Nobia Interim Report first quarter 2023
First quarter 2023 summary:
- Net sales declined to SEK 3,660m (3,779) corresponding to an organic sales decline of -6% (6).
- Operating profit, excl. items affecting comparability, decreased to SEK 81m (182),
corresponding to an operating margin of 2.2% (4.8).
- Operating profit includes items affecting comparability of SEK -298m (0) related to
restructuring charges following the programme communicated in January.
- Profit after tax amounted to SEK -214m (128), corresponding to earnings
per share after dilution of SEK -1.28 (0.76).
- Operating cash flow amounted to SEK -38m (-420).
The macroeconomic situation with declining construction activity and lower disposable income for consumers continues to deteriorate for durable goods suppliers, which is reflected in the organic sales trend that was -6% in the quarter. The volume decline and continued inflationary pressure burdened operating profit that declined to SEK 81m (182), excluding items affecting comparability of SEK 298m related to restructuring measures.
Our short-term focus is to adapt resources, manage investments, working capital and pursue direct material price reductions. In January, we announced a restructuring programme aimed at improving operating profit by SEK 300m over the next 18 months. Restructuring of our UK operations is an important part of the programme, which includes exiting parts of the UK project sales, closure of two manufacturing sites, staff and discretionary spend reductions. Execution of the programme is running according to plan and the financial impact will gradually materialize.
Housing completions in the Nordics provided support for project sales that remained on par with prior year whilst consumer sales declined, resulting in total sales for the region decreasing -7% organically. Shift reductions in our largest factory have been implemented to adapt to the lower volume. Production equipment installations in the new factory continue and in parallel we use the factory for select component manufacturing to support our plant in Tidaholm and further improve the overall supply chain cost situation.
In the UK region, sales were down -5% organically, while profit was slightly better reflecting cost reductions. We are also pressing ahead with the long-term transformation plan for the UK that was communicated at the capital markets update in March. The plan includes shifting to more focus on value, differentiating to grow share in the more premium part of the mass segment, upgrading stores and new product development at the same time as we pursue maximum cost efficiency and simplification across all operations,
Performance in Portfolio Business Units was mixed in the quarter. The Netherlands delivered solid growth while Austria and Commodore & CIE had lower sales. The unit is also part of the restructuring programme, in particular the UK, and will contribute with savings going forward.
We continue to see challenging market dynamics during 2023. A firm execution of announced restructuring measures is being carried out and we continuously assess further measures. Direct material costs are showing signs of decline for some commodities upstream in the supply chain. Ensuring that this decline will be realized also in our purchasing is a top priority. The fact that the economic downturn coincides with our planned high investment level has resulted in a high and increasing leverage. As communicated at the capital markets update, we explore different leverage reduction options such as sale and leasebacks of assets.
President and CEO
This disclosure contains information that Nobia AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 27-04-2023 08:30 CET.