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April 29, 2020

Lindab International AB (publ): Lindab’s Interim Report for the first quarter 2020


First quarter 2020

• Net sales increased by 1 percent to SEK 2,332 m (2,315), of which organic growth was -1 percent.

• Operating profit 1) decreased by 4 percent to SEK 184 m (192).

• Operating margin 1) amounted to 7.9 percent (8.3).

• Profit for the period amounted to SEK 136 m (142).

• Earnings per share, before and after dilution, amounted to SEK 1.78 (1.85).

• Cash flow from operating activities amounted to SEK 26 m (79).

• On 23 March, the Board of Directors revised the previous dividend proposal from SEK 3.60 per share to SEK 1.75 (1.75) per share. It is proposed that the dividend will be paid on two occasions.

1) No one-off items or restructuring costs have been reported in 2020 or 2019, whereby adjusted operating profit and adjusted operating margin are not reported for these periods.

Lindab’s President and CEO, Ola Ringdahl, comments:
“Lindab had a strong start of the year and the positive trends from the previous year continued also in early 2020. Until mid-March, sales and profit followed our plan. After that, the effects of covid-19 became noticeable, especially in the countries in Europe that shut down large parts of the economy.

The operating margin of 7.9 percent for the quarter is in line with the strong result for the previous year and significantly above the levels from the corresponding period in earlier years. The gross margin has continued to strengthen this quarter, thanks to increased efficiency.

Ventilation Systems has continued to improve profitability and reached ten percent operating margin during the first quarter. The business area has continued to keep a high pace in the implementation of investments to increase automation and thereby further raise the quality and efficiency in production.

Profile Systems had a strong first quarter with organic growth of 13 percent, partly due to a mild winter and strong project sales. The operating profit improved slightly, but the operating margin was lower than last year due to changed product and customer mix.

Building Systems showed a positive result for the first quarter, which normally is the seasonally weakest period of the year. As sales were record strong the corresponding period last year, the profit did not quite reach the same level during the first quarter. Sales and profit for Building Systems vary between quarters as it is a project-based business.

During the first quarter, the corona pandemic had only a limited impact on the Group’s sales and profits. Lindab has 98 percent of its sales in Europe. The supply chain is robust and Lindab has been able to benefit from its established logistics and production network to ensure delivery to customers.

The extensive restrictions imposed in some countries have resulted in reduced construction activity. During the month of March this has mainly affected our sales in Italy and France. The relatively stable construction activity in the Nordic region, on the other hand, has made a positive contribution to sales development.

When we look into the second quarter, we will also see the negative effects of imposed restrictions in countries such as the UK and Ireland, and in several countries in Continental Europe. How deep this decline will be, and how long it will last, is hard to predict.

The continued focus for Lindab in 2020 will be profitability and customer satisfaction. We have initiated measures to reduce cost, based on different scenarios for how covid-19 can affect demand. Every single part of Lindab should continue to improve its long-term profitability. This requirement remains, also when the market conditions have changed in the short term.

Customer satisfaction is even more important in turbulent times. Customers should be able to rely on Lindab, and with a long-term approach we ensure that customers are still there when the corona crisis is over. Even in countries where the construction activity is very low, we stay open on a small scale to ensure delivery to customers.

Despite the uncertain market situation in Europe and the challenges it poses, we continue to prepare Lindab for the future. Lindab’s strong financial position enables implementation of prioritized investments in order to build long-term competitive advantages. The stable platform we created in 2019 gives us room for action and we will continue to drive Lindab towards our long-term goals.

Finally, I would like to thank all the staff for their efforts during this special period.”
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