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INTERIM REPORT - 6 MONTHS
1 APRIL-30 SEPTEMBER 2020
PRESIDENT'S STATEMENT
2020 - A YEAR OF CHALLENGES AND OPPORTUNITIES
The first six months of the 2020 financial year for the Momentum Group were characterised by the integration of TOOLS and Swedol as well as the challenges entailed by the ongoing COVID-19 pandemic for us, our employees and our customers.
Sales and earnings performance during the reporting period
The general demand situation over the past quarters was characterised by restraint and caution among customers in all of our main markets in the Nordic region, although with some variations between customer segments and countries. Revenue for the Group declined by a total of approximately 8 percent during the reporting period compared with the preceding year (for comparable entities including Swedol), with the negative sales trend due primarily to the pandemic.
Measures already implemented to increase efficiency and raise margins have yielded a stable earnings performance for the business area Components & Services, which exceeded the preceding year's performance with an EBITA margin of over 13 percent. EBITA for the business area Tools, Consumables, Workwear & Protective Equipment decreased by 18 percent during the period compared with the preceding year (including Swedol) and the business area is working on initiatives to improve sales and efficiency. Within the framework for the integration of TOOLS and Swedol, the business area's operating profit for the second quarter of 2020 has been charged with a restructuring reserve totalling MSEK 97 pertaining to non-recurring costs for store and product range coordination, etc. This reserve had no effect on the cash flow.
The Group's cash flow from operating activities improved during the period, despite the turbulent operating environment.
New Group structure creates opportunities for the future
We are continuing to focus on what we can affect in our daily operations and the decentralised earnings responsibility entails, for example, that local measures are taken if and where needed. At the same time, the acquisition of Swedol and the new Group structure with two operationally independent business areas is creating new, interesting opportunities for the future.
Stockholm, October 2020
Ulf Lilius
President & CEO
MOMENTUM GROUP IN SUMMARY
QUARTER | REPORTING PERIOD | FULL-YEAR | |||||||||
JUL-SEP | JUL-SEP | APR-SEP | APR-SEP | ROLLING | |||||||
2020 | 2019 | 2020 | 2019 | 12 MON | 2019/20 | ||||||
Revenue, MSEK | 2,029 | 1,432 | 42% | 4,317 | 3,008 | 44% | 7,444 | 6,135 | 21% | ||
Revenue including Swedol 2019/20 1 | 2,029 | 2,258 | -10% | 4,317 | 4,757 | -9% | 9,340 | 9,780 | -4% | ||
Operating profit, MSEK | 14 | 75 | -81% | 148 | 145 | 2% | 306 | 303 | 1% | ||
of which: Items affecting comparability | -97 | - | -101 | - | -115 | -14 | |||||
of which: Amortisation of intangible assets incurred | |||||||||||
in connection with corporate acquisitions | -17 | -5 | -34 | -10 | -45 | -21 | |||||
EBITA, MSEK | 128 | 80 | 60% | 283 | 155 | 83% | 466 | 338 | 38% | ||
EBITA including Swedol 2019/20 1 | 128 | 161 | -20% | 283 | 329 | -14% | 635 | 681 | -7% | ||
Profit after financial items, MSEK | 2 | 71 | -97% | 122 | 137 | -11% | 268 | 283 | -5% | ||
Net profit (after taxes), MSEK | 1 | 56 | -98% | 95 | 107 | -11% | 205 | 217 | -6% | ||
Earnings per share, SEK | 0.00 | 2.00 | -100% | 1.85 | 3.80 | -51% | 5.75 | 7.70 | -25% | ||
Operating margin | 0.7% | 5.2% | 3.4% | 4.8% | 4.1% | 4.9% | |||||
EBITA margin | 6.3% | 5.6% | 6.6% | 5.2% | 6.3% | 5.5% | |||||
EBITA margin including Swedol 2019/20 1 | 6.3% | 7.1% | 6.6% | 6.9% | 6.8% | 7.0% | |||||
Profit margin | 0.1% | 5.0% | 2.8% | 4.6% | 3.6% | 4.6% | |||||
Return on equity | 10% | 16% | |||||||||
Return on working capital (EBITA/WC) | 29% | 28% | |||||||||
EBITA/WC including Swedol 2019/20 1 | 26% | 30% | |||||||||
Equity per share, SEK | 58.15 | 56.95 | 2% | ||||||||
Equity/assets ratio | 38% | 38% | 38% | 48% | |||||||
Number of employees at the end of the period2 | 2,513 | 1,692 | 49% | 2,513 | 1,651 | 52% |
- Calculated as though the acquisition of Swedol had closed on 1 April 2019.
- Adjusted for employees furloughed due to the COVID-19 pandemic as of 30 September 2020.
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INTERIM REPORT - 6 MONTHS
1 APRIL-30 SEPTEMBER 2020
REVENUE AND PROFIT
Second quarter (1 July-30 September 2020)
Revenue amounted to MSEK 2,029 (1,432), with the change compared with the preceding year primarily attributable to the acquisition of Swedol. Compared with revenue for the corresponding quarter in the preceding year including Swedol (MSEK 2,258), revenue declined by 10 percent. Revenue for comparable units (including Swedol), measured in local currency and adjusted for the number of trading days, decreased by 7.5 percent compared with the corresponding quarter in the preceding year. The quarter contained the same number of trading days as the corresponding quarter in the preceding financial year.
