Interim report, January-June 2023

Stable earnings in a challenging market – largest acquisition to date

Second quarter:

• Net sales amounted to SEK 2,263 million (2,475), down 9 percent. Organic growth amounted to a negative 13 percent.
• Reported order intake decreased by 21 percent while the order backlog as of 30 June was SEK 1,575 million, a decrease of 41 percent.
• Operating EBITA amounted to SEK 261 million (297) and the operating EBITA margin amounted to 11.6 percent (12.0).
• Earnings per share amounted to SEK 3.36 (3.66).
• Return on operating capital amounted to 16.8 per-cent (17.9).
• Net debt amounted to a multiple of 0.7 in relation to operating EBITDA (0.4 excluding IFRS 16).

January-June 2023:

• Net sales amounted to SEK 4,358 million (4,548), down 4 percent. Organic growth amounted to a negative 11 percent.
• EBITA amounted to SEK 429 million (470) and the EBITA margin amounted to 9.8 percent (10.3).
• Operating EBITA amounted to SEK 430 million (477) and the operating EBITA margin amounted to 9.9 percent (10.5).
• Earnings per share amounted to SEK 5.26 (5.74).
• On July 13, Inwido acquired Sidey in the UK, which fo-cuses on the renovation market in Scotland.

CEO Comments:
It is with satisfaction that we begin the third quarter of 2023 by announcing that our largest acquisition to date, Sidey Group, is now a part of Inwido. The company that is the market leader in renovations of social housing in Scotland, with sales of about SEK 800 million over the past 12-month period. The transaction makes Inwido number one in the Scottish market and takes the Group a major step towards its targeted sales of SEK 20 billion by 2030.

Inwido’s strong balance sheet and good cash flow allows us to continue to act aggressively despite the currently more challenging market. Sidey Group was acquired at a multiple of slightly less than six times EBIT, with the acquisition being financed with available cash and equivalents.
In the second quarter of 2023, the market weakened compared with the first quarter, resulting in sales decreasing for the first time since 2019. The decline in the market that was previously mainly attributable to a slowdown in new construction, we now also see in the consumer market, although not at the same pace. Both order intake and order backlog declined due to the weaker market. That Inwido nonetheless delivered an operating EBITA margin of 11.6 percent and a return on operating capital well above our target shows the resilience of our business model.

With regard to the key indicators for our sustainability work, these are affected by lower production volumes, which increases energy consumption per unit despite consolidated energy consumption decreasing in absolute terms. During the quarter, the proportion of sales that are compatible with the EU Taxonomy’s criteria for significantly contributing to limiting climate impact increases. It is also satisfying to see that our efforts to reduce the number of accidents are continuing to have an impact.

Over the quarter, net sales decreased by 9 percent to SEK 2,263 million (2,475) and organic growth was a negative 13 percent. Operating EBITA totaled SEK 262 million (297).

Mixed development in our business areas
During the quarter, Business Area Scandinavia operated in a clearly weaker market, resulting in sales falling by 12 percent. Various types of programs are therefore welcome, accelerating the transition towards more energy-efficient properties, such as the energy efficiency benefit that came into effect in Sweden in early July and that includes window replacements in houses heated with electricity or gas. In the long term, we believe that this may have an impact on the willingness to invest, thus increasing the pace of the green transition to more energy efficient buildings.

Business Area Eastern Europe continues to show sales growth in the Consumer market, while the Industry market diminished. During the quarter, profitability increased sharply with an operating EBITA margin of 13 percent (8.8). This is mainly driven by the ongoing price increases that have been implemented and are now reaching their full impact.

Business Area e-Commerce operates in a market that is currently particularly competitive. Although sales increased the operating EBITA margin decreased to 3.9 percent (7.6). This is largely attributable to market investments in connection with the launch of the newly started operations in the Netherlands, as well as increased marketing investments in existing markets.

Business Area Western Europe is characterized by a hesitant market. Sales to the Consumer market are decreasing, while the Industry market is more favorable for our business units. Our Irish business unit deviates positively both in terms of sales and profitability.

Future prospects
The second quarter was characterized by a more hesitant market than previously. However, our strong financial status enables us to perceive opportunities to advance our positions, particularly with the acquisition of Sidey Group, but also with our initiatives in our existing business units. During the quarter, our Board of Directors approved, for example, an investment of SEK 100 million in Elitfönster’s production facility in Vetlanda.
The recent inflation and rapid interest rate hikes in Europe affect both new construction and consumers’ willingness to invest. We therefore welcome the energy efficiency benefit initiated in Sweden in early July, as a means of stimulating the market. Given the EU’s clear ambitions to enhance energy performance in properties over the upcoming years to mitigate negative environmental impacts, I see very good growth opportunities for energy-efficient windows and doors that also improve our indoor environment.

MALMÖ, JULY 14, 2023
Henrik Hjalmarsson,
President and CEO

This information is such that Inwido AB (publ) is obliged to publish in accordance with the EU market abuse regulation and the Swedish Securities Market Act. The information was submitted by the below contact persons for publication on July 14, 2023 at 07:45 a.m. CET.