The comparative figure was positively affected by remeasurement of contingent considerations amounting to SEK 18 million
- Operating profit/loss (EBIT) amounted to SEK -92 (-20) million, impacted by goodwill impairment of SEK 87 million
- Basic and diluted earnings per share amounted to SEK -2.26 (-0.65*)
- Cash flow from operating activities was SEK 3 (10) million, affected by a tax deferral repayment of SEK -3 (-25) million.
The period January - December 2024
- Net sales amounted to SEK 905 (1,000) million. Growth was -10 percent, where acquisitions contributed 1 percent, compared with the same period in 2023
- Adjusted EBITA amounted to SEK 42 (72) million, corresponding to a margin of 5 (7) percent
- EBITA amounted to SEK 42 (81) million, corresponding to a margin of 5 (8) percent
- Operating profit/loss (EBIT) amounted to SEK -105 (13) million, affected by goodwill impairment of SEK 122 million
- Basic and diluted earnings per share amounted to SEK -3.12 (-1.72*)
- Cash flow from operating activities was SEK 45 (80) million, negatively affected by a tax deferral repayment of SEK 7 million (previous year: positively affected by SEK 66 million).
- The Board of Directors proposes that no dividend be distributed for 2024.
*) Key ratios inclusive of divested business
CEO comment
Q4
Net sales during Q4 amounted to SEK 211 (227) million, a decrease of 7 percent, which was entirely organic. Demand stabilized during October and November, while December was weak, with many of our companies and their customers being closed more days than usual over Christmas. Adjusted EBITA during the quarter was SEK 6 (3) million. Financial performance is still being negatively affected by weak demand, but is offset by the effects of cost savings. Nordbutiker's performance during the quarter was of particular note, with a marked improvement in profit driven by an increase in net sales. Cash flow from operating activities during Q4 amounted to SEK 3 million, which was satisfactory given the seasonal cycle where many companies build up inventory ahead of the high season.
Full year 2024
Net sales over the full year 2024 amounted to SEK 905 million (-10 percent compared with 2023, where acquisitions contributed 1 percent), while adjusted EBITA was SEK 42 (81) million. The Product Companies, with more exposure to consumers, grew by 2 percent during the year. Opo Scandinavia reported record net sales, while Nordbutiker grew by 18 percent and returned a positive operating profit after a very challenging 2023. As regards industrial component companies, net sales fell by 14 percent, primarily driven by weak development in Borö-Pannan and Pexymek. Bara Mineraler, the largest company in the Group in terms of earnings, showed strong development during the last three quarters after a sluggish start to the year. Costs savings partly offset reductions in volume. Cash flow from operating activities was SEK 45 (80) million. The Group's net debt excluding tax deferrals at the year-end amounted to SEK 215 (230) million, and to SEK 300 (329) million including a tax deferral. Debt is high relative to the Group's cyclically weak EBITDA, and a clear priority is to drive both improvements in profits and cash flow in order to reduce the debt ratio.
2024 marked by exposure to a weak Swedish economy and the heat pump market
Although the Seafire Group is relatively well-diversified, our subsidiaries still have considerable indirect exposure to consumers, construction and installation markets, and to a great extent the Swedish market. This has been particularly challenging during 2024, since demand in the Swedish economy has been weak. In spite of the weak trend in net sales, all companies in the Group with the exception of Borö-Pannan reported a positive operating profit, demonstrating the strength of business models and offering. Borö-Pannan's net sales fell by 37 percent and, although substantial costs have been eliminated, cost savings cannot offset a loss in net sales of this magnitude considering the high gross margin. The reduction in operating profit for Borö-Pannan accounts for approximately 50 percent of the reduction in Seafire's operating profit over the full year. After a weak Q1, other companies stabilized during the second half of the year, and the operating profit for Q2-Q4 exceeded the corresponding period of 2023.
Goodwill impairment and valuation discipline
In Q4 we did a write down of goodwill in Borö-Pannan, Kenpo Sandwich and Thor Ahlgren. The investments were made at high valuations with cyclically high profit levels at the time of acquisition. These valuations are now no longer justifiable under the prevailing conditions. While Seafire has historically acquired many good companies, Seafire has in some cases been carried along with high valuations in times with low interest rates and a demand above the long-term trend. Thorough evaluations of the quality of acquired companies, valuation discipline with a focus on normalized earnings, and safety of principal will be critical for future acquisitions.
The year-end marks my first five months as CEO of Seafire. It has been an intensive period in a challenging macro-environment during which I learned a lot about our structure and our subsidiaries. I would like to take the opportunity to share my reflections on the current situation and the future of the Seafire Group.
