Interim Report January-March 2020
For further information:
Jonas Gustavsson, President and CEO, +46 70 509 16 26
Juuso Pajunen, CFO, +358 10 33 26 632
Stable results and extensive measures in an uncertain market
“We are delivering stable results for the first quarter and are taking extensive measures to meet an uncertain market due to the Covid-19 pandemic”, said Jonas Gustavsson, President and CEO.
First quarter 2020
– Net sales amounted to SEK 5,255 million (4,389)
– EBITA, excl. items affecting comparability, was SEK 474 million (390)
– EBITA margin, excl. items affecting comparability, was 9.0 percent (8.9)
– EBITA totalled SEK 474 million (327)
– EBITA margin was 9.0 percent (7.5)
– EBIT (operating profit) amounted to SEK 411 million (313)
– Basic earnings per share: SEK 2.48 (2.32)
COMMENTS BY THE CEO JONAS GUSTAVSSON
Results for the first quarter were stable although the end of the quarter was characterised by uncertainty and effects linked to the Covid-19 outbreak. ÅF Pöyry has a broad exposure to a number of industries and markets, and deliveries to the majority of clients are still unaffected. At the same time we have taken extensive measures to mitigate future effects on our operations.
Performance in the first quarter
Combined net sales amounted to SEK 5,255 million (5,423) in the quarter, with total growth of -3.1 percent adjusted for calendar effects. Challenging market conditions in the automotive industry had a negative effect on net sales, as did the repositioning of the Energy Division and a recently concluded EPC project. Growth was positive in three out of five divisions.
Earnings strengthened during the quarter and combined EBITA, excluding items affecting comparability, was SEK 474 million (467), and the corresponding EBITA margin was 9.0 percent (8.6). The result improved primarily in the Process Industries and Energy divisions.
Extensive measures to meet a more uncertain market
We have restructured most of our activities to remote work and expanded our digital collaborations. This has been a great success, which showcases the digital maturity of our company and the fact that our digital platforms for collaboration work very well.
As a result of the Covid-19 pandemic, we have taken extensive measures such as short-term work allowance, staff reductions, deferred investments and further cost reductions to mitigate future effects on operations. About 1,600 employees are placed on short-term work allowances, most of them connected to the automotive industry, but also includes administrative staff.
Besides substantial short-term savings, we are increasing the pace of our ongoing SEK 120 million cost-saving programme, which was announced in the previous interim report. In addition, we are reviewing the cost structure to increase flexibility in the long term and adapt our operations to a more fast-moving market.
The investment programme connected to the systems platform will be reviewed and adapted to the current situation. In order to further strengthen our financial position, the Board of Directors has decided to withdraw the earlier proposed dividend, and we have renewed our credit facilities. All in all, the measures ensure that the company will continue to be in a good position going forward and will be well placed operationally and financially when the situation has stabilised.
Performance among the divisions
The effects of Covid-19 have varied depending on the industry segment and market. Demand in the Infrastructure Division was generally good during the quarter, but we noted a certain impact on the buildings segment towards the end of the quarter. Many of the division’s projects are of social importance and are being prioritised even in the current circumstances.
The Industrial & Digital Solutions Division started the quarter with stable demand but was then clearly impacted in the second half by the situation in the automotive industry, experiencing a considerable reduction in activity. We were quick to take action to follow our clients through the current situation. Other segments like the telecom sector and the food and pharma industry continued to perform favourably during the quarter.
The Process Industries Division performed well during the quarter and has not yet noted any substantial impact from Covid-19. There has been high demand for several of our clients’ products even in exceptional times like these.
The Energy Division’s operations performed well and we can see that the effects of the repositioning of the division have been realized sooner than expected. The division noted some delays in investment decisions, but despite this we are seeing stable growth in the energy sector.
The Management Consulting Division noted a weaker demand towards the end of the quarter, particularly in transaction-related services. This was a result of a decrease in the number of new orders as many European countries closed down.
We signed several new agreements during the quarter. I am particularly proud of the fact that Metsä Fibre chose us as a partner for one of the most modern sawmills in the world and also for their new bioproduction facility in Finland. I am also proud that we were trusted to lead the project planning for a new emergency hospital in Västerås, which is of great significance for the healthcare system going forward.
Outlook
We find ourselves in a market situation that is both uncertain and difficult to assess, and expect the effects of the Covid-19 outbreak to have a negative impact on net sales in the second quarter. We still see good levels of activity in many parts of our customer segments. However, negative effects in the automotive industry and delayed projects and investment decisions in other segments are to be expected. There are positive signs that several countries are now starting to lift their restrictions and some of our clients that have felt the impact are expected to resume operations relatively soon.
The ongoing crisis will lay the foundations for new structures and business models, which will probably be more sustainable and climate-friendly than existing solutions. We therefore believe that these transitions will create continued strong demand for our sustainable solutions and digitalisation services in the long term.
I would like to take the opportunity to thank all our employees for their great engagement, flexibility and strong client focus throughout this period.
ÅF Pöyry AB (publ), SE-169 99 Stockholm, Sweden
Visitors’ address: Frösundaleden 2, 169 70 Solna, Sweden
Tel. +46 10 505 00 00 Fax +46 10 505 00 10
www.afry.com / info@afry.com
Corporate ID number 556120-6474
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 11.00 CET on 28 April 2020.
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.
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