Year-end Report January-December 2020
For further information:
Jonas Gustavsson, President and CEO, +46 70 509 16 26
Juuso Pajunen, CFO, +358 10 33 26 632
Strengthened profitability and continued recovery in the fourth quarter
“The fourth quarter was still affected by the pandemic, however the recovery from previous quarter continues. The EBITA-margin improved in line with our long-term target of 10 percent and the cash flow was strengthened”, said Jonas Gustavsson, President and CEO.
Fourth quarter 2020
– Net sales amounted to SEK 4,907 million (5,447)
– EBITA, excl. items affecting comparability, was SEK 490 million (516)
– EBITA margin, excl. items affecting comparability, was 10.0 percent (9.5)
– EBITA totalled SEK 478 million (327)
– EBITA margin was 9.7 percent (6.0)
– EBIT (operating profit) amounted to SEK 484 million (298)
– Basic earnings per share: SEK 3.17 (1.63)
– Net sales amounted to SEK 18,991 million (19,792)
– EBITA, excl. items affecting comparability, was SEK 1,635 million (1,731)
– EBITA margin, excl. items affecting comparability, was 8.6 percent (8.7)
– EBITA totalled SEK 1,584 million (1,368)
– EBITA margin was 8.3 percent (6.9)
– EBIT (operating profit) amounted to SEK 1,456 million (1,276)
– Basic earnings per share: SEK 8.81 (8.07)
– The Board of Directors proposes a dividend for 2020 of SEK 5.00 (0.00)
COMMENTS BY THE CEO JONAS GUSTAVSSON
We are leaving 2020 behind us; a challenging year marked by the Covid-19-pandemic and its effects on our operations. We took precautions at an early stage, reorganised our operations to allow remote work and expanded our digital collaborations, all while managing significant drops in volume in certain segments as a result of the pandemic.
Fourth quarter: strong profitability and financial position
The fourth quarter continued to be affected by the pandemic, although we are seeing a stabilisation and cautious recovery in all segments compared with the previous quarter. Net sales amounted to SEK 4,907 million, which corresponds to a negative organic growth of -5.5 percent. The automotive segment, weak development in the real estate segment and the repositioning in the Energy Division all had a negative effect on net sales. Meanwhile, Food & Life Science and several other business areas within Process Industries and Management Consulting showed a continued strong development.
The operating margin improved in line with our long-term target of 10 percent despite lower net sales, and cash flow was strong. EBITA, excluding items affecting comparability, amounted to SEK 490 million (516) and the EBITA margin was 10.0 percent (9.5). Four out of five divisions noted improved margins compared with previous year. The increase during the quarter was due to a strong performance primarily in the Energy and Management Consulting Divisions, as well as support from our short- and long-term savings initiatives. The costs in the quarter decreased by around SEK 660 million compared to the same period last year.
The net debt/EBITDA ratio, excluding the effect of IFRS 16 and items affecting comparability, amounted to 1.6x (2.3). We improved our financial position, thus creating opportunity to increase our focus on acquired growth.
Full year 2020
Despite the pandemic, 2020 was an eventful year in which we contributed with sustainable solutions to our client projects, established our new AFRY brand in the market, raised the ambitions of our sustainability and digitalisation efforts and launched a new and clear growth strategy.
Total net sales for 2020 fell sharply as a result of the pandemic, particularly during the second quarter in the automotive segment. Thanks to extensive measures, we achieved an operating margin in line with 2019. Net sales for the full year amounted to SEK 18,991 million, which corresponds to a negative organic growth of -6.4 percent. EBITA, excluding items affecting comparability, amounted to SEK 1,635 million (1,731) and the EBITA margin was 8.6 percent (8.7). Accumulated long-term savings amounted to SEK 210 million during the year, compared with the SEK 120 million that has been previously communicated. We strengthened our balance sheet during the year thanks to a clear focus on cash flow, and we are now able to increase our focus on growth. I can now assert that we succeeded in navigating through the effects of the pandemic, although the ongoing uncertainty continues to place high demands in terms of flexibility, measures and our capacity to exploit attractive opportunities for growth.
Performance of the divisions
The Infrastructure Division was primarily affected by a weak growth in the real estate segment. A continued strong growth was noted in water and environment. We are seeing healthy underlying demand for our services as society transforms and there is a greater need for sustainable solutions.
The Industrial & Digital Solutions Division continued to be affected by the negative trends in the automotive industry, although compared with the previous quarter we can see a higher level of activity. Food & Life Science continued to show a strong development during the quarter.
The Process Industries Division noted a strong development, primarily in Sweden, Finland and Latin America, with major projects progressing as planned.
The Energy Division had a strong development in Nuclear, Thermal & Renewables and Transmission & Distribution. The ongoing repositioning is progressing above expectations, which helped increase stability and improve the results.
Within the Management Consulting Division the energy consulting business continued to perform strongly, and clear signs of increased activity in the bioindustry sector were noted during the quarter.
We entered several exciting agreements during the quarter. In particular, I would like to highlight a framework agreement with Scania for product development, in which AFRY will bear overall responsibility, and the engineering assignments during the year from Metsä Fibre for the construction of the world’s most modern sawmill and their new planned bioproduct factory in Kemi, Finland. The key objectives of Metsäs investments are increased environmental efficiency and fossil free operations by utilising advanced technology and digitalisation, where AFRY will contribute with leading sustainable solutions and digital expertise.
New strategy focusing on growth
We presented the new Take-off strategy for growth at our Capital Markets Day in November, which strongly focuses on sustainability, digitalisation and growth in transforming segments. A new mission was launched simultaneously to accelerate the transition to a more sustainable society. The new strategy outlines how we will get there and is based on five pillars;
1. Drive growth in our core markets
Based on our strong balance sheet, we will accelerate our acquisition agenda targeting both add-ons as well as platforms. In recent times we have added three small but strategically important add-ons to our portfolio. AFRY will also increase organic growth in core markets by attracting new and retain talent.
2. Target transforming segments
AFRY will focus on segments that show strong, long-term growth and in which we have a strong position in the customer value chains. Examples of segments include Infrastructure, Food & Life Science, Clean Energy and Bioindustry.
3. Develop AFRY Digital
AFRY aims to be a driver of industrial digitalisation and to be the best at applying digital in our core sectors. Within the next five years, our target is to triple revenue from the digital area.
4. Lead in sustainable solutions
AFRY is uniquely positioned to adopt a leading role as an enabler of the transition towards sustainability in our client projects, while also focusing on reducing our own carbon footprint. In line with this strategy, AFRY is now joining the Science Based Targets’ Initiative (SBTi).
5. Deliver best in class operations
AFRY has established a scalable platform to enable efficient cross-sales, improved quality and better usage of information, as well as to exploit economies of scale in core markets and increase the use of excellence centres.
Although the fourth quarter was characterised by continued recovery and greater optimism, we remain in the midst of a pandemic and great uncertainty remains. We are therefore maintaining our focus on our employees’ health and safety, cost optimisation and flexibility whilst at the same time we are planning to exploit growth opportunities. The need for a green recovery following the Covid-19-pandemic has increased the demand for digital and sustainable solutions where AFRY has a market-leading position and a broad exposure to a variety of industries and markets.
I am proud of how our employees have navigated a historically turbulent year, and we are entering 2021 with a positive momentum throughout the organisation. I would also like to thank our clients and partners for a rewarding collaboration – we are looking forward to an exciting year together.
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 / email@example.com
Corporate ID number 556120-6474
This report has not been reviewed 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. This information was released, through the agency of the above-mentioned contact person, for publication on 5 February 2021, at 07.00 CET.
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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