AB Fagerhult : Fagerhult, Interim Report Q1 January-March 2022

AB Fagerhult (publ.) 566 80 [e-mail]

2,204

Order intake, MSEK

Order intake was MSEK 2,204 (1,854), an increase of +18.9% adjusted to +14.0% for currency effects of MSEK +90

1,873

Net sales, MSEK

Net sales were MSEK 1,873 (1,678), an increase of +11.6% adjusted to +7.5% for currency effects of MSEK +70

173

Operating profit, MSEK Operating profit was MSEK 173.3 (152.9), an increase of +13.5% with an operating margin of 9.3 (9.1)%

120

Net profit, MSEK

Earnings after tax were MSEK 119.5 (96.2)

0.68

Earnings per share, SEK Earnings per share were SEK 0.68 (0.53)

-68

Operating cash flow, MSEK Cash flow from operating activities was MSEK -68.4 (58.6)

The first quarter

We continue to see good activity levels leading to strong customer demand for our lighting solutions across many geographical markets. The Group's operating model and business area focus provides a platform for further development and growth.

The Group continues to manage well the ongoing external challenges, not least of which comes from the supply chain difficulties. These difficulties are compounded by the situation in Ukraine.

Order intake for the quarter of 2,204 (1,854) MSEK was an all-time record and results in an organic growth of +14.0% and the order backlog is 2,239 (1,472) MSEK, an increase of +18% from the start of the year and an increase of +52% from the position a year ago. Order intake was particularly strong in business area Collection.

Net sales at 1,873 (1,678) MSEK for the quarter delivers +7.5% organic growth.

As a response to the previously reported supply chain cost pressures, price increases were implemented on the market and in the current quarter we achieved a gross margin increase of 1.6% compared to the previous quarter.

The operating profit for the quarter of 173.3 (152.9) MSEK delivers an operating margin of 9.3 (9.1)%. The operating margin in business areas Collection and Infrastructure demonstrated good improvements and remained on a high level in business area Premium. The results in business area Professional were below expectations.

The operating cash flow for the quarter was negative at -68.4 (positive +58.6) MSEK with a 282 (117) MSEK increase in working capital being the main reason.

Typically, due to seasonality, the first quarter experiences a working capital increase and during 2022 this trend has grown by an increase of 177 MSEK in receivables due to the net sales growth and an increase of 194 MSEK in inventory to support service levels to our customers during the ongoing supply chain difficulties.

1

CEO comment

The first quarter

The first quarter showed good growth in order intake and net sales. The Group's improving performance has been delivered through clear focus and progress on our strategic ambitions, high levels of innovation, hard work by all involved and more favourable market conditions.

The Group has a decentralised operating model which adapts quickly to market changes and is well positioned to take advantage of external market opportunities.

The results for the first quarter are ahead of the results for the comparable quarter in 2021 with a solid organic order intake growth of 14.0%, an organic net sales growth of 7.5% and a 173 MSEK operating result that delivers a Q1 operating margin of 9.3%.

I point out two particular aspects of the results for the first quarter and why I do this is obvious.

First of all, see chart below, the rolling 12 month order intake passes 8 BSEK and is above the 2019 levels. This is as a result of many successes on the market from all our Group brands with high levels of innovation, particularly addressing the sustainability opportunity, a steadily growing penetration of connectivity projects with Organic Response and ongoing good management of the supply chain difficulties.

Secondly, in Collection, we deliver a double-digit margin which results from an increased activity level, good cost control and passing on the supply chain cost pressures.

Rolling 12 month and quarterly order intake

2020Quarter

2021 2022Rolling 12 months

The world around us presents challenges and the Group's management of these continues to impress me.

Bodil Sonesson, CEO and President

It is of course a sad situation in Ukraine. As mentioned in the last webcast, we have two sales offices in Russia with combined sales of less than 1.5% of the Group's total. Our priority remains the safety and security of our employees as we begin the process of scaling down our local operations with an objective to leave the Russian market. This shall be done in a responsible manner. meeting our regulatory and contractual obligations.

