Lindab’s Interim Report January – March 2023: High sales growth and strong cash flow
Lindab’s net sales increased by 18 percent during the first quarter, mainly due to completed acquisitions. The operating margin amounted to 8.2 percent. Business area Ventilation Systems, which represents approximately 70 percent of sales, continued to develop well in terms of sales and profitability. Profile Systems has been affected by weaker demand and did not reach the expected level of profitability. Cash flow from operating activities was strong in the quarter, mainly related to changes in working capital.
First quarter 2023
- Net sales increased by 18 percent to SEK 3,224 m (2,733). Organic growth decreased by 5 percent. Structural changes contributed positively by 20 percent.
- Adjusted1) operating profit amounted to SEK 264 m (340).
- Operating profit amounted to SEK 264 m (321).
- Adjusted1) operating margin amounted to 8.2 percent (12.4).
- Operating margin amounted to 8.2 percent (11.7).
- Profit for the period amounted to SEK 180 m (236).
- Earnings per share before dilution amounted to SEK 2.35 (3.09) and after dilution to SEK 2.35 (3.08).
- Cash flow from operating activities increased to SEK 355 m (-213).
- During the first quarter Lindab acquired two companies, one in Germany and one on Ireland, with total annual sales of approximately SEK 260 m.
- In March, Lars Ynner was appointed as Chief Financial Officer (CFO) and started the position on April 11.
1) Adjusted operating profit/operating margin does not include significant one-off items and restructuring costs.
Lindab’s President and CEO, Ola Ringdahl, comments:
“Lindab continued to grow during the first quarter, thanks to a high acquisition rate and stable sales from Ventilation Systems. Profitability in Ventilation Systems improved sequentially and exceeded Lindab’s 10 percent target for the Group. Profile Systems was burdened by lower volumes and continued raw material price effects, which led to a lower operating margin than planned.
Growing renovation market, new construction is decreasing
Lindab’s market is difficult to assess in the short term. When the economy turns downwards, the demand for ventilation systems is usually more stable due to larger proportion of upgrading and renovation. In addition, we estimate the renovation market to grow as demand for energy efficient solutions increases in Europe. Several indicators suggest that high inflation and rising interest rates lead to lower investments in new construction, especially in the residential segment.
Temporary pressure on margins
In recent quarters, fluctuating raw material prices have put temporary pressure on gross margins. This effect is expected to subside by the end of the second quarter. The gross margin has also been affected by the fact that the acquired companies have entered Lindab with a lower average margin than Lindab Group. However, the main reason for the Group’s weakened operating margin was that business area Profile Systems was burdened by low demand, cost inflation and raw material effects. We are implementing price adjustments, cost savings and focus the different parts of the business for optimal profitability, in line with our goals. We have a clear plan for how Lindab will continue to develop positively and show profitable growth, even in more challenging times.
Business area Ventilation Systems develops well
Business area Ventilation Systems, which represents approximately 70 percent of sales, has continued to develop well with stable volumes in existing operations, acquired growth and satisfactory profitability. The operating margin for the business area exceeded 10 percent during the quarter.
Business area Profile Systems had an exceptionally strong year in 2022, resulting in challenging comparative numbers. The business also has high exposure to the Swedish market and residential buildings, where construction activity is slowing down. The gross margin continued to be pressured by raw material effects, which combined with lower volumes led to a lower operating profit than expected. A review of costs and adjustment of prices is ongoing.
Continued acquisitions of ventilation companies
During the first quarter, we welcomed two more companies to the Lindab Group. The German ventilation company Raab Lüftungstechnik specialises in fast deliveries of rectangular ventilation ducts. The Irish Ventilation & Filtration acquisition gave us access to the market segment for maintenance and upgrading of ventilation systems, an interesting niche with steady demand and good profitability.
Acquisitions are an important part of our strategy and we see good opportunities to carry out attractive acquisitions also in the future. The ventilation market is fragmented and Lindab has a strong balance sheet.
In January, Lindab committed to the Science Based Targets initiative. This means that we will set scientifically based targets for the reduction of greenhouse gas emissions. For us, sustainability work is business-critical and an obvious customer requirement. Lindab is and will be a leader in climate-efficient ventilation solutions.
Focus on energy efficiency benefits Lindab
We are positive about the prospects for both the ventilation industry and Lindab, even though there are challenges in the short-term. High energy prices are putting focus on energy-efficient ventilation, which will benefit Lindab. We expect a longer period of renovation of public and private properties in Europe. In new construction, the requirements for sustainable and energy-efficient buildings will increase further, also to the advantage of Lindab and our leading product range.
All in all, with our strong local presence, stable supply chain, attractive products and efficient organisation, Lindab has excellent possibilities to further develop in a positive direction. For 2023, the financial targets remain unchanged and I am determined that we will achieve them.”
Press and analyst meeting:
A live webcast will be held at 10:00 am (CEST) on May 3. The Interim Report will be presented by Ola Ringdahl, President and CEO, and Lars Ynner CFO.
If you wish to participate via webcast please use the link below.
If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
This disclosure contains information that Lindab is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 03-05-2023 07:40 CET.
President and CEO
Phone: +46 (0) 431 850 00
Phone: +46 (0) 431 850 00
Head of Corporate Communications
Mobile: +46 (0) 701 48 99 65
Lindab in brief
Lindab is a leading ventilation company in Europe. Lindab develops, manufactures, markets and distributes products and systems for energy-efficient ventilation and a healthy indoor climate. The products are characterised by high quality, ease of installation and environmental thinking.
The Group had sales of SEK 12,366 m in 2022 and is established in 20 countries with approximately 5,000 employees. The Nordic region accounted for 53 percent of sales in 2022, Western Europe for 34 percent, Central Europe for 12 percent and Other markets for 1 percent.
The share is listed on the Nasdaq Stockholm, Large Cap, under the ticker symbol LIAB.