Clean air with Nederman solutions for industrial air filtration

Interim report January-September 2020

Good margin development despite market challenges
Digital solutions display strength

Quarter 3, 2020

  • Incoming orders amounted to SEK 827m (965), equivalent to a currency-neutral decrease of 5.6 percent compared with the same period last year.
  • Compared with the second quarter 2020, incoming orders increased by 11.8 percent.
  • Net sales amounted to SEK 826m (1,089), equivalent to a currency-neutral decrease of 16.0 percent compared with the same period last year.
  • Operating profit was SEK 63.3m (77.9), giving an operating margin of 7.7 percent (7.2).
  • Adjusted operating profit was SEK 63.5m (77.9), giving an adjusted operating margin of 7.7 percent (7.2).
  • Net profit was SEK 31.5m (52.8).
  • Earnings per share were SEK 0.90 (1.50).

January – September, 2020

  • Incoming orders amounted to SEK 2,562m (3,028), equivalent to a currency-neutral decrease of 12.5 percent compared with the same period last year.
  • Net sales amounted to SEK 2,735m (3,221), equivalent to a currency-neutral decrease of 12.3 percent compared with the same period last year.
  • Operating profit, including restructuring costs of SEK 75m, was SEK 125.2m (234.5), giving an operating margin of 4.6 percent (7.3).
  • Adjusted operating profit was SEK 201.6m (235.9), giving an adjusted operating margin of 7.4 percent (7.3).
  • Net profit was SEK 55.3m (153.4).
  • Earnings per share were SEK 1.58 (4.37).

 
CEO’s comments


The third quarter of the year continued to be characterised by the effects of the restrictions imposed around the world in the wake of the COVID-19 pandemic. During the first two months of the quarter, demand remained highly restrained, while we were able to discern some improvement at the end of the quarter. Nederman Monitoring & Control Technology performed strongly during the quarter, reporting growth of 21 percent compared with the preceding quarter. Orders received also grew within our other divisions compared with the preceding quarter, but at a significantly lower rate. As a result of the restructuring programme initiated during the second quarter of the year and a favourable product mix, Nederman was able to maintain healthy profitability during the quarter, despite extensive challenges. Adjusted operating profit amounted to SEK 63.5m (77.9), corresponding to an adjusted operating margin of 7.7 percent (7.2). Orders received for the quarter amounted to SEK 827m (965) and sales were SEK 826m (1,089).
 

Digital solutions increasingly important
For a number of years, we have conducted comprehensive work to offer our customers various forms of digital solutions that continuously measure, analyse and optimise the filtration process. Accordingly, our customers have the opportunity to take full responsibility for the air quality in their facilities. The ongoing digitalisation journey encompasses all divisions, but has made most progress in the Nederman Monitoring & Control Technology division.

Nederman Monitoring & Control Technology displays strength
The importance of being able to offer digital and future-proof solutions that give customers control over their facilities on an entirely new level was clearly demonstrated by Nederman Monitoring & Control Technology's performance during the third quarter of the year. Although this division has faced the same challenges as our other divisions, it reported strong development during the quarter, with growth in orders received of 21 percent compared with the preceding quarter. Organic growth compared with the corresponding quarter in 2019 amounted to 24 percent. Through a combination of acquisitions and organic growth, the division has more than doubled its turnover during the past twelve months.

Measures to equip Nederman Group for the future are proceeding to plan
To face the future following the COVID-19 pandemic, Nederman initiated a restructuring programme during the second quarter of the year that will lead to annual cost savings of approximately SEK 100m. The plan encompasses all of the Group’s divisions and entails, for example, that the Group will exit less profitable market segments. Restructuring costs, which amount to SEK 75m, were expensed during the second quarter of the year. The restructuring programme continued according to plan during the third quarter and will essentially be completed at the end of 2020.

Limited impact on Nederman’s production capacity
Nederman’s production capacity was good during the quarter. The only exception was our plant in India, where we were only able to use between 10 and 30 percent of the workforce due to varying official restrictions. After the end of the quarter, the restrictions at the Indian plant were lifted.

Challenging conditions
The effects of national lockdowns and other types of restrictions throughout the world continued to have a significant negative impact on Nederman’s sales. The large uncertainty surrounding the global economy and the development of the pandemic mean that decisions on major investments are being postponed to a high degree. In several countries, we are also seeing how legislation and rules relating to various environmental issues are postponed. It remains difficult to arrange physical meetings with our customers, which significantly hampers the possibilities for us to demonstrate the benefits of our installation products. A positive effect of the lockdowns is that they have