Interim Report, January–June 2017

Strong sales growth and margin compression in line with previous guidance

Second quarter of 2017

  • Consolidated net sales increased by 16 percent to SEK 603 m (522), of which organic growth amounted to 3 percent. Acquisitions contributed by 10 percent and currency by 3 percent
  • Net sales in Products & Solutions amounted to SEK 430 m (397) and Installation Services to SEK 207 m (156)
  • EBITDA before items affecting comparability decreased by 12 percent to SEK 79 m (90)
  • Operating profit (EBIT) before items affecting comparability decreased by 15 percent to SEK 72 m (84)
  • Operating profit (EBIT) amounted to SEK 65 m (75)
  • Operating cash flow amounted to SEK -12 m (50)
  • Earnings per share before and after dilution were SEK 2.13 (2.31)
  • A dividend of SEK 3.75 per share was paid

January–June 2017

  • Consolidated net sales increased by 16 percent to SEK 983 m (846), of which organic growth amounted to 4 percent. Acquisitions contributed by 9 percent and currency by 3 percent
  • Net sales in Products & Solutions amounted to SEK 729 m (656) and Installation Services to SEK 303 m (236)
  • EBITDA before items affecting comparability decreased by 12 percent to SEK 94 m (107)
  • Operating profit (EBIT) before items affecting comparability decreased by 17 percent to SEK 80 m (96)
  • Operating profit (EBIT) amounted to SEK 69 m (83)
  • Operating cash flow amounted to SEK -29 m (1)
  • Earnings per share before and after dilution were SEK 2.07 (2.32)

Message from the CEO

Second quarter 2017 sees strong sales growth and margin compression in line with our previous guidance

Consolidated net sales for the second quarter rose by 16 percent compared with the second quarter last year, from SEK 522 m to SEK 603 m. Sales were penalized by a late Easter, as the holiday period fell in the second quarter this year. All newly acquired companies contributed according to plan.

EBIT before items affecting comparability, at SEK 72 m, was slightly below SEK 84 m last year. This is mainly due to increased raw material costs compared with the corresponding period in 2016. The price increases in our main raw materials have now stabilized but at a higher level than last year. Our own sales price increases are largely in effect and are expected to reach their full impact by the middle of the third quarter. All our three acquisitions continued to contribute positively, in line with the forecasts made at the time of acquisition.

In early July, we made our fourth acquisition this year with the acquisition of the Danish company Taasinge Elementer A/S, thereby continuing to deliver on our commitment to expand our business through both internal and external growth. Taasinge Elementer is Denmark’s leading manufacturer for the construction industry of prefabricated roof and facade elements based on wooden frame constructions, with annual sales of approximately SEK 150 million.

Both of our operating segments contributed to our consolidated sales growth of 16 percent. While our Products & Solutions operating segment reported a sales increase of 8 percent, our Installation Services operating segment achieved an increase of 33 percent deriving from both continued improvement in demand in the Finnish market and the contribution from acquisitions.

Within our Products & Solutions segment, Denmark and Sweden contributed positively despite Easter falling in the second quarter this year. Sales in Finland decreased, due to lower demand in the Builders Merchants segment where the consumer market was negatively affected by unfavourable weather conditions. Sales in Norway decreased by 8 percent, due to high competition and instability within the Builders Merchants segment. SealEco showed strong sales compared with the preceding year, with additional sales from the recently acquired EPDM Systems.

Installation Services in Finland achieved a 16 percent sales increase in the second quarter 2017, compared with the corresponding quarter in 2016 and comparable operations. The recently acquired LA Kattohuolto contributed with sales as of 1 May 2017. Our Danish franchise companies continued to perform well during the second quarter, with an improved EBIT contribution compared with the preceding year.

Earnings per share for the quarter were 2.13 SEK (2.31).

I am pleased to welcome Taasinge Elementer A/S to our Group. The acquisition of Taasinge is an important step forward in our strategy of offering comprehensive solutions for building and infrastructure protection. The company has a unique market position in high-quality prefabrication where the key is knowledge of materials and customer-specific products consisting of flat elements including facades, roofs and decks. Everything Taasinge does is tailor-made to the specific project, and their technical sales force and construction engineers are in close dialogue with the contractors and architects regarding design and solutions. The company has extensive know-how of waterproofing and solutions for roofs and facades, in which a number of products within the Nordic Waterproofing product range are also used. We see good opportunities to broaden our customer base in Denmark, and Taasinge’s product range and manufacturing competence can be exported to other countries where Nordic Waterproofing operates. Taasinge is operated as a separate business unit within the segment Products & Solutions – and Martin Tholstrup, Head of Taasinge, is a new member of Nordic Waterproofing’s Group Management.

I am also pleased to confirm that the integration of all four acquired companies is going well.

As from today, we have updated our long-term financial targets. Our new profitability target is connected to capital efficiency and the return on capital employed (ROCE) exceeding 15 percent before items affecting comparability. This target level is analogue to the previous EBIT margin target of at least 10 percent, which has been replaced. We believe in our business model with the two segments Products & Solutions and Installation Services, and the new profitability target better reflects the profitability in these segments taking the capital efficiency into account. In addition, we want to exploit the growth potential in full. Profitability, efficient use of capital and increasing shareholder value are at the core of what we do.

Vejen, 15 August 2017

Martin Ellis,
President and CEO

Conference call

A conference call for investors, analysts and media will be held today, 15 August 2017, at 10:00 a.m. CET and can be joined online at www.nordicwaterproofing.com. Presentation material for the call will be available on the website one hour before the call.
To participate, please dial:
From the United Kingdom:          +44 20 3008 9804
From Denmark:                          +45 35 44 55 75
From Sweden:                           +46 8 566 427 00

Further information can be obtained from

Martin Ellis, President and CEO                          tel: +45 31 21 36 69
Jonas Olin, CFO & Investor Relations                   tel: +46 708 29 14 54

This information is information that Nordic Waterproofing Holding A/S 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 15 August 2017, 08:00 a.m. CET.

 

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