Lindab’s Interim Report January – September 2024: Sales growth in a continued weak market
Lindab’s sales increased by 3 percent and the Group reported the highest sales ever for a third quarter. Business Area Ventilation Systems, which accounts for approximately 75 percent of sales, continued to grow as a result of completed acquisitions. Business Area Profile Systems’ sales decreased slightly. The adjusted operating margin was 9.1 percent. To strengthen profitability, costs will be adjusted to lower demand in the coming quarters.
Third quarter 2024
- Net sales increased by 3 percent to SEK 3,348 m (3,251). Organic sales decreased by 4 percent while acquisitions contributed positively by 9 percent. Currency effects had a negative impact of 2 percent.
- Adjusted1) operating profit amounted to SEK 304 m (351).
- One-off-items amounted to SEK -30 m (-). These items were not affecting cash flow.
- Operating profit amounted to SEK 274 m (351).
- Adjusted1) operating margin amounted to 9.1 percent (10.8).
- Operating margin amounted to 8.2 percent (10.8).
- Profit for the period amounted to SEK 158 m (239).
- Earnings per share before and after dilution amounted to SEK 2.05 (3.10).
- Cash flow from operating activities amounted to SEK 259 m (444).
- During the quarter Lindab signed an agreement to acquire the French ventilation company ATIB. The acquisition was completed in October. In July, Lindab finalised the acquisition of the Danish ventilation company Venti.
January – September 2024
- Net sales increased by 2 percent to SEK 10,015 m (9,840). Organic sales decreased by 6 percent while acquisitions contributed positively by 8 percent. Currency effects were neutral at 0 percent.
- Adjusted1) operating profit amounted to SEK 867 m (917).
- One-off-items amounted to SEK -30 m (-). These items were not affecting cash flow.
- Operating profit amounted to SEK 837 m (917).
- Adjusted1) operating margin amounted to 8.7 percent (9.3).
- Operating margin amounted to 8.4 percent (9.3).
- Profit for the period amounted to SEK 488 m (659).
- Earnings per share before and after dilution amounted to SEK 6.34 (8.59).
- Cash flow from operating activities amounted to SEK 809 m (1,122).
1) Adjusted operating profit/operating margin does not include significant one-off items and restructuring costs.
Lindab’s President and CEO, Ola Ringdahl, comments:
“Lindab increased sales during the third quarter thanks to completed acquisitions. The market has continued to be characterised by a weak economy in Europe. The operating margin of 9.1 percent did not reach the profitability target of at least 10 percent. Further cost savings will be implemented to increase margins. Structural measures within Profile Systems will be accelerated.
The market situation remains weak with many projects on hold. Although early signs of recovery have been noted, this will not have a positive impact until next year, as ventilation installations are completed in the later phases of a construction project. The economic situation in Western and Southern Europe has gradually deteriorated during the year, while demand in the Nordic region has not yet picked up. Lindab has a positive view of future market development one year ahead, but over the next few quarters the business will continue to adapt to lower demand.
Ventilation Systems continues to grow through acquisitions
Ventilation Systems increased sales by 6 percent during the quarter. Completed acquisitions have made a positive contribution. The adjusted operating margin has been stable during the year and amounted to 9.5 percent in the third quarter. However, the margin is lower than the target of an operating margin of at least 10 percent. Ventilation Systems has successfully managed difficult market conditions with negative organic growth for seven consecutive quarters. A new cost revision will be conducted to ensure a profitability in line with the financial targets.
Stable development for Profile Systems in the Nordics
Over the past two years, Profile Systems has been negatively affected by reduced construction activity in the Nordic region and a very challenging situation in Eastern Europe. Profile Systems had a weak start of the year, but has gradually reversed the trend in the Nordic region. In the third quarter, the operating margin was 8.8 percent. The strategic evaluation of activities in Eastern Europe is being intensified.
Acquisitions create conditions for further growth
During the third quarter, an agreement was signed to acquire the French ventilation distributor ATIB, a company with in-depth knowledge of technical sales. ATIB strengthens Lindab’s market position in Western France and creates opportunities for additional sales of Lindab’s technical products. The acquisition was finalised at the beginning of October and did therefore not affect sales or earnings for the third quarter.
After the end of the quarter, the UK Competition and Markets Authority announced its decision regarding Lindab’s acquisition of HAS-Vent in October 2023. In two locations where Lindab and HAS-Vent each have a branch, one of the branches in each location will need to be divested in the near future. The competition investigation has been ongoing for approximately one year and has led to delays in the integration of the businesses. After the divestments, Lindab and HAS-Vent will have 30 distribution branches in the UK and together build a strong business with significant synergies.
With a continued strong cash flow and a good financial position, more acquisitions will be added to Lindab in the coming quarters. Acquisitions are expected to account for approximately two thirds of Lindab’s growth until 2027.
Prepared for higher demand
The long-term demand for Lindab’s products looks very positive. New EU directives and national legislation require newly built properties to have zero emissions and existing buildings to reduce their energy consumption. This means that ventilation will be a priority area for both new construction and renovations. In addition, demand for products with a strong sustainability profile is increasing, which favours Lindab.
When the market recovers, Lindab is well placed to quickly capitalise on higher demand. With investments already made in increased capacity and automation, production can be increased without major cost increases, which should lead to a noticeable strengthening of the operating margin.
The market shows signs of recovery
The market situation remains subdued and Lindab is planning for continued weak demand during the first half of 2025. However, the accumulated needs are high and Lindab believes in gradually increasing volumes in the second half of 2025. Thereafter, we believe that the ventilation market will enter a multi-year growth phase.”
Press and analyst meeting:
A live webcast will be held at 10:00 am (CEST) on October 24. The Interim Report will be presented by Ola Ringdahl, President and CEO, and Lars Ynner CFO.
If you wish to participate via webcast please use the link below.
If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
This disclosure contains information that Lindab is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 24-10-2024 07:40 CET.
