October-December 2022

• Net sales were 459.9 MSEK (489.5), a decrease of 6.0% from the equivalent quarter in 2021. The organic growth amounted to -11.0% for the period.
• EBITA was 46.6 MSEK (82.2), an EBITA margin of 10.1% (16.8). There were one-off costs of 6.8 (0) MSEK regarding moving to new premises for Hot Bath B.V. in the Netherlands.
• Earnings per share were 0.87 SEK (1.32).
• Cash flow after investments was -1.4 MSEK (43.3).

January-December 2022

• Net sales were 1 925.6 MSEK (1 824.8), an increase of 5.5% compared to the equivalent period in 2021. Organic growth amounted to 0.7% for the period.
• EBITA was 281.2 MSEK (338.9), an EBITA margin of 14.6% (18.6). The result was affected by one-off (-) costs and income (+) of +0.9 MSEK (-5.4). This year´s income relates to a repayment of consolidation funds from Fora. The costs relate to moving to new premises in the Netherlands and, previous year, the acquisition of Aqualla Brassware Ltd and hacking.
• Earnings per share were 4.57 SEK (5.62).
• Cash flow after investments was 20.3 MSEK (152.2).
• The Board of Directors proposes a dividend of 2.50 SEK (2.50 recalculated after share split).

STATEMENT FROM THE CEO

A challenging end to the year

We end the fourth quarter of 2022 with total sales of 460 MSEK and an EBITA margin of approximately 10%. When this result is compared with the unusually strong fourth quarter of 2021, we can see that the sales growth and margin were both significantly weakened. Despite the uncertain economy and a challenging end to the year, I am pleased and proud that we increased sales for the full year by 5.5% and achieved an EBITA margin of around 15%, which is in line with our established goal.

As announced earlier, the fourth quarter of 2021 was unusually strong due to the building up of inventory levels, primarily by our Nordic customers. Meanwhile, demand fell progressively during the year as a result of greater market uncertainty with rises in inflation, interest rates and energy prices. The increasing uncertainty also caused several customers to reduce their inventory. Overall, this led to lower sales across all our countries and brands, primarily in the Nordics. We expect the market uncertainty to persist. However, in the long term we see a strong underlying need in all our markets to renovate and build new bathrooms and kitchens. An increased need for and stronger legal requirements regarding energy-efficient construction, using products that can save water and energy, is to our advantage. Switching to touchless mixers is one example.

In terms of profitability, our margin weakened during the quarter due to both lower sales and persistently high prices of purchased material and energy, which were not fully compensated by the prices charged to customers. During the quarter we also invested around 7 MSEK in a new head office and distribution centre for Hotbath in the Netherlands, an important investment for continued sales growth in Benelux and neighbouring countries. Costs of sales and marketing increased across all brands during the quarter as a result of conscious decisions to develop our marketing positions. It should be borne in mind that the comparison is with the four quarter of 2021, when activity in these areas was low due to the pandemic.

The challenging market conditions led to a greater focus being placed on cost control. We are reducing our inventory levels, as we see strong potential to free up working capital in the coming 18 months. We are also adapting our staffing levels to sales, and are continuing to prioritise various initiatives that can strengthen the group’s sales and profitability in both the short and long term. As a consequence of this, we decided to reduce the workforce in Mora by approximately 10%, an initiative we plan to implement during the first half of 2023.

The ability to launch attractive products is central to our business regardless of market conditions, and during the fourth quarter we launched Damixa Silhouet Instant, a new product for modern kitchens that delivers boiling water straight from the tap. Moreover, we have received many positive comments regarding the acquisition of Aqua Invent in October. This new, exciting business that now joins the group can help our customers analyse the quality of their water and offer clean water solutions.

Despite the challenging market conditions, we continue to pursue our clear strategy of offering sustainable, attractively designed products as well as local service in the markets where we operate. Throughout 2022, sales of our most sustainable products increased and we also continued to reduce the group’s overall carbon footprint. This is a satisfying result and something we will do more of over the coming year.