Fagerhult : Interim Report January-September 2020

Interim Report Q3

January-September 2020

AB Fagerhult (publ.)	[e-mail]
566 80 Habo	www.fagerhultgroup.com

AB Fagerhult (publ.)

566 80 Habo

1,664

Order intake, MSEK

Order intake was MSEK 1,664 (2,038), a decline of -18.4%adjusted to -15.1%for currency effects of MSEK -69

1,700

Interim report Q3

January - September 2020

The third quarter

During the third quarter we continued to experience a lower market activity caused by Covid-19. We continue to handle the situation well and operations remain stable. We are of course concerned by the increasing second wave of Covid-19 and we continue to see some signs of recovery in some markets.

The lower market activity has a negative effect on the Group's trading performance. However, the trend on organic order intake compared to Q2 is positive.

Net sales, MSEK	Order intake at 1,664 (2,038) MSEK was -15.1% organically adverse, compared to
-24,0% in Q2. Net sales at 1,700 (2,066) MSEK were ahead of expectations.
Net sales were MSEK 1,700 (2,066), a
decline of -17.7% adjusted to -14.7% for	Following the press release on 7 August the process to exit Lighting Innovations,
currency effects of MSEK -62
	South Africa, continues. This has negatively impacted the quarterly operating
144
profit with one-off costs and write downs of 77.3 MSEK arising from this process,
refer to the table below. The operating profit of 66,8 MSEK is adjusted for these
Adjusted operating profit,	items to determine an adjusted operating profit of 144,1 (255,1) MSEK. There are
no adjustments to the prior year number. The business also delivered a trading
MSEK	loss of 5.1 (0.2 profit) MSEK.
Adjusted operating profit was MSEK 144.1
(255.1), a decrease of 43.5% with an	The Q2 report stated up to 156 MSEK of one-off costs and write downs arising
adjusted operating margin of 8.5 (12.3)%
	from this exit and we reconfirm this maximum sum. The process is planned to be
67	finalised in the fourth quarter. Refer to pages 8 and 11 for further details.
The adjusted operating profit of 144.1 (255.1) MSEK delivered an operating
Operating profit, MSEK	margin of 8.5 (12.3)%, there were comparable cost savings of 87.1 MSEK and 31.1
Operating profit was MSEK 66.8 (255.1), a	MSEK of government subsidy income in the quarter.
decrease of 73.8% with an operating
margin of 3.9 (12.3)%	Operating cash flow remains positive at 388.8 (400.4) MSEK in the quarter and
5	financial items were 36.0 (16.8) MSEK including 9.7 (2.6) MSEK for IFRS.
	Reconciliation of adjusted operating profit			Q1-3, 2020
	Q3, 2020
Net profit, MSEK		Operating profit		66.8	231.1
	Intangible assets impairment		63.1	63.1
Earnings after tax were MSEK 4.9 (181.1)
	Redundancy and other cost		14.2	14.2
0.00		Adjusted operating profit		144.1	308.4

Earnings per share, SEK

Earnings per share were SEK 0.00 (1.02)

389

Operating cash flow, MSEK

Cash flow from operating activities was

MSEK 388.8 (400.4)

[e-mail]1 www.fagerhultgroup.com

Interim report Q3

January - September 2020

CEO comments

• Together with the local management teams we continue our focus in navigating our way through the Covid-19 challenge.
• Group colleagues have responded well to the challenges of Covid-19 and we are making good progress on the implementation of the strategic alignment process, which means we will emerge stronger from the pandemic.
• From this process we have identified opportunities for collaboration and growth in focussed markets, segments and business areas and have initiated early steps in these strategic developments.
• The third quarter was ahead of expectations for net sales and adjusted operating profit.
• Organic order intake was -15,1% in the quarter compared to -24,0% in Q2.
• Order intake does, however, remain a concern but the quarter on quarter positive trend is encouraging. Continued cost reductions and cash generation activities deliver a solid platform to improve results and reduce net debt in the coming months.
• In the Group we are increasing our focus on sustainability. Our new mission statement clearly shows our ambitions. A leading example is the launch of Whitecroft Vitality, a circularity platform for lighting within the Whitecroft brand where the first accredited cradle to cradle product was recently launched.

