CEO comment, Q1 2018

Morten Falkenberg, President and CEO, comments the first quarter 2018.

Solid performance in the first quarter, impacted by seasonality and one-time effects in sales. 

 

The sales trend for the quarter was partly affected by fewer delivery days compared with the preceding year, driven by the calendar effect of Easter. In addition, our project sales were adversely affected by the cold winter, while comparative figures were impacted by our ceased business with Homebase and last year's large project deliveries to Battersea Power Station in the UK. Adjusted for these factors, currency-adjusted growth was unchanged.

 

Conditions in the Nordic region remain favourable and our position is strong. Ahead, we believe that the Danish and Finnish markets will take over the role that Sweden has had as the growth engine of the region. For example, in the first quarter we were chosen by the construction company SRV as the kitchen and cabinet supplier to Majakka, which will be the tallest tower in Finland with 283 apartments, located in Kalasatama, Helsinki and scheduled for completion in spring 2019. This is our largest ever order in Finland.

 

The market in the UK remains characterised by macroeconomic uncertainty. However, our UK operations are well-diversified since our kitchens are sold in several channels. The repositioning of Magnet has been successful and we deem that Magnet captured market shares during the important winter campaign in the UK, when almost half of annual consumer sales take place.

 

Our Austrian operations have during the quarter undergone a review, that has resulted in adjustments to the customer offering. The operations are now performing in the right direction, although it may take time before the measures get a full effect on earnings. In May, Ralph Kobsik will take office as EVP and Head of Central Europe.

 

Despite the sales decline and weak currency, we maintained an operating margin of more than 10 per cent for the past 12 months. There is continued potential to drive margin improvements. For example, we are now reviewing our production structure, which we assess can be further streamlined, and we continue with our initiative to reduce the complexity of our product portfolio.

 

Many of our brands updated their websites during the quarter and the roll-out of our omnichannel store concept is continuing. Marbodal's renovated store in central Gothenburg is the latest in a series of stores that have been designed following this concept.

 

Dividends totalling SEK 1,180 million were paid on 17 April. Even after this transaction the company has a very strong financial position that enables acquisitions and investments for growth. The targets are clear: sales are to grow by an average of 5 per cent per year and we will deliver continually improved profitability.

 

Morten Falkenberg

President and CEO