Good companies with strong leaders - but some of our companies need to grow
The impressions I gained from my visits and interactions with subsidiaries during the autumn were both strong and positive ones; Seafire has many high-quality companies with a strong culture, attractive products, satisfied customers and strong leaders. In general, there are firm foundations in place for future growth and profitability. The abrupt economic downturn, combined with changes in ownership, management, and the rapid acquisitions of many new companies to the Group, has undoubtedly brought challenges.
During 2024, we focused on adapting costs to lower volumes, without damaging the long-term potentials. Given that Seafire's subsidiaries are relatively small, cost levels have a distinct stepped profile, and it is not possible to eliminate sufficient costs to maintain our operating margins. Similarly, however, we should see an improvement in margins as demand increases. In the long term, our subsidiaries need to grow to a critical mass, either organically or through additional acquisitions, in order to improve both resilience and scalability.
Faster decision-making with a focus on results
Historically, Seafire has developed its governance model based on inspiration from private equity, with formal board meetings, ambitious long-term plans and a high level of formal governance. Our ambition to drive strategic progress in our companies remains unchanged, however, moving forward, we will focus more closely on measuring and monitoring results, and on business development summarized in a few "must-win battles". Our model must remain nimble in responding to opportunities and risks, and should resemble those applied by the entrepreneurs who ran the companies before Seafire acquired them, rather than that of a large corporate. However, we must, of course, make no compromises to our checks and balances. During 2025, we will increase our focus on collaboration between subsidiaries.
Motivated leaders with the right incentives are pivotal in a decentralized model like Seafire's and, during 2025, our remuneration model will have an even clearer focus on growing profits and cash flow.
Focus on what we can influence
During 2024, Seafire's subsidiaries implemented meaningful cost savings. We believe that the scope to reduce the fixed cost base over the coming years is limited if we are not to harm the future potential of our subsidiaries. Heading into 2025, our priorities will, therefore, be to continue to strengthen our underlying profitability by actively improving gross margins (pricing/procurement) and maintaining a firm grip on implemented cost savings to maximize earnings leverage.
We have begun to work on optimizing inventory and accounts receivable and systematized our follow-up processes. Results are visible in a number of subsidiaries, but working capital in the Group remains too high. In 2025, we will increase our focus with targeted efforts.
Stabilized markets heading into 2025
I would like to thank the Group's employees for their efforts during a challenging 2024. During the year, our subsidiaries won new customers and concluded many strategically important projects. However, the hard work that has been put in, and continues to be put in, was to some extent obscured by weak markets. As we look ahead to 2025, we believe that many of our markets have stabilized at a low level. We can see early signs that market conditions are improving, particularly among the companies that have either direct or indirect consumer exposure. In a number of subsidiaries, we carried out selective growth investments in 2024. These are expected to bear fruit in 2025, hopefully with support from a stronger Swedish economy. Heading into the first quarter, which is small in terms of sales and profits, and involves a considerable build-up of inventory ahead of the high season, we see a market that remains cautious, but with underlying indicators pointing in the direction of strengthening during Q2 and Q3.
Profits and cash flow first - but the ambition to grow Seafire remains
In the short term, our focus will clearly be on organic profit growth and cash flow, but we must also look ahead and build further on Seafire's strengths. We now have infrastructure, system support and processes in place which fully meet the quality requirements for our listing on Nasdaq Main Market. In absolute numbers, the costs for this infrastructure are acceptable and difficult to change, but in a situation where the underlying portfolio encounters weak demand, and therefore delivers weak profitability, the effect on the Group's financial results is considerable. We see the potential to add substantial operations to the existing infrastructure without incurring incremental central costs, and thereby boost the Group's profitability. An additional benefit of growth is even broader diversification away from individual risks related to relatively small companies, markets and key personnel. Once we see stability in financial results, cash flow and debt, we will gradually increase focus ongrowing the Group through acquisitions, primarily with a focus on markets we already understand and like.
I would like to thank you, our shareholders your trust and support for Seafire.
Daniel Repfennig
President and CEO
For more information, please contact
Daniel Repfennig, CEO, +46 722-00 89 41, daniel.repfennig@seafireab.com
Jacob Persson, CFO, +46 708-64 07 52, jacob.persson@seafireab.com
About Seafire
Seafire is a company group consisting of the business segments Industrial components and Products, which acquires and develops companies in Sweden. The group was founded in 2016 and focuses on acquiring profitable companies with development potential. Seafire consists of 12 companies with sales of about one billion SEK. The company's shares are listed on Nasdaq Stockholm. For more information, please visit www.seafireab.com/en.
This information is information that Seafire is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2025-02-24 08:00 CET.
