Year-end report 1 January – 31 December 2021

Stable fourth quarter and a strong year

FOURTH QUARTER

The last quarter of the year developed in accordance with our expectations. After a couple of quarters with historically high profitability, the development in the market during the fourth quarter was more cautious with lower wood product prices as a result. In spite of this, EBITDA amounted to SEK 106 million, an 36% improvement compared with last year. Net sales amounted to SEK 790 million, compared with SEK 558 million last year.

 

FULL YEAR

For the full year, EBITDA amounted to SEK 503 million, an improvement of SEK 291 million compared with last year. The EBITDA margin was 16.5% (9.9). Net sales amounted to SEK 3,055, compared with SEK 2,149 million last year.

 

Considering the performance and the financial position of the company, the Board proposes a dividend of SEK 0.30 (0.20) per share. The proposed dividend amounts to approximately SEK 104 million.

 

MARKET

The market for construction and renovations remains good. This trend is global, but mainly of interest is Europe, where Bergs has its main markets. The United Kingdom, France, Sweden, the Baltics and Iceland account for the majority of our sales. Here, we currently see no slowdown in demand.

 

The prices of wood products have fluctuated sharply during the year. The decline in the spring in the US was followed by lower prices in Europe. Since this autumn, however, prices in the US have risen again, now positively affecting the price development in Europe.

 

Over time, the price of wood products has lagged the long-term price development of other construction materials such as steel and concrete. However, increased demand and limited supply seemingly has narrowed the gap the last couple of years.

 

Prices for value-added products, such as high-quality bespoke windows and doors, are largely affected also by factors such as quality, service, reliability, and performance. Given the shift upwards in the value chain, Bergs is today less sensitive to world market prices for raw materials than was the case three years ago.

 

PERFORMANCE BY PRODUCT AREA

 

WOOD PROTECTION

Wood protection operations, which are conducted at three production units in Sweden, Latvia and the United Kingdom, have experienced weakening margins during the last quarter of the year due to lower sales prices and higher raw material costs. Investments in increased capacity are ongoing and are expected to be commissioned during the first quarter of 2022. Development of new products, the range of value-added products and increased marketing activity to increase awareness of our brands has been conducted to improve the conditions for further growth.

 

JOINERY

There is still strong demand for our windows, doors as well as garden products and houses. The order situation looks promising for the current year. Some difficulties with logistics (transport) and access to various input-goods have increased costs and affected delivery times. The PTP Group, acquired in the UK during the summer, is developing according to plan and contributing to both growth and earnings. Preparations are underway for the launch of the Timber Windows concept to other countries, where the first step will be taken on the Swedish market during the first quarter of 2022.

 

SAWN WOOD

During the quarter, we saw a decline in prices from this summer’s record levels in Europe, at the same time as prices are now rising again in the USA with consequent effects also in our markets. Demand remained good during the quarter with high margins as a result. The rebuilding of the saw line that was carried out at Vika Wood in Latvia during the autumn involved a production shutdown for six weeks. However, the sawmill is now back at full capacity, delivering the planned results in terms of efficiency and safety.

 

OTHER (ENERGY & LOGISTICS)

The market for pellets has been weak both in 2020 and 2021 and the result has been unsatisfactory. During the fourth quarter, however, we noticed an improved market situation, underpinned by generally rising energy price.

 

FUTURE PROSPECTS

The construction market and the renovation market are expected to remain strong, which is favourable for all our operations. Order intake is presently stable and generally good for the season. The impact from rising raw material costs for our value-added products should be compensated by higher sales prices and by the performance of our own sawmills.

 

ECONOMIC SUMMARY

 

FOURTH QUARTER (1 OCTOBER–31 DECEMBER)*

 

•   Net sales increased by 42% to SEK 790 million (558). The increase in net sales was mainly related to higher sales prices. The newly acquired PTP Group contributed with SEK 85 million.

•   EBITDA amounted to SEK 106 million (78), an increase primarily related to higher sales prices for products in Wood Protection.

The EBITDA margin was 13.4% (14.0). Higher costs for material and logistics in Joinery have affected the result negatively.

•   Operating profit amounted to SEK 85 million (58), corresponding to an operating margin of 10.8% (10.4).

•   Profit for the period amounted to SEK 88 million (44).

•   Earnings per share, before and after dilution, was SEK 0.25 (0.13).

•   Cash flow from operating activities amounted to SEK 83 million (51), negatively affected by a higher level of working capital due to higher purchasing prices.

•   Financial net debt totalled SEK 223 million (–32) as of 31 December 2021, corresponding to a net debt/equity ratio of 0.14 (–0.03).

•   An investment of 25 percent of the shares in the innovation company Wood Tube was made.

•   The Board of Directors proposes a dividend of SEK 0.30 (0.20) per share. The total proposed dividend is approximately SEK 104 million.

 

FULL-YEAR (1 JANUARY–31 DECEMBER)*

 

•   Net sales increased by 42% to SEK 3,055 million (2,149). 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 503 million (212), an increase primarily related to higher sales prices for products in Wood Protection and Sawn Wood. The EBITDA margin was 16.5% (9.9).

•   Operating profit amounted to SEK 426 million (137), corresponding to an operating margin of 13.9% (6.4).

•   Profit for the period amounted to SEK 417 million (169).

•   Earnings per share, before and after dilution, was SEK 1.20 (0.30).

•   Cash flow from operating activities amounted to SEK 65 million (355), negatively affected by a higher level of working capital due to higher sales- and raw material prices.

•   A strategic orientation and new financial targets that reflect the Group’s growth and profitability ambitions were publicised in March.

•   The acquisition of the Performance Timber Products Group in the UK was completed in June.

 

*) The Swedish sawmill business was sold on 1 September 2020 and was recognized as discontinued operations. Comparative periods in the consolidated income statement have been restated. The consolidated income statement and key performance indicators reflect the continuing operations, unless otherwise indicated. For more information on discontinued operations, see page 16.

 

 

Further information regarding the year-end 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.

 

This information in this year-end 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 3 February 2022 at 1:00 p.m. CET. The year-end report is available on the company’s website, www.bergstimber.com

 

FINANCIAL CALENDER

 

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.