INTERIM REPORT 1 JANUARY – 30 SEPTEMBER 2021

Stable quarter with growth and profitability

THIRD quarter

The third quarter has developed well and we report an EBITDA result of SEK 186 million, which can be compared with SEK 53 million the previous year. Net sales during the third quarter amounted to SEK 846 million, an increase of SEK 328 million compared with the previous year.

The strong market for new construction and renovation has led to good demand for our products with price increases as a result. At the same time, capacity utilization has been high, which in combination with price increases has contributed to the strong earnings trend.

The exceptionally strong wood products market in 2021 created a deficit during the summer and prices for mainly sawn wood products rose to new record levels in Europe. At the same time, prices in the US have fallen from high levels. What we are seeing for the winter is a certain reduction and price rebound in Europe, at the same time as US prices are rising again. With continued good demand behind it, we now expect timber prices to find a new, more stable and sustainable level.

Prices for the sawmills’ raw material, saw logs, are rising and the assessment is that the sawmills’ production volumes will decrease slightly during the winter. Like the rest of the business community, we have been affected by a lack of access to transport with increased costs. In our favourable market, the increased costs have largely been absorbed by our customers

 

performance by product area

Wood Protection
The traditional wood protection business has continued to develop well with good margins. A certain slowdown in demand has taken place after the summer as a result of shortages of materials and manpower leading to delays and shifts in projects. The increased interest in fire protection-impregnated wood and linseed oil impregnation continues and we expect a continued favourable market.

Joinery
We continue to have good demand for windows, doors, garden products and houses. The capacity is sold out for 2021 and we see a good order intake for next year. During the quarter, we had some disruptions in component deliveries, mainly glass and fittings. The PTP Group, acquired in England during the summer, delivers according to plan and contributes to growth in our product area Joinery.

Sawn Wood
Demand for sawn wood products has been good during the quarter and with high margins in the business. During the quarter, our Vika Wood sawmill in Latvia had a six-week planned production stoppage for rebuilding the saw line. The rebuilding has gone according to plan and production is now back at full speed. After sharply increased prices for sawn wood products, we now see a price correction. We currently have a very low finished goods inventory and good supply of raw materials, which provides a favourable situation for the winter.

Other (Energy & Logistics)
The market for pellets has been weak during 2020 and the first half of 2021. The situation for our operations in Fågelfors has been unsatisfactory and loss-making. We are now seeing a clear improvement in the market after the summer with increased delivery volumes and declining inventories. Demand and increased prices are driven by the generally increased cost of energy and the use of pellets for both heating and electricity production.

acquisitions and investments

In October, a decision was made to become a partner in the Värmland-based innovation company Wood Tube. The company has developed a patented paper stud for interior walls and furniture frames. Bergs’s initial ownership share will be 25 percent. Our investment is SEK 8.5 million and, together with regional support, creates the conditions for constructing a first industrial production facility. We believe that the product has good properties and will be well received in market.

Investment in increased production capacity for Linax (linseed oil impregnation) in Sweden and expansion of our window and door production in Latvia are proceeding according to plan.

future prospects

According to available public forecasts, activity for construction and renovation will continue to develop well into 2022. The supply of raw materials for production of wood products is not expected to increase. At the same time, interest in wood as a building material in both single-family houses and larger buildings is increasing. This means that we have every reason to look positively on the future.

We see continued good demand for the Group's products and expect continued good capacity utilization. The price adjustments of sawn wood products that are now taking place will have a negative effect on the profitability of Wood Protection and Sawn Wood in the fourth quarter.

The last quarter of the year is seasonally our weakest quarter. After several exceptionally good quarters, we now expect a return to more normal margins.

ECONOMIC SUMMARY

THIRD quarter (1 JULY–30 SEPTEMBER)

• Net sales increased by 63% to SEK 846 million (518). The increase in net sales was mainly related to higher sales prices. The newly acquired PTP Group contributed with SEK 86 million.
• EBITDA amounted to SEK 186 million (53), an increase primarily related to higher sales prices for products in Wood Protection and Sawn Wood. The EBITDA margin was 22.0% (10.2).
• Operating profit amounted to SEK 166 million (31), corresponding to an operating margin of 19.6% (6.0).
• Profit for the period amounted to SEK 158 million (95).
• Earnings per share, before and after dilution, was SEK 0.46 (0.08).
• Cash flow from operating activities amounted to SEK 63 million (167), negatively affected bt higher level of working capital due to higher sales- and raw material prices.

 

Interim period (1 January–30 SEPTEMBER)

• Net sales increased by 42% to SEK 2,265 million (1,591). The increase in net sales was mainly related to higher sales prices, but also higher sales volumes in Joinery contributed positively.
• EBITDA amounted to SEK 397 million (134), an increase primarily related to higher sales prices for products in Wood Protection and Sawn Wood. The EBITDA margin was 17.5% (8.4).
• Operating profit amounted to SEK 341 million (79), corresponding to an operating margin of 15.1% (5.0).
• Profit for the period amounted to SEK 329 million (125).
• Earnings per share, before and after dilution, was SEK 0.95 (0.18).
• Cash flow from operating activities amounted to SEK -18 million (304), negatively affected by a higher level of working capital due to higher sales- and raw material prices.

 

 

 

Contact information

Further information concerning this press release will be provided by the President and CEO, Peter Nilsson, on telephone number +46 70 315 09 27 or Anders Marklund, CFO, 070-284 47 96.

 

The information is such that Bergs Timber AB (publ) is required to make public pursuant to the Securities Markets Act. The information was submitted for publication on 28 October, 2021 at 13:00 CET

Calendar

 

Year-end report for 2021	3 February 2022
Interim report, January-March 2022	5 May 2022
Interim report, January-June 2022	25 July 2022
Interim report, January-September 2022	27 October 2022
Year-end report for 2022	2 February 2023

 

 

 

 

About Bergs

 

An international wood products Group

The Bergs Group consists of independent subsidiaries, with clear responsibilities for results, that develop, produce and market processed wood for various applications.

 

With years of experience in wood and a great deal of competence in processing, Bergs promotes building a sustainable society based on renewable raw materials from sustainably cultivated forests in the Baltic Sea region.

 

Operations are conducted in Sweden, Estonia, Latvia and the UK, and the Group’s products are sold in some 20 countries. The largest markets consist of Scandinavia, the Baltic countries, the UK and France. The head office and Group management are located in Sweden.

 

The company’s share has been listed on Nasdaq Stockholm since 1984.