Interim Report 1 January – 31 March

Continued good demand and order intake

 

PRESS RELEASE

2022-05-05

 

 

FIRST QUARTER

The first quarter of the year developed in line with our expectations. Seasonally lower deliveries and increased raw material costs for Wood Protection were largely offset by the result from Sawn Wood and a strong development for Joinery. Demand and order intake for our product areas remained good. For the quarter, EBITDA amounts to SEK 82 million, compared with SEK 65 million the previous year. Net sales for the quarter amounted to SEK 910 million, an increase of 53 percent compared with the previous year. Cash flow from operating activities was strong and amounted to SEK 124 million.

 

MARKET

The market for sawn wood products is affected by the ongoing war in Ukraine. Europe normally imports close to 10 percent of the annual consumption of wood products from Russia and Belarus. As sanctions have come into force and with significant problems with the logistics flow from Russia, imports have gradually decreased and will according to current sanction rules cease completely.

 

Russian goods continue to be exported, mainly to China, at the same time as production is expected to gradually decrease. This has created an imbalance in the global wood products market and we are now seeing some shortages and price increases in the market. The price of wood chips and shavings is also affected, with price increases being implemented before the summer. The war has also caused disruptions in transport by both ships and trucks. This has resulted in rising logistics costs. It is currently difficult to fully see the effects of the war and we expect a continued rather volatile market for sawn wood products.

 

The positive trend for wood products continues. There is great interest among politicians, architects, and builders to gradually increase the pro- portion of renewable raw materials where wood is doing well. Despite price increases for building materials, the market for new construction and renovation remains strong. Ahead of the spring and summer, we see a continued stable development in demand for all the Group’s products. Not least, we see a promising development in Joinery with windows and doors as the largest products.

 

PERFORMANCE BY PRODUCT AREA

WOOD PROTECTION

The first quarter of the year is seasonally our weakest quarter for Wood Protection with lower delivery volumes and inventory build-up for the spring and summer season. This in combination with increased raw mate- rial costs had a negative effect on earnings. Demand for the coming high season is good and price increases have been achieved that will improve earnings. Demand for high-quality and more exclusive products continues to increase. After a weak start of the year, we also see an improvement in the English market.

Our business in Latvia has traditionally purchased sawn wood products

from Russia. These deliveries have been strongly affected and are now ceasing completely. The inventory at our operations was large at the beginning of the year and we have gradually compensated for the loss of Russian raw material with increased deliveries from our own sawmill in Estonia, as well as from other existing Baltic and Scandinavian suppliers.

 

The investment in expanded capacity for linseed oil impregnation, with the Linax brand, at our Swedish unit in Nybro has gone according to plan and production has started.

 

JOINERY

Demand for windows, doors and garden products remains good and order intake remains at a high level. Increased costs for raw materials and logistics have been offset by increased prices for our products. The PTP Group acquired in the UK in 2021 has developed well and we continue to see interesting expansion opportunities. During the spring, the first two Swedish showrooms for windows and doors were opened. In addition to this, several projects are underway to increase our product offering.

 

SAWN WOOD

After the autumn and winter price declines, the market is now strengthening. This is linked to the ongoing war in Ukraine and the continued good demand for wood products. The cost of the sawmills’ raw material, saw logs, is rising. However, this is well offset by increased sales prices for wood products and by-products. We have a good supply of raw materials at our two Baltic sawmills and expect continued full capacity utilization during the summer.

 

OTHER (ENERGY & LOGISTICS)

In the wake of increased costs for energy, the market for pellets has improved markedly during the spring. Inventory levels are very low and prices are rising. After a weak development in 2021, we now see improved margins for our pellet business.

 

FUTURE PROSPECTS

The construction activity remains good and the order backlog in most markets is good. At the same time, uncertainty is increasing regarding the effect of rising inflation, the ongoing war and expected interest rate hikes.

Despite increased uncertainty, we currently see no weakening of demand for our products and the effects of increased costs are likely to be offset by higher prices.

 

Vimmerby, 5 May 2022

 

Peter Nilsson

President and CEO

 

FIRST QUARTER (1 JANUARY–31 MARCH)

• Net sales increased by 53% to SEK 910 million (593). The increase was mainly related to higher sales prices in Sawn Wood and higher sales volume in Joinery.
• EBITDA amounted to SEK 82 million (65); higher sales prices in Sawn Wood compensated higher raw material costs in Wood Protection. Higher volumes in Joinery and higher margins in the pellet business contributed positively. The EBITDA margin was 9.0% (11.0).
• Operating profit amounted to SEK 61 million (47), corresponding to an operating margin of 6.7% (7.9).
• Profit for the period amounted to SEK 63 million (53).
• Earnings per share, before and after dilution, were SEK 0.18 (0.15).
• Cash flow from operating activities amounted to SEK 124 million (–108), positively affected by a lower level of working capital.
• Financial net debt totalled SEK 130 million (94) as of 31 March, corresponding to a net debt/equity ratio of 0.08 (0.07).
• A new loan agreement was made with Danske Bank and SEB. The total credit facilities amount to SEK 650 million and have a three-year term.
• Performance Timber Products Group acquired all shares in the English company P&P Holdings Limited that sells, distributes and installs windows and doors in Surrey and South West London.

 

 

The Group’s key performance indicators
AMOUNTS IN SEK million	2022 Jan–March 3 months	2021 Jan–March 3 months	2021 Jan–Dec 12 months
Net sales	910	593	3,055
EBITDA	82	65	503
EBITDA margin, %	9.0	11.0	16.5
Operating profit	61	47	426
Operating margin, %	6.7	7.9	13.9
Profit for the period	63	53	417
Earnings per share, SEK	0.18	0.15	1.20
Equity per share, SEK	4.86	3.79	4.66

 

 

Contact details

Further information regarding the interim report can be provided by the CEO, Peter Nilsson, on telephone number +46 70 315 09 27 or CFO, Anders Marklund, on +46 70 284 47 96.

 

The information in this interim report is such that Bergs Timber AB (publ) is required to disclose pursuant to the EU’s Market Abuse Regulation. The information was released for publication on 5 May 2022 at 8:00 a.m. CET. The interim report is available on the company’s website, www.bergstimber.com

 

 

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.