"The ongoing strategy work will deliver long term value whilst in the short-term we become stronger."

Bodil Sonesson, CEO and President

AB Fagerhult (publ.)	[e-mail]	2
566 80 Habo	www.fagerhultgroup.com

Interim report Q3 January - September 2020

5,465

Order intake, MSEK

Order intake was MSEK 5,465 (5,827), an overall decline of -6.2% adjusted to -12.4% for acquisitions of MSEK 418 and currency effects of MSEK -59

5,116

Net sales, MSEK

Net sales were MSEK 5,116 (5,716), a decline of -10.5% adjusted to -14.8% for acquisitions of MSEK 289 and currency effects of MSEK -43

308

Adjusted operating profit,

MSEK

Adjusted operating profit was MSEK 308.4 (588.0) a 47.6% decrease with an adjusted operating margin of 6.0 (10.3)%

231

Operating profit, MSEK

Operating profit was MSEK 231.1 (588.0) a 60.7% decrease with an operating margin of 4.5 (10.3)%

87

Net profit, MSEK

Earnings after tax were MSEK 87.3 (388.6)

0.46

Earnings per share, SEK

Earnings per share were SEK 0.46 (2.63)

707

Operating cash flow, MSEK

Cash flow from operating activities was MSEK 706.9 (628.6)

January-September

During the first half of 2020 the Fagerhult Group faced several challenges and as reported many of these challenges were one-off events which have now been dealt with. During the second half of the year we are dealing with the ongoing Covid-19 condition as well as progressing the exit from South Africa.

Trading performance remains disrupted due to Covid-19. We see a positive trend in the quarter on quarter comparable organic order intake, a sign that the market deteriorates no further. For the remainder of the year we continue the focus at reducing the cost base.

At the same time, we continue the strategic alignment process where we see many opportunities for growth with the new business areas beginning to collaborate and execute on these.

The Group's year to date order intake of 5,465 (5,827) MSEK shows a -6.2% decrease and on a comparable basis a decrease of -12.4% when adjusting for acquisitions (418 MSEK) and currency effects (-59 MSEK).

The Group's year to date net sales of 5,116 (5,716) MSEK show a -10.5% decline, increasing to -14.8% when adjusting for acquisitions (289 MSEK) and currency effects (-43 MSEK). The order backlog position is 1,441 (1,554) MSEK.

The Group's year to date operating profit of 231.1 MSEK is adjusted to 308.4 (588.0) for the 77.3 MSEK one-off costs and write downs in South Africa, refer to the table below. There are no adjustments to the prior year number. The year to date trading losses in Lighting Innovations are -17.2(-3.6) MSEK. During the second and third quarters comparable cost savings of 173.1 MSEK have been delivered and the gross government subsidy income is 68.7 MSEK.

Operating cash flows improved to 706.9 (628.6) MSEK mainly as a result in a working capital reduction of 219.2 (81.8) MSEK.

Financial items of 88.7 (67.8) MSEK include 23.1 (14.6) MSEK for IFRS16, a 5.7 MSEK decrease in net interest costs and an 18.1 MSEK increase in currency effects.

The tax expense in the period of 55.1 (131.6) MSEK results in a 38.7 (25.3)% tax rate with the write downs in South Africa being disallowable for tax.

Reconciliation of adjusted operating profit	Q3, 2020	Q1-3, 2020
Operating profit	66.8	231.1
Intangible assets impairment	63.1	63.1
Redundancy and other cost	14.2	14.2
Adjusted operating profit	144.1	308.4

AB Fagerhult (publ.)	[e-mail]	3
566 80 Habo	www.fagerhultgroup.com