DOVRE GROUP TRADING STATEMENT JANUARY 1 – MARCH 31, 2021 Dovre's Q1 net sales lower with improved operating profit year-on-year – raises quidance
Dovre Group Plc Stock exchange release April 28, 2021 at 8.45 a.m.
DOVRE GROUP TRADING STATEMENT JANUARY 1 – MARCH 31, 2021
Dovre's Q1 net sales lower with improved operating profit year-on-year – raises quidance
Dovre Group Plc issues today a trading statement for the three months ended on March 31, 2021. The figures presented in this trading statement are not audited. Last year’s corresponding period in parentheses.
January – March 2021
- Net sales EUR 19.7 (23.6) million – decrease -16.6%
- Project Personnel: net sales EUR 15.4 (19.4) million – decrease -20.3%
- Consulting: net sales EUR 4.3 (4.2) million – increase 0.5%
- Operating result EUR 0.8 (0.7) million – increase 19.3%.
- Net cash flow from operating activities EUR 0.5 (-1.3) million
- Dovre Group strengthened its renewable energy expertise by acquiring 51% of Suvic Oy, a Finnish windmill park construction and construction design company, on March 31, 2021.
New Outlook for 2021
Dovre Group’s net sales in 2021 is expected to be more than EUR 110 million (2020: 77 million) and the operating profit (EBIT) is expected to be more than EUR 3.5 million (2020: 2.4).
Previous guidance (published March 31, 2021): Dovre Group’s net sales in 2021 is expected to be around EUR 110 million (2020: 77 million) and the operating profit (EBIT) is expected to be more than EUR 3 million (2020: 2.4).
ARVE JENSEN, CEO:
Our business performed according to our expectations in the first quarter of the year. Our profitability improved despite of our sales being down year-on-year mainly due to the lower headcount after the COVID-19 breakout. Dovre’s positive growth trend, which started in H2 2020, continued during the quarter and we have now reached back to the same headcount level that we had before the COVID-19 pandemic. The key for us now is to keep our cost levels down while ensuring capacity to grow.
Singapore has had the strongest headcount growth, followed by the Norway units. Consulting in Norway has also had a very active start of the year with several large consulting projects for public sector. The operations in other units have been stable in Q1.
We signed several new frame agreements in the energy sector in Q1. In addition, our Consulting unit announced new agreements with Statsbygg and Gassnova in Norway.
Our strategy to further diversify and expand into renewable energy led us to the recent acquisition of Suvic Oy on the last day of March. With this acquisition we have taken a major step into renewable energy and in addition clearly strengthened our position in Finland. At the current sales level we estimate that we now will have close to 50% of our sales in oil and gas and 50% outside oil and gas.
Our main markets are all still affected by Covid, but there is an increased optimism about the time after each country has completed the main parts of the vaccination plans. We expect the negative effects of the pandemic to impact our business to some degree at least for the next six months’ period. We continue to monitor the development of the pandemic and COVID-19 vaccination schedules, oil price development, and other market movements. If necessary, we will adjust our operations accordingly.
SUVIC ACQUISITION
On March 31, Dovre Group completed the acquisition of a majority stake (51%) in the Finnish windmill park construction and construction design company Suvic Oy, which specializes in building windmill park infrastructure as a turn-key solution as a single contractor. Suvic’s revenue in 2020 was 32 million euros (2019: 23 million) and the EBIT 0.9 million euros (0.9). On a pro forma basis, the combined revenue of both Suvic and Dovre Group in 2020 would have been 109 million euros and combined EBIT 3.2 million euros.
The debt-free and net cash purchase price of the transaction is about 3 million euros, of which 2 million euros will be paid in cash. In addition, Dovre Group will issue 3 million shares to the sellers of Suvic in a directed new share issue. The subscription price will be recorded in full in Dovre Group's invested unrestricted equity fund. From the date of registration, the new shares will generate the same shareholder rights as the company's other shares and the number of Dovre Group shares will increase to 105,956,494. Dovre Group will apply for the new shares to be traded on Nasdaq Helsinki no later than June 1, 2021.
Suvic Oy is headquartered in Oulu with 24 employees and it will continue its operations as part of Dovre Group, but as an independent operational unit. Suvic is consolidated with Dovre Group from 31 March 2021 and reported as part of the new renewable energy segment.
Further information on the acquisition can be found in the stock exchange releases issued by Dovre Group on March 10, 2021 and March 31, 2021.
NET SALES
In Q1, Dovre Group’s net sales decreased by 16.6% to EUR 19.7 (23.6). The decline was mainly attributable to the slower demand in the Project Personnel business due to the COVID-19 pandemic, but the development was also affected by the strong comparison figure for the first quarter of 2020, which was not yet affected by the pandemic.
Project Personnel accounted for 78 (82) percent and Consulting for 22 (18) percent of the Group’s net sales. Project Personnel’s net sales decreased by 20.3% to EUR 15.4 (19.4) million and net sales for Consulting were at the level of the comparison period at EUR 4.3 (4.2) million.
