Interim Report January-June 2019
Stable growth and profitability in first half of the year
Stable growth and profitability in first half of the year
”We deliver stable earnings and growth, whilst the integration of Pöyry and the realisation of cost synergies are proceeding at a higher rate than foreseen. With a strengthened position we look forward to continued profitable growth in 2019,” said Jonas Gustavsson, President and CEO.
Second quarter 2019
– Net sales amounted to SEK 5,393 million (3,608)
– EBITA, excl. items affecting comparability, was SEK 481 million (366)
– EBITA margin, excl. items affecting comparability, was 8.9 percent (10.2)
– EBITA totalled SEK 405 million (366)
– EBITA margin was 7.5 percent (10.2)
– EBIT (operating profit) amounted to SEK 392 million (353)
– Basic earnings per share: SEK 2.59 (3.35)
January – June 2019
– Net sales amounted to SEK 9,782 million (7,023)
– EBITA, excl. items affecting comparability, was SEK 870 million (691)
– EBITA margin, excl. items affecting comparability, was 8.9 percent (9.8)
– EBITA totalled SEK 732 million (691)
– EBITA margin was 7.5 percent (9.8)
– EBIT (operating profit) amounted to SEK 705 million (664)
– Basic earnings per share: SEK 4.94 (6.29)
COMMENTS BY THE CEO
The first half of 2019 demonstrates a stable performance, with organic growth of 5.2 percent (4.5). Net sales in the second quarter totalled SEK 5,393 million (3,608). EBITA, excluding items affecting comparability, amounted to SEK 481 million (366) and corresponding EBITA margin to 8.9 percent (10.2). The integration of Pöyry is proceeding at high speed, while we are seeing persistently healthy demand for our services.
The demand for sustainable solutions continued to be good with disruptive trends as strong drivers. The market for infrastructure continues to be favourable, and we can especially note a high demand for technical solutions in buildings. Demand in the industry sector remained stable, with 5G, electrification and automation as drivers. However, demand in the automotive industry is being impacted by cost savings and reprioritisation of R&D programmes, despite the fact that the industry is on the cusp of extensive technical changes. The process industries market remains strong, especially in Europe. In the energy market we see continued demand for large-scale energy projects in Southeast Asia, and at the same time demand for renewable energy is on the rise. There is also persistently high demand for advisory services due to major transformations within process industries and the energy sector.
Integration of Pöyry and synergies
With the acquisition of Pöyry, we are now forming a leading engineering, design and advisory company. Our operations have been integrated quickly, while maintaining a firm focus on our clients and we show organic growth in the quarter. The realisation of cost synergies is proceeding at a higher rate than foreseen. The annual run-rate savings after the second quarter amount to SEK 99 million. As previously announced, the cost synergies target is SEK 180 million and the majority is expected to be realised in 2019. The issue of new shares carried out in April was well received and oversubscribed. In June, ÅF Pöyry issued bonds totalling SEK 2 billion to replace existing financing in connection with the acquisition. Following the issue of new shares and implemented financing, net debt in relation to EBITDA is at 2.7 (adjusted for Pöyry’s EBITDA over the past 12 months), creating conditions for carrying out additional acquisitions in the second half of the year.
Performance among the divisions
The Infrastructure Division experienced a somewhat slow start to the year, but delivered a second quarter with stable growth. The profitability was negatively impacted by the slow down in architecture and weak development in Denmark. Strong demand for technical, low-carbon solutions for buildings continued to contribute to the division’s growth and profitability.
The Industrial & Digital Solutions Division gave a stable performance in the second quarter despite demand in the automotive industry levelling off slightly. Demand for services in product development, electrification and automation remains good in all sectors. Business area Food & Pharma has performed well, and in the second quarter a new assignment was received from Arla Foods in Denmark for project planning of a new production facility.
The Process Industries Division performed well in the quarter, with persistently high demand in the Nordics. During the quarter, the division received an assignment from Metsä Fibre for the design of a bioproduct mill, which is one of the largest investments in the Nordic paper and pulp industry. At the same time, there are good opportunities for growth in Latin America, the US and Russia, where major projects are entering the next phase. Digitalisation and sustainability continue to be the primary drivers.
The Energy Division exhibited improved growth and profitability in the second quarter, with the division’s international delivery capabilities making a positive contribution. Meanwhile work is continuing on adapting the division’s structure to both market changes and in order to boost profitability. The required transition to sustainable, renewable energy production is gaining momentum and the division was awarded several assignments in the quarter within hydropower, waste management and nuclear decommissioning.
The Management Consulting Division performed well in the quarter and the core markets remained stable. The key industry drivers are the solid transaction volume across the sectors, as well as the ongoing transition of the energy sector.
Overall, the integration of Pöyry is successful and we have strenghtened our position in all divisions. The two right issues that have been carried out have strengthened our capital structure, and we are at the forefront in terms of realising cost synergies. With our new joint company and a market driven by megatrends such as digitalisation, urbanisation and climate change, we are ready to meet our clients’ needs and to continue pursuing profitable growth.
This report has not been subjected to scrutiny by the company’s auditors.
This information fulfils ÅF Pöyry AB’s (publ) disclosure requirements under the provisions of the EU’s Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication through the agency of the contact person set out above at 08.00 CET on 12 July 2019.
All assumptions about the future that are made in this report are based on the best information available to the company at the time the report was written. As is the case with all assessments of the future, such assumptions are subject to risks and uncertainties, which may mean that the actual outcome differs from the anticipated result.
This is a translation of the Swedish original. The Swedish text is the binding version and shall prevail in the event of any discrepancies.
The full report including tables (pdf) is available for download.
Link to press-images
For further information, please contact
Juuso Pajunen, CFO, +358 10 33 26 632