Operating profit amounted to MSEK 14 (75), with the change compared with the preceding year primarily attributable to the acquisition of Swedol and provisions for a restructuring reserve. This reserve consists of items affecting comparability totalling MSEK -97 pertaining to costs for restructuring in connection with the integration of TOOLS and Swedol. EBITA (excluding the items affecting comparability and amortisa- tion of intangible assets incurred in connection with corporate acquisitions) amounted to MSEK 128 (80). Compared with EBITA for the corresponding quarter in the preceding year including Swedol (MSEK 161), EBITA thus declined by 20 percent and the EBITA margin amounted to 6.3 percent (7.1). Exchange-rate translation effects had a net impact of MSEK -1 (1) on operating profit.
Reporting period (1 April-30 September 2020)
Revenue amounted to MSEK 4,317 (3,008), with the change compared with the preceding year primarily attributable to the acquisition of Swedol. Compared with revenue for the corresponding period in the preceding year including Swedol (MSEK 4,757), revenue declined by 9 percent. Revenue for comparable units (including Swedol), measured in local currency and adjusted for the number of trading days, decreased by approximately 8 percent compared with the corresponding period in the preceding year. Exchange-rate translation effects had an impact of MSEK -126 on comparable units (including Swedol). The reporting period contained one trading day more than the corresponding period in the preceding financial year.
Operating profit amounted to MSEK 148 (145), with the change compared with the preceding year primarily attributable to the acquisition of Swedol and provisions for a restructuring reserve. Operating profit for the period includes items affecting comparability totalling MSEK -101 pertaining to costs for restructuring in connection with the integration of TOOLS and Swedol, as well as for advisors and other costs arising from the acquisition of Swedol. EBITA (excluding the items affecting comparability and amortisation of intangible assets incurred in connection with corporate acquisitions) amounted to MSEK 283 (155). Compared with EBITA for the corresponding period in the preceding year including Swedol (MSEK 329), EBITA thus declined by 14 percent and the EBITA margin amounted to 6.6 percent (6.9). Operating profit was charged with depreciation of MSEK -29(-8) on tangible non-current assets and amortisation of MSEK -54(-18) on intangible non-current assets. Exchange-rate translation effects had a net impact of MSEK -1 (1) on operating profit.
Profit after financial items totalled MSEK 122 (137) and net profit amounted to MSEK 95 (107), which corresponds to earnings per share of SEK 1.85 (3.80) for the reporting period.
- Since Momentum Group is changing its financial year to the calendar year, the current 2020 financial year will be shortened to nine months and cover the 1 April to 31 December 2020 period.
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INTERIM REPORT - 6 MONTHS
1 APRIL-30 SEPTEMBER 2020
OPERATIONS
From 1 April 2020, the Momentum Group comprises two business areas: Business Area Tools, Consumables, Workwear & Protective Equipment and Business Area Components & Services. Group-wide includes the Group's management, finance function and support functions (including internal communications, investor relations and legal affairs).
MARKET AND THE IMPACT OF THE COVID-19 PANDEMIC
The first six months of the 2020 financial year were characterised by a significantly restrained and cautious attitude in Momentum Group's main markets, primarily due to the uncertainty concerning the COVID-19 pandemic. Since the stringent measures from both society at large and individual companies started taking effect toward the end of March, all operations in the Group have experienced a negative effect on overall demand. The downturn has been the most tangible among larger customers in the industrial sector, while small and medium-sized customers have demonstrated greater tolerance to the slowdown. At the same time, sales of certain product groups, mainly personal protective equipment, have been more positive, while demand in the automotive and oil & gas sectors has been weaker. Performances have also varied between countries. The overall impact on demand in Sweden has been relatively limited, although with major variations between customer segments. At the same time, the Norwegian and Finnish markets have generally performed more negatively, probably due to the stricter lockdowns in these countries and to weaker demand in the oil & gas sector as well as the shipbuilding industry.
In total, the COVID-19 pandemic is deemed to be the main reason for the Momentum Group's (including Swedol) negative sales performance of approximately 8 percent for the reporting period. Meanwhile, different government measures, in combination with the Group's own cost-saving measures, continue to reduce the cost base. Personnel costs during the period decreased by approximately MSEK 115 for comparable entities (including Swedol), of which government support was significantly lower in the second quarter than in the preceding quarter. At the end of the reporting period, the Group only had a few employees left in government supported programs but continues to implement its own adaptations in the units to meet fluctuating demand.
While demand has gradually stabilised in certain areas of the Group during the course of the financial year, future sales, particularly to the Group's larger, export-oriented customers, will largely be impacted by developments in the global markets. Accordingly, it is not possible to predict with any certainty how the pandemic will affect Momentum Group in the coming quarters today, since this depends on the extent and duration of the decline in demand and the effects of the cost-cutting measures taken. Measures taken by the Group during the past months, such as increased vigilance for changes in customer structure and a heightened focus on liquidity, will continue. However, the current situation has not led to any changes in material bases of judgement compared with those applied in the Annual Report for 2019/20.
Sales performance
QUARTER | REPORTING PERIOD | |
JUL-SEP 20201 | APR-SEP 20201 | |
Change in revenue for: | ||
Comparable units in local currency | -7.5% | -7.9% |
Currency effects | -2.8% | -2.4% |
Number of trading days | 0.0% | 0.7% |
Other units2 | 0.1% | 0.3% |
Total change | -10.2% | -9.3% |
- Swedol is included in "Comparable units" as though the acquisition had closed on 1 April 2019.
- Other acquisitions in 2019/20 (excluding Swedol, which is included in "Comparable units").
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Momentum Group AB published this content on 23 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 October 2020 06:09:04 UTC