Year-on-year fluctuations in foreign currency exchange rates had only a minor impact on the Group’s net sales in Q1. At constant currencies, net sales would have decreased by 15.5% year-on-year in Q1 instead of 16.6 per cent.
| Net sales by reporting segment | 1-3 | 1-3 | Change | 1-12 | |||
| EUR million | 2021 | 2020 | % | 2020 | |||
| Project Personnel | 15.4 | 19.4 | -20.3 | 62.9 | |||
| Consulting | 4.3 | 4.2 | 0.5 | 14.5 | |||
| Group total | 19.7 | 23.6 | -16.6 | 77.5 |
OPERATING RESULT
In Q1, the Group’s operating result increased to EUR 0.8 (0.7) million and EBIT-margin clearly improved year-on-year. Project Personnel’s operating result was at the level of the comparison period, EUR 0.6 (0.6) million, despite a clear decrease in the segment’s net sales. Consulting’s operating result increased slightly and totaled EUR 0.6 (0.5) million. The operating result of the Group’s Other functions was EUR -0.3 (-0.2) million. The figure includes EUR 0.1 million of non-recurring expenses related to the acquisition of Suvic.
| Operating result | 1-3 | 1-3 | Change | 1-12 | |||
| EUR million | 2021 | 2020 | % | 2020 | |||
| Project Personnel | 0.6 | 0.6 | 2.2 | 2.4 | |||
| Consulting | 0.6 | 0.5 | 42.4 | 0.6 | |||
| Other functions | -0.3 | -0.2 | -31.9 | -0.1 | |||
| Unallocated *) | -0.1 | -0.1 | 5.3 | -0.3 | |||
| Group total | 0.8 | 0.7 | 19.3 | 2.7 |
*) Unallocated expenses include amortization of customer agreements and relations.
PERSONNEL
On March 31, 2021, Dovre Group employed 714 (677) people, 602 (589) of whom were employed by Project Personnel, 85 (85) by Consulting, 24 (0) by Renewable Energy and 3 (3) by Other functions. The number of Project Personnel employees increased slightly because of organic growth, while the number of personnel in Consulting remained unchanged. The number of employees in the established new Renewable Energy segment increased as a result of the Suvic acquisition.
| Average number of personnel | 1-3 | 1-3 | Change | 1-12 | |||
| Number of persons | 2021 | 2020 | % | 2020 | |||
| Project Personnel | 572 | 595 | -3.9 | 541 | |||
| Consulting | 86 | 88 | -2.6 | 85 | |||
| Other functions | 3 | 3 | 0.0 | 3 | |||
| Group total | 661 | 687 | -3.7 | 629 | |||
| Personnel at period-end | 31 Mar | 31 Mar | Change | 31 Dec | |||
| Number of persons | 2021 | 2020 | % | 2020 | |||
| Project Personnel | 602 | 589 | 2.2 | 521 | |||
| Consulting | 85 | 85 | 0.0 | 86 | |||
| Renewable Energy | 24 | - | - | ||||
| Other functions | 3 | 3 | 0.0 | 3 | |||
| Group total | 714 | 677 | 5.5 | 610 |
CASH POSITION
On March 31, 2021, the Group’s net debt was EUR -1.1 (2.2) million. The Group’s cash and cash equivalents totaled EUR 8.9 (3.3) million. During Q1, Dovre Group raised a loan of EUR 2.0 million for the acquisition of Suvic. The Group’s interest-bearing liabilities increased to EUR 7.7 (5.5) million, a total of EUR 4.4 (3.0) million of which were current and EUR 3.4 (2.4) million non-current.
In Q1, net cash flow from operating activities was EUR 0.5 (-1,3) million, which includes EUR -0.3 (-1.7) million change in working capital. Due to the nature of the business, the Group’s cash flow development is typically less favorable during the first half of the year.
OTHER EVENTS DURING THE REVIEW PERIOD
The number of treasury shares held by Dovre Group Plc decreased to 236,725 shares on March 30, 2021, when the company transferred 633,612 treasury shares without consideration to the key persons participating in the earning period 2018-2020 of the share-based incentive program 2018 according to the terms and conditions of the program.
Further information on the share-based incentive plan and the related transfer of own shares can be found in the stock exchange releases published on June 1, 2018, March 29, 2021 and March 30, 2021.
In Espoo, April 28, 2021
DOVRE GROUP PLC
BOARD OF DIRECTORS
For additional information, please contact:
Dovre Group Plc
Arve Jensen, CEO
tel. +47 90 60 78 11
[email protected]
Sirpa Haavisto, CFO
tel. +358 20 436 2000
[email protected]
Dovre Group is a global provider of project management services. Dovre Group has two business areas: Project Personnel and Consulting. Dovre Group has offices in Canada, Finland, Norway, Russia, Singapore and the US, and employs more than 700 people worldwide. Dovre Group is listed on Nasdaq Helsinki (symbol: DOV1V). Website: www.dovregroup.com.
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