Year-end report 2019
Investing for the future
A stable Q4 concludes a year characterized by high market volatility. It also marks the end of a highly important year for Nobia, when we set a new direction for the company and decided on major future investments.
One highlight was of course the directional decision to invest SEK 2bn in a new state-of-the-art factory for the Nordic region, which was announced in December. The new factory will be unique in its ability to mass produce made-to-order kitchens and will be instrumental for us to realise our strategy and cement our leading position in Europe. Another area where we are injecting resources is the important trade segment, where we have successfully proven that we can capitalize on our strong retail brands and utilize the scale of our nationwide store networks.
Organic growth declined in the quarter, mainly driven by a softer Nordic project market but also as a result of franchising part of the Nordic store network. The quarter includes costs for strategic investments related mainly to the decision to build a new Nordic factory and changes in the UK supply chain. Adjusting for last year’s non-recurring cost and this year’s strategic investments, our operating income and margin were on par with last year.
In the Nordics, we delivered an improved margin despite an organic decrease in sales, which partly was a result of conversions of own stores to franchise. Deliveries to the project market declined in line with construction activity falling from high levels, mainly in Finland. In Denmark our new product introductions continued to perform well, contributing to another overall good quarter.
In the UK we delivered organic growth despite the market weakness. The Brexit uncertainty continued and was even more apparent ahead of the election in December, burdening retail sales and construction market activity. Our London based project business had higher deliveries, however much less than expected due to market uncertainty and project delays. Together with the continued growth from our new concept for trade customers, we delivered positive organic growth for the region.
Cash flow for the year remained solid and the balance sheet remains strong. This gives us continued financial headroom to focus on profitable growth, organically as well as through acquisitions and the Board of Directors has proposed to maintain the dividend at SEK 4.00 per share. We have an exciting 2020 ahead of us and look forward to sharing more of our plans at a capital markets day in Stockholm on March 19.
President and CEO