Purmo Group Plc, stock exchange release, 9 February 2023 at 08.15 EET

October–December 2022

  • Net sales decreased by 7 per cent to EUR 206.6 million (222.6). Organic1) net sales decline was 10 per cent.
  • Net sales for ICS increased by 25 per cent to EUR 99.7 million (79.7) and net sales for Radiators declined by 25 per cent to EUR 106.9 million (142.9).
  • Adjusted EBITDA decreased by 28 per cent to EUR 16.3 million (22.6), corresponding to an adjusted EBITDA margin of 7.9 per cent (10.1).
  • EBIT was EUR -1.5 million (-41.9), which included EUR 9.7 million (57.7) of comparability adjustments.
  • Cash flow from operating activities increased to EUR 40.2 million (32.2).
  • On 5 October 2022, the new organisation was announced in conjunction with the strategy acceleration programme; the new organisation came into effect on 1 January 2023 and consists of two business divisions: Climate Products & Systems and Climate Solutions.

January–December 2022

  • Net sales increased by 7 per cent to EUR 904.1 million (843.6). Organic1) net sales growth was 3 per cent.
  • Net sales for ICS increased by 26 per cent to EUR 425.3 million (337.2) and net sales for Radiators division decreased by 5 per cent to EUR 478.8 million (506.3).
  • Adjusted EBITDA decreased by 11 per cent to EUR 92.9 million (103.9), corresponding to an adjusted EBITDA margin of 10.3 per cent (12.3).
  • EBIT was EUR 39.0 million (3.5), which included EUR 21.7 million (70.2) of comparability adjustments.
  • Cash flow from operating activities was EUR 31.1 million (35.4).
  • The strategic acquisition of Thermotech was completed on 1 March 2022.
  • Proposed return of capital for 2022 is EUR 0.36 per class C share and EUR 0.07 per class F share.

Financial guidance for 2023
Purmo Group’s adjusted EBITDA in 2023 is expected to be on a similar level to 2022 (EUR 92.9 million). Similar means being within +/- 5 per cent of the previous year.

Visibility for 2023 is limited due to the geopolitical and macroeconomic uncertainties impacting Purmo Group’s addressable markets. The company continues to actively manage the situation and improve its financial performance through, for example, pricing and cost reduction initiatives. Purmo Group reiterates the previously communicated targets for the strategy acceleration programme – targeted adjusted EBITDA run-rate improvements of EUR 20 million by the end of 2023 and cumulatively EUR 40 million by the end of 2024.

Key figures

EUR million10–12/202210–12/2021Change, %20222021Change, %
Net sales206.6222.6-7%904.1843.67%
Adjusted EBITDA16.322.6-28%92.9103.9-11%
Adjusted EBITDA margin7.9%10.1%
10.3%12.3%
Adjusted EBITA9.216.5-44%64.676.6-16%
Adjusted EBITA margin4.4%7.4%
7.1%9.1%
EBIT-1.5-41.996%39.03.51025%
EBIT margin-0.7%-18.8%
4.3%0.4%
Profit for the period-7.0-46.785%13.1-18.8170%
Adjusted profit for the period2.611.0-76%34.951.4-32%
Earnings per share, basic, EUR2)-0.17-1.5889%0.32-0.65149%
Adjusted earnings per share, basic, EUR2)0.060.39-85%0.851.77-52%
Cash flow from operating activities40.232.225%31.135.4-12%
Adjusted operating cash flow, last 12 months3)


51.950.28)3%
Cash conversion4)


55.9%48.3%8)
Operating capital employed5)


305.0271.812%
Return on operating capital employed6)


12.8%1.3%
Net debt


275.2239.515%
Net debt / Adjusted EBITDA7)


2.962.3129%


1)Adjusted for currency effects and impacts from acquisitions and divestments.
2)The number of shares in the comparison period are those of Purmo Group Ltd. Before the merger 31 December 2021 Purmo Group Ltd shares amounted to 11,073,834 which have been converted using 31 December 2021 merger conversion ratio 2.600334506.
3)Adjusted EBITDA on a rolling 12-month basis less by the change in net working capital and capex on a rolling 12-month basis.
4)Adjusted operating cash flow divided by Adjusted EBITDA, both on a rolling 12-month basis.
5)Net working capital, other intangible assets, property, plant and equipment, and right-of-use-assets.
6)EBIT based on a rolling 12-month calculation divided by operating capital employed. Return on operating capital employed without non-recurring items was 1.0% (22.0%).
7)Adjusted EBITDA based on a rolling 12-month basis.
8)Figures for 1-12/2021 restated for comparability reasons.

Unless otherwise stated, the comparison figures refer to the corresponding period in 2021. The full year 2021 non-adjusted key figures are affected by a one-time, non-cash IFRS 2 merger impact of EUR 52.3 million as a result of the merger of Virala Acquisition Company Plc and Purmo Group Ltd on 31 December 2021, as well as EUR 17.9 million other items affecting comparability.

CEO’s review

The market environment continued to be challenging in both renovation and new-build segments during the fourth quarter of the year, which resulted in weak demand; especially in our Radiators business. Despite the overall negative market sentiment, our ICS business performed strongly, supported especially by Emmeti: our solution-business in Italy.

Net sales declined in the fourth quarter by 7 per cent to EUR 206.6 million and adjusted EBITDA was EUR 16.3 million; a decline of 28 per cent. Adjusted EBITDA margin was 7.9 per cent.

