Clear recovery but uncertainty remains

Group

The third quarter was characterized by a gradual recovery from the previous quarter’s weak demand, as society reopened and the global economy resumed. For Beijer Alma, this entailed improved order bookings and sales, albeit not at the previous year’s levels. Thanks to a continued focus on costs and a favorable product mix, however, the operating margin was up year-on-year. Cash flow remained strong, despite increased activity during the quarter. There is still significant uncertainty in the strength of the recovery in different industries as well as the future development of the COVID-19 pandemic itself.

Subsidiaries

Demand for chassis springs for Lesjöfors posted a strong recovery during the quarter due to the aftermarket backlog following the workshop shutdowns across Europe in the spring. Order bookings were higher than the preceding year and production was adapted to quickly meet the increased demand. Order bookings in Industry increased month by month, but had still not recovered to the preceding year’s levels.

Habia Cable experienced weak demand during the quarter, combined with lower order bookings and reduced project deliveries in offshore, nuclear power and defense. Personnel reductions were implemented.

For Beijer Tech, which serves Nordic industrial companies, demand increased gradually during the quarter. The picture was mixed, where Fluid Technology with its broad customer base encompassing small and large customers posted a clear recovery. For Industrial Products, demand from Swedish and Norwegian customers remained weak, while demand from Danish and Finnish customers was largely at the preceding year’s levels.

Acquisitions

Generally in the market, uncertainty has entailed fewer corporate acquisitions. Beijer Alma’s ambition is to continue to pursue profitable growth through acquisitions, which is possible thanks to our financial strength.

The INU Group, a successful company within building automation systems, was acquired during the quarter, opening up an exciting new area for Beijer Tech.

Henrik Perbeck, President and CEO

991

Net revenues declined to MSEK 991 (1,147).

132

Operating profit totaled MSEK 132 Mkr (135).

13.3%

Operating margin was 13.3 percent (11.8).

123

Profit after net financial items amounted to MSEK 123 (124).

1.60

Earnings per share totaled SEK 1.60 (1.58).

1,032

Order bookings declined to MSEK 1,032 (1,114).

Invoicing (MSEK)

Profit after net financial items (MSEK)

Beijer Alma in brief

Order bookings declined 7 percent to MSEK 1,032 (1,114) during the quarter. In organic terms – that is, excluding corporate acquisitions and fluctuations in exchange rates – the decrease was 6 percent. Net revenues decreased 14 percent to MSEK 991 (1,147). In organic terms, net revenues declined 13 percent.

COVID-19’s effect on order bookings, revenues and earnings continued during the third quarter. Net revenues were lower due to production cutbacks at several customers. The recovery noted during June continued during the quarter. The use of furlough schemes for some employee categories in several operating areas decreased compared with the previous quarter. Government grants and reductions in social security contributions of MSEK 15 were received during the quarter, of which MSEK 3 was in Sweden. These have been recognized as cost reductions.

Operating profit amounted to MSEK 132 (135) and profit after net financial items to MSEK 123 (124), corresponding to earnings per share of SEK 1.60 (1.58). At the end of the third quarter, the equity ratio was 50.4 percent (50.5) and the net debt/equity ratio was 31.6 percent (36.6).

Cash flow from operating activities totaled MSEK 135 (207). Cash flow after capital expenditures, excluding corporate acquisitions, amounted to MSEK 107 (135).

Order bookings declined 9 percent to MSEK 3,096 (3,420) during the year to date perod. In organic terms, the decrease was 14 percent. Net revenues fell 11 percent to MSEK 3,171 (3,561), an organic decrease of 15 percent.

Government grants and reductions in social security contributions amounted to MSEK 52, of which MSEK 22 was in Sweden.

Operating profit amounted to MSEK 357 (459) and profit after net financial items to MSEK 335 (439), corresponding to earnings per share of SEK 4.36 (5.61).

Cash flow from operating activities totaled MSEK 497 (379). Cash flow after capital expenditures, excluding acquisitions, amounted to MSEK 340 (182).

The number of employees decreased to 2,605 (2,750).

Equity ratio

50.4%

Net debt/equity ratio

31.6%

Number of employees

2,605

Lesjöfors in brief

Order bookings rose to MSEK 647 (611) during the quarter, corresponding to an organic increase of 7 percent. Net revenues amounted to MSEK 588 (605), corresponding to a decrease of 3 percent. In organic terms, the decrease was 1 percent. Operating profit during the third quarter increased to MSEK 107 (92).

The COVID-19 pandemic continued to have negative effects on net revenues in Industry in the form of shutdowns and lower customer demand. Net revenues for Industry amounted to MSEK 416 (464) during the quarter, corresponding to a decrease of 10 percent.

