Stable performance and integration of Pöyry according to plan

"We had a solid start in 2019 with strong organic growth, and have successfully completed the acquisition of Pöyry. The integration is proceeding according to plan, including the realisation of cost synergies," said Jonas Gustavsson, President and CEO.

First quarter 2019*
- Net sales amounted to SEK 4,389 million (3,415)
- EBITA, excl items affecting comparability, totalled SEK 390 million (325)
- EBITA margin, excl items affecting comparability, was 8.9 percent (9.5)
- EBITA totalled SEK 327 million (325)
- EBITA margin was 7.5 percent (9.5)
- EBIT (operating profit) amounted to SEK 313 million (311)
- Basic earnings per share, before dilution: SEK 2.32 (2.94)

*including effects from IFRS 16 Leases

COMMENTS BY THE CEO

We had a solid start in 2019 with strong organic growth of 8.0 percent (0.5) in the quarter. Net sales amounted to SEK 4,389 million (3,415), which is an increase of 28.5 percent. EBITA, excluding items affecting comparability, amounted to SEK 390 million (325). We are also pleased that we closed the acquisition of Pöyry and that the integration is proceeding according to plan with good business momentum.

In connection with the rights issue process in March we announced an outlook for the first quarter for ÅF Pöyry and for Pöyry separately. We can now conclude that the actual outcome for the first quarter was in line with the outlook. Net sales was higher than last year for both entities. EBITA, excluding items affecting comparability, was in line with last year for ÅF Pöyry, and significantly higher for Pöyry.

Market trend
The general market and demand for sustainable solutions continue 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. The process industries market has continued to be 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 increasing. There is also continued high demand for advisory services due to major transformations within process industries and the energy sector.

The ÅF Pöyry Group structure
With the acquisition of Pöyry, we are now forming a leading engineering, design and advisory company. From 21 February, we operate in five divisions: Infrastructure, Industrial & Digital Solutions, Process Industries, Energy, and Management Consulting. A new Group management structure was also introduced during the quarter. Our operations have been integrated quickly, while keeping a strong focus on serving our clients as well as sustaining strong organic growth in the quarter.

The realisation of the committed cost synergies is developing according to plan. The annual run-rate savings after the first quarter amount to SEK 25 million. As previously announced, the cost synergies target is SEK 180 million and the majority is expected to be realized in 2019. The rights issue carried out after the quarter was well received and oversubscribed. After the Pöyry acquisition we also reviewed and reconfirmed our financial targets which apply over a business cycle: annual growth of 10 percent, including add-on acquisitions, EBITA margin of 10 percent (excluding effects from IFRS 16 Leases and items affecting comparability), net debt in relation to EBITDA of 2.5, and a dividend policy where the dividend corresponds to approximately 50 percent of consolidated profit after tax excluding capital gains.

Performance among the divisions
The Infrastructure Division delivered a solid first quarter with good growth. However a slow start of the year affected utilisation negatively in the beginning of the quarter. The strong demand for technical solutions in buildings continued to contribute to the growth and profitability in the division.

The Industrial & Digital Solutions Division also started the year with a strong focus on growth and the demand for services and projects remained stable in the quarter. The division experienced continued demand for services within product development, electrification and automation.

The Process Industries Division performed well in the quarter with continued strong demand in Europe, especially within mining and metals in the Nordics. Digitalisation and sustainability remain the key drivers. Demand in Latin America showed potential to improve while other regions remain mixed.

The Energy Division showed improved growth and profitability and continues to adapt its structure to market changes. We have also seen that the required transition to sustainable, renewable energy is gaining momentum and the division was awarded with several assigments in the quarter.

The Management Consulting Division performed well in the quarter and the core markets have remained stable. The key industry drivers are the solid transaction volume across the sectors, as well as the ongoing transition of the energy sector.

We have an exciting year ahead of us with continuous and increasing demand for sustainable solutions driven by megatrends such as digitalization and urbanisation. We are well positioned to meet these demands with ÅF Pöyry's combined strong offering.

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.afconsult.com / info@afconsult.com
Corporate ID number 556120-6474

This report has not been subjected to scrutiny by the company's auditors.

This information fulfils ÅF 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 CEST on 15 May 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.

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