For the full year 2022, net sales reached EUR 904.1 million; an increase of 7 per cent. Adjusted EBITDA was 92.9 million; a decrease of 11 per cent. Adjusted EBITDA margin was 10.3 per cent.

Strong performance in ICS, weak demand impacted performance in Radiators

Our ICS division’s performance during the fourth quarter was strong; net sales grew by 25 per cent to EUR 99.7 million, and adjusted EBITDA was EUR 11.4 million; a growth of 17 per cent. Adjusted EBITDA margin was 11.4 per cent. ICS net sales for the full year grew by 26 per cent to reach EUR 425.3 million. Adjusted EBITDA grew by 19 per cent to EUR 51.9 million. Adjusted EBITDA margin was 12.2 per cent. We saw similar customer behaviour and demand during this quarter as throughout the year with highest growth in solar panels and heat pumps.

Our Radiators division was challenged by continued low demand in the fourth quarter. Net sales for the quarter were EUR 106.9 million; a decline of 25 per cent. Adjusted EBITDA was EUR 8.1 million, corresponding to a decline of 46 per cent, and adjusted EBITDA margin was 7.6 per cent. For the full year, net sales in Radiators were EUR 478.8 million; a decline of 5 per cent. Adjusted EBITDA was EUR 50.3 million, down 24 per cent compared to the previous year. EBITDA margin was 10.5 per cent.

Strategy acceleration programme underway

In October, we announced a strategy acceleration programme to strengthen the execution of our strategy. The “Accelerate PG” programme addresses a broad range of strategic and operational initiatives to support us in reaching our financial targets. It focuses on improving sales growth, profitability and net working capital efficiency. The targeted adjusted EBITDA run-rate improvements are EUR 20 million by the end of 2023, and cumulatively EUR 40 million by the end of 2024.

The programme is currently at full speed and progressing according to plan. By the end of 2022 we had already validated over 150 initiative roadmaps which are supporting achievement of the targeted improvements. Implemented run-rate EBITDA improvements at the end of 2022 amounted to EUR 1.4 million, which is according to expectations given the phasing of the programme’s initiatives.

We also announced a new organisational structure to support the execution of the programme, aligning resources with our strategic direction and strengthening customer focus. The new organisation came into effect on 1 January 2023 and consists of two business divisions: Climate Products & Systems and Climate Solutions.

As previously stated, solution selling was strong in Italy during the quarter and during the year. We were also active in our development of smart products throughout the year. In the fourth quarter we developed exciting innovations. The ICS division developed Unisenza PLUS control range which is built upon the original Unisenza underfloor heating platform. Unisenza PLUS is a second step towards a complete controls system allowing multiple Purmo Group products such as electronic radiator valves and wireless thermostats, to be inter-connected as part of a common indoor climate comfort control system. The hardware is adapted to future third-party home automation platforms.

Purmo Group continued to assess a large number of acquisition opportunities during the year, with a special focus on companies active within solution sales, heat pumps and ventilation. The exit from our business in Russia is ongoing.

Financial guidance for 2023

Purmo Group’s adjusted EBITDA in 2023 is expected to be on a similar level to 2022 (EUR 92.9 million). Similar means being within +/- 5 per cent of the previous year.

Visibility for 2023 is limited due to the geopolitical and macroeconomic uncertainties impacting Purmo Group’s addressable markets. The company continues to actively manage the situation and improve its financial performance through, for example, pricing and cost reduction initiatives. Purmo Group reiterates the previously communicated targets for the strategy acceleration programme – targeted adjusted EBITDA run-rate improvements of EUR 20 million by the end of 2023 and cumulatively EUR 40 million by the end of 2024.

I want to express my gratitude to our shareholders, customers, suppliers and Purmo Group’s employees for the strong support during these extraordinary times. I am looking forward to our continued journey together in 2023.

News conference and webcast for analysts, investors and media

The publication will be followed at 10.00 EET by a live webcast and a teleconference to analysts, investors and media representatives. At the event, CEO John Peter Leesi will present the results and answer questions in English.

Webcast: https://purmogroup.videosync.fi/financial_statements_2022

Teleconference lines: https://palvelu.flik.fi/teleconference/?id=10010247

Participants should register through the above link if they wish to ask questions through the conference call lines. After registering they will receive a teleconference number and a code to join the call. Participants will be asked to press number 5 to join the queue for questions.

A recording of the event will be available at https://investors.purmogroup.com/ir-material/ shortly after the event has ended.

Purmo Group Plc

Further information:
Matts Rosenberg, interim Chief Financial Officer, Purmo Group Plc
Katariina Kataja, Head of Investor Relations, Purmo Group Plc, Tel. +358 40 527 1427

Distribution:
Nasdaq Helsinki Ltd
Principal media
investors.purmogroup.com

About Purmo Group:
Purmo Group is a leader in sustainable indoor climate comfort solutions in Europe. We provide complete heating and cooling solutions to residential and non-residential buildings, including radiators, underfloor heating, heat pumps, towel warmers, valves and controls. Our mission is to be the global leader in sustainable indoor climate comfort solutions. Our 3,500 employees operate in 24 countries, manufacturing and distributing top quality products and solutions to our customers in more than 100 countries globally. Purmo Group’s shares are listed on Nasdaq Helsinki with a ticker symbol PURMO. More information: www.purmogroup.com.

Attachments

Purmo Group Financial Statements Review 2022 09022023 FINAL

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