CEO comment Q3, 2019
A stable quarter in a challenging market.
Soon I will already be two months into my new position as the President and CEO of Nobia. I have spent a lot of time visiting our various operations and listening to and learning from colleagues. I am proud to join a financially strong company with a solid foundation built on the knowledge and ability of its dedicated employees, strong brands and long-lasting trade partner relationships.
For some time, the Group has been conducting a strategic review of areas including our manufacturing footprint, sourcing and how we go to market, to determine how we can create more long-term value for all our stakeholders. Many promising initiatives are being started and I will be able to share the substantial opportunities that we have to create value in due course.
Nobia delivered a stable third quarter. Organic growth was an encouraging 3% with positive contributions from all three of our regions, despite uncertainty and somewhat softer market conditions in some of the main markets. Operating income was in line with the previous year’s third quarter. The unfavourable impact of the further weakening of the GBP against the EUR and higher direct material costs were compensated by higher average selling prices and a favourable customer mix development.
The performance of Magnet in the UK and the consumer segment in Denmark was especially pleasing. Sales to project customers reported a volatile trend reflecting uncertainty in the property markets in Sweden, Norway and the UK. In the Netherlands, Bribus our most recent acquisition, continued to perform well.
In the UK we are seeing the benefits of the re-positioning of Magnet to both consumers and trade customers. We have now adapted 160 stores to the improved Trade concept, and this is reflected in the healthy organic sales developments in the quarter. The investment in the new positioning and the transition costs held back profit which improved only marginally for the UK region.
The political insecurity over Brexit continued to hamper demand and increased uncertainty in the UK market. Even though it is difficult to predict the short-term consequences of a hard Brexit, Nobia has taken several actions to mitigate risk, including building up its own safety stock, securing safety stock at key suppliers and administrative actions to make import procedures as smooth as possible.
Jon Sintorn President and CEO