Interim report, January - September 2022

Growth and profitability exceeding targets

Third quarter 2022

• Net sales rose to SEK 2,386 million (1,897), up 26 percent. Organic growth amounted to 15 percent.
• Reported order intake decreased by 1 percent while the order backlog increased by 6 percent to SEK 2,420 million.
• EBITA increased to SEK 298 million (275) and the EBITA margin amounted to 12.5 percent (14.5).
• Operating EBITA rose to SEK 297 million (275) and the operating EBITA margin amounted to 12.5 percent (14.5).
• Earnings per share rose to SEK 3.88 (3.57).
• Net debt decreased to a multiple of 0.8 in relation to operating EBITDA (0.5 excluding IFRS 16).

January–September 2022

• Net sales rose to SEK 6,934 million (5,550), up 25 percent. Organic growth amounted to 16 percent.
• EBITA increased to SEK 768 million (660) and the EBITA margin amounted to 11.1 percent (11.9).
• Operating EBITA rose to SEK 775 million (663) and the operating EBITA margin amounted to 11.2 percent (11.9).
• Earnings per share rose to SEK 9.62 (8.57).
• Cash flow from operating activities increased to SEK 653 million (539)
• Return on operating capital increased to 17.9 percent (16.4)

CEO comments:

Summing up the third quarter, I am able to state that Inwido has continued the favorable trend experienced in the first half of the year. Growth exceeds by some margin our long-term growth target of reaching sales of SEK 20 billion by 2030 and the return on operating capital is also above the targeted figure. Cash flow for the quarter was favorable and the already strong balance sheet has been further strengthened. On the whole, I feel that this shows Inwido to be stable in a time pervaded by an increasingly uncertain external environment. Over the quarter, our operations were affected by the peak in the price of natural gas in August and September, which in turn entailed higher prices, particularly for glass. Hence, the margin decreased somewhat over the period, which was also due to a continued weaker trend in e-Commerce. Although the picture varies within the Group, we are now seeing, for the first time in a long while, order intake decreasing somewhat. At the same time, our business units are used to quickly adapting their operations to demand, not least because our business has always been characterized by seasonal variations. 

Inwido stands stably despite uncertain external conditions with inflation remaining high and interest rates rising rapidly. Over the quarter, net sales increased by 26 percent to SEK 2,386 million (1,897), 15 percent organically. Operating EBITA increased to SEK 297 million (275), the highest to date for the third quarter of a year, while the operating EBITA margin amounted to 12.5 percent (14.5). The order backlog of SEK 2,420 million remains at a historically high level and increased by 6 percent, while order intake for the quarter decreased by 1 percent. 

Positive development in three out of four business areas

Business Area Scandinavia continued its high level of growth over the quarter, combined with improved profitability. We have succeeded well in both defending and strengthening our market positions. Sales increased by 27 percent, operating EBITA rose by 28 percent to SEK 206 million (160) and the operating EBITA margin was 16.2 percent (16.1). 

Business Area Eastern Europe shows strong growth. Sales rose by 36 percent, operating EBITA increased to SEK 59 million (45) and the operating EBITA margin amounted to 9.0 percent (9.2). The favorable trend can be seen clearly, both in our largest business unit in Finland, as well as in our Polish operation. 

Business Area e-Commerce continues the weak trend of the first half of the year. Early in the year, disruptions in the implementation of growth-promoting investments in machinery caused capacity shortages, causing our sales to lose the positive momentum present in 2021. There is no longer any shortage of capacity, and efficiency is gradually improving. At the same time, we are seeing that consumers are more cautious towards e-trade than they were during the Covid boom. Combined, this meant that sales fell by 9 percent to SEK 232 million, while the operating EBITA amounted to SEK 15 million (58) and the operating EBITA margin was 6.3 percent (22.8). 

Business Area Western Europe shows strong growth but weaker margins for the quarter. Several of our business units show favorable growth and Dekko Window Systems, which was acquired in the first quarter, continues to contribute positively to the business area’s development. Sales increased by 46 percent to SEK 241 million. Operating EBITA rose to SEK 24 million (21) while the operating EBITA margin fell to 9.9 percent (12.8). 

Well positioned for continued growth through acquisitions
The three acquisitions we have made to date this year, Dekko Window Systems, Westcoast Windows and Hyvinkään Puuseppien all showed favorable growth and profitability over the quarter. Although the external environment is pervaded by considerable uncertainty, we see big opportunities to maintain a high acquisition rate, keeping debt at a favorable balance of course. In the third quarter, our strong cash flow further lowered our debt ratio, affording us good opportunities to continue making acquisitions even in a weakened economy.

Future prospects
The third quarter shows good sales, improved profits over last year and a strong order backlog . At the same time, there is some uncertainty around order intake. Over the year, the price of input material has risen sharply, which we have countered with price increases. We foresee prices for glass remaining high over the year, while prices for wood are falling back. Consumer confidence is generally at record low levels in Europe, affecting the willingness to invest.
In its energy savings campaign, the Swedish Energy Agency writes that 35 percent of the heat in a single-family home is lost through windows and doors. Accordingly, with energy prices at record highs, there has probably never been a better time to invest in our energy efficient products.
 

MALMÖ, OCTOBER 25, 2022

 
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 October 25, 2022 at 7:45 a.m. CET.