Looking to the future, we will gain further advantage in serving our customers by continuing to invest in innovation. Innovation and product development is at the heart of our businesses and we have recently launched many new product solutions. Some address the sustainability topic, some the growing connectivity demands and some are new innovative lighting solutions for the specification market.

Regarding connectivity and Organic Response in particular we see an increasing 'pull' from the market and an expansion across the Group's indoor brands. In Sweden there is a growing number of new opportunities with several leading real estate companies and in Italy we perform a pilot project with a leading financial institution. Project engagement and opportunities in the Group's core indoor application areas grows at an increasing rate.

We continue our work to establish our carbon footprint "baseline" for scope 1, 2 and 3 in preparation for establishing science based targets. Based on this we will define our sustainability targets which we look forward to communicating later this year.

Outlook - strengthening and well positioned Looking at ourselves, all indicators are positive. We have an improving business and a healthy order backlog. The strategic focus is clear and we are working well on many opportunities.

Looking at the world around us we are well positioned for when these challenges subside and the markets return to a more stable state.

Business areas

Net sales and operating profit by business area

Net sales

Operating profit

Operating margin %

Q1

Q1

Q1

Collection Premium Professional Infrastructure Eliminations

Results by business area IFRS 16

Unallocated cost Operating profit Financial items Profit before tax

2022	2022	2022
915.3 605.6 247.8 186.4 -82.4	751.6 609.1 234.3 166.3 -83.8	93.6 68.4 11.6 22.6 -	58.5 69.4 19.7 16.2 -	10.2 11.3 4.7 12.1 -
1,872.7 - -	1,677.5 - -	196.2 3.4 -26.3	163.8 3.0 -13.9	10.5 - -
- -	- -	173.3 -13.8	152.9 -22.2	9.3 -
-	159.5	-

12.1 9.7

2022 2021

10.2 7.8

11.3 11.4

4.7 8.4

- 10.5

- 9.8

-

-

- 9.3

- 9.1

-

-

-

-

Net sales per business area, MSEK

1,000

900

Q1

800

700

600

500

400

300

200

100

0

22

21

22

21

21

22

22

21

Operating profit per business area, MSEK

100

Sales share per business area, %

9%

47%

90

Q1 0

80

70

60

50

40

30

20

10

22

21

22

21

22

21

CollectionPremiumProfessional

22

21

Infrastructure

Collection

Collection is home to our brands with a global market footprint. All have an international product portfolio and are well-renowned in the lighting designer and architect communities globally. They offer a wide product range with a focus on indoor and outdoor architectural applications.

Brands included are; ateljé Lyktan, iGuzzini, LED Linear and WE-EF with product development and manufacturing facilities in Sweden, Italy, Canada, China, Germany and Thailand. Seneco is also consolidated in this business area.

Business area order intake for the quarter of 1,023 (790) MSEK shows an organic growth of +22.6% with between 20-30% growth in three out of the four businesses. This indicates a high level of activity in the specification market.

Net sales for the quarter were 915 (752) MSEK, an organic increase of 16.0% and all businesses deliver sales growth.

Operating profits for the quarter increased 60.0% to 93.6 (58.5) MSEK with a record high operating margin of 10.2 (7.8)%. All businesses deliver profit growth where the key drivers are increased sales and cost pressures being recovered from the market.

During the quarter there were several significant and prestigious projects; Los Angeles metro with WE-EF, Zurich-Lengg University Pediatric Hospital with iGuzzini, Royal Museum of Fine Arts, Antwerp also with iGuzzini and finally Metrolinx Stations, Canada with LED Linear.

915

Net sales, MSEK

94

Operating profit, MSEK

10.2

Operating margin, %

Collection	Q1, 2022	Q1, 2021
Net sales	915.3	751.6
(of which, intercompany sales)	(39.7)	(21.3)
Operating profit	93.6	58.5
Operating margin, %	10.2	7.8
Sales growth, %	21.8	6.3
Sales growth, adjusted for exchange rate differences , %	16.0	13.0
Growth in operating profit, %	60.0	-