CEO comment Q4, 2020
A very unusual year has come to an end, in which we managed to finish on a strong note with a solid result in the last quarter. Despite a partially closed store network during the fourth quarter we were able to continue to serve customers, improve operating profit and generate a solid cash flow.
Before going further into the financials I would like to express my deep gratitude to all our customers, employees, suppliers, shareholders and other stakeholders. It has been a huge task on all fronts, first and foremost to ensure the health and safety of our employees, and to deal with the fast-changing business and operational conditions in 2020. On the one hand we have had positive momentum and underlying demand on the back of home improvement trends, and on the other hand, the lockdowns have caused difficulties for our store network and in keeping operations steady. For most of the time we have been able to keep our business and operations going, but not without some pain.
Fourth quarter Group organic growth was 5% driven by the Nordics and Central Europe, while the UK declined. Project sales continued to be strong in all markets except the UK where social housing and London property markets remained soft. Despite lockdowns, the positive momentum of consumer sales continued in all markets. The underlying market is deemed to remain good, although the conversion is impacted by customers’ limited access to our store network in several markets.
Cash generation was strong throughout the year on the back of solid earnings in the Nordics, lower working capital and efficient cash management. By the end of year, we were debt free excluding pension and lease liabilities. The Board of Directors proposes a dividend of SEK 2 per share for 2020.
During the quarter some important milestones in our long-term strategy were reached: we concluded the initial preparatory phase for the new Nordic factory to be built in Jönköping (ready 2024) and we secured the required financing. We also were the first kitchen specialist to have our science-based climate targets approved by the Science Based Targets Initiative (SBTI). This is confirmation of our aim to drive a strong sustainability agenda and development across our industry and beyond.
We enter this year at a stronger position than I would have anticipated back in April. We have a robust financial position; however the more uncertain times will continue this year and it will be a balancing act investing for the future at the same time as maintaining our more short-term financial performance. We have a solid plan, indicators suggest continued underlying demand of our products, and we have a new organisation in place to execute our strategy. I look forward to sharing more details at our capital markets day later this spring.
Finally, I would again like to sincerely thank all our employees for their strong commitment and tremendous hard work in the challenging conditions during the last year.
President and CEO