In Chassis Springs, which experienced stronger effects from the pandemic than in the second quarter, we noted a strong recovery during the quarter. Net revenues amounted to MSEK 172 (140) corresponding to an increase of 23 percent.

Order bookings for the year to date period were MSEK 1,796 (1,910), an organic decrease of 11 percent. Net revenues amounted to MSEK 1,825 (1,973), corresponding to an organic decline of 12 percent. Net revenues in Industry decreased to MSEK 1,347 (1,460) and to MSEK 477 (514) in Chassis Springs. Operating profit totaled MSEK 293 (336).

Habia Cable in brief

Order bookings for Habia Cable in the quarter decreased 37 percent to MSEK 150 (238). Net revenues amounted to MSEK 178 (277) during the quarter, corresponding to a decrease of 36 percent. The organic decrease was 31 percent. Habia’s operating profit totaled MSEK 11 (27).

Reduced demand for projects, particularly within offshore, continued during the third quarter. Telecom and Other Industry were also affected by reduced demand. Most of the cost reduction measures decided on during the second quarter have been implemented and the process will be completed during the fourth quarter.

Order bookings for the year to date were MSEK 576 (690), corresponding to an organic decrease of 16 percent. Net revenues decreased 19 percent organically to MSEK 627 (780). During the second quarter, Habia’s operating profit was charged with nonrecurring costs of MSEK 16 and totaled MSEK 40 (74) for the first three quarters of the year.

Beijer Tech in brief

Order bookings decreased to MSEK 234 (265) during the quarter, corresponding to an organic decrease of 18 percent. Net revenues decreased 20 percent organically to MSEK 225. Operating profit during the quarter totaled MSEK 16 (20).

Net revenues decreased to MSEK 127 (159) for Industrial Products and to MSEK 98 (106) for Fluid Technology. The negative effects of the COVID-19 pandemic continued in the third quarter as well, primarily in Industrial Products. The effects in Fluid Technology were not as negative, since demand recovered more during the third quarter.

Order bookings for the year to date totaled MSEK 725 (821) and net revenues amounted to MSEK 719 (808). The organic decrease was 20 and 19 percent, respectively. Net revenues were MSEK 404 (444) for Industrial Products and MSEK 316 (364) for Fluid Technology. Operating profit totaled MSEK 39 (66). Operating profit for the second quarter was charged with MSEK 6 for impairment of some technical equipment.

Corporate acquisitions during Q3 2020

The INU Group. On July 3, Beijer Alma’s subsidiary Beijer Tech entered into an agreement to acquire INUinvest AB, including operations at INUstyr AB and its sister companies. The acquisition was completed through a newly formed company, BeijerInu AB, where Beijer Tech acquired 75 percent of the shares for MSEK 30.4 and lent an additional MSEK 93.7 to the company. The transaction was completed on August 31 and earnings from the INU Group were consolidated starting in September. INUstyr is active in building automation systems and offers energy efficient solutions for public and private customers in Sweden. The company focuses on complete solutions for indoor environments through system integration and coordination, particularly in commercial and specialized buildings. The corporate group’s sales amount to approximately MSEK 110 with favorable profitability and has 55 employees.

Q3 in summary

	2020 Q3	2019 Q3	Change %	2019 full-year
Net revenues, MSEK	990.9	1,147.1	–13.6	4,621.7
Operating profit, MSEK	131.6	135.3	–2.7	582.6
Operating margin, %	13.3	11.8	12.8	12.6
Profit after net financial items, MSEK	122.9	123.6	–0.6	557.4
Earnings per share, SEK	1.60	1.60	1.20	7.15
Order bookings, MSEK	1,031.5	1,113.7	–7.4	4,459.6
Net liabilities, MSEK	766.9	856.2	–10.4	720.9
Net debt/equity ratio, %	31.6	36.6	–13.7	29.9
Cash flow after capital expenditures, excl aquisitions, MSEK	107.3	134.8	–20.4	385.4

Net revenue per segment (subsidiaries) MSEK

	2020 Q3	2019 Q3	Change %	2019 full-year
Lesjöfors	588.4	604.5	–2.7	2,563.5
Habia Cable	177.5	277.1	–35.9	977.8
Beijer Tech	225.0	265.3	–15.2	1,080.1
Parent company and intra-group	–	0.2	–	0.3
Total Group	990.9	1,147.1	–	4,621.7

Operating profit per segment (subsidiaries) MSEK

	2020 Q3	2019 Q3	Change %	2019 full-year
Lesjöfors	107.1	92.1	16.3	441.3
Habia Cable	11.2	26.7	–58.1	80.1
Beijer Tech	16.1	19.8	–18.7	81.4
Parent company and intra-group	–2.9	–3.3	–	–20.2
Total	131.5	135.3	–	582.6

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The next interim report for January–December will be published on February 15, 2021. For more information about the company’s activities, visit our calendar

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Q3: President’s statement