Interim Report 1 April–30 September 2023

Second quarter (1 July–30 September 2023)

• Revenue rose by 2 percent to MSEK 1,094 (1,073).
• EBITA increased by 27 percent to MSEK 107 (84) and the EBITA margin improved to 9.8 percent (7.8).
• Net profit totalled MSEK 49 (49).
• Cash flow from operating activities increased by 252 percent to MSEK 176 (50).
• Two acquisitions have been completed, with total annual revenue of approximately MSEK 135.

Six months (1 April–30 September 2023)

• Revenue rose by 2 percent to MSEK 2,322 (2,273).
• EBITA increased by 21 percent to MSEK 212 (175) and the EBITA margin improved to 9.1 percent (7.7).
• Net profit totalled MSEK 97 (104).
• Earnings per share for the most recent 12-month period amounted to SEK 7.45 (7.75) before dilution and SEK 7.40 (7.70) after dilution.
• Four acquisitions have been completed, with total annual revenue of approximately MSEK 220.

CEO’s comments

“We are continuing to trim the sails”

Continued positive earnings performance despite a weaker market
EBITA increased compared with the preceding quarter and rose by 27 percent year on year to MSEK 107 (84). We are approaching a double-digit operating margin since this meant that the EBITA margin increased 2 percentage points to 9.8 percent (7.8).

This was despite weaker demand in the construction sector during the quarter and a slowdown in industry as a whole. Demand was also impacted by our Nordic reseller customers continuing to reduce their buffer inventories. Overall, together with the ongoing efforts to phase out low-margin transactions, this contributed to a smaller revenue increase for the quarter, and organic revenue declined by 7 percent. Our acquisitions of companies with healthy margins and efforts to continually improve the product mix, increased the contribution margin ratio by some 2.5 percentage points during the quarter. Initiated cost savings have yielded results and the Group’s like-for-like costs continued to decline. Together, this resulted in a significant earnings improvement in the quarter, which is typically our seasonally weakest quarter of the year.

The Building Materials and Tools & Consumables divisions increased their earnings considerably during the quarter and both posted double-digit operating margins, while earnings declined in the Workplace Safety division. The primary reason for the increase in earnings for Tools & Consumables was the cost savings we have initiated, particularly in Luna, have had a positive effect on earnings despite lower like-for-like revenue than in the preceding year. The decline in profit in Workplace Safety was partly the result of that the division’s main customer group, Nordic resellers, do inventory reductions. Additional cost-saving measures were implemented in Workplace Safety to adapt to lower demand.

Increased earnings and lower inventories yield a strong cash flow
Combined with lower inventories, the increase in earnings boosted cash flow from operating activities, which amounted to MSEK 176 (50) during the quarter. Inventories decreased by almost MSEK 300 organically year on year.

Acquisitions of highly profitable, market-leading niche companies with the prerequisites for growth
We acquired two companies during the second quarter. The acquisition of Itaab, the Swedish market leader in metal suspended ceilings that are mainly installed in public properties, provides us with a platform in a niche in the construction sector that is expected to grow. The acquisition of Sandbergs strengthens our presence in the niche for liquid-handling equipment in Sweden, where we already own Germ. Sandbergs’ customers are mainly active in industry, haulage/contracting and public-sector operations in northern Sweden, where future market conditions are assessed as favourable. These acquisitions will provide the Group with annual revenue of approximately MSEK 135 with healthy profitability. I welcome Itaab and Sandbergs to the Group and look forward to supporting the companies in their respective growth journeys.

Ambition to increase profitability, earnings and cash flow
Our ambition is to continue to improve profitability, earnings, margins and cash flow in the Group. Our decentralised governance model allows our companies to rapidly adapt to prevailing conditions and not find themselves complaining that there is too little wind – they trim the sails! Thanks to our companies’ and employees’ proactive actions to respond to changes in the economy, we are well prepared to adapt to varying market conditions on a company-by-company basis. All of our companies have concrete short- and long-term targets and activities in place that will ensure we will continue to focus on earnings growth ahead of revenue growth. We will continue improving our working capital efficiency, primarily by reducing inventory levels and improving the operating margin, including additional efficiency measures. Despite a weaker underlying market, we have the prerequisites to increase the Group’s profitability, margin and cash flow through improvements in our 27 companies. Moreover, we intend to acquire highly profitable niche companies with strong cash flows during the operating year. I therefore believe that Bergman & Beving has good potential to continue to improve its earnings, and our ambition of reaching MSEK 500 in operating profit by the 2025/2026 operating year remains firm.

Stockholm, October 2023

Magnus Söderlind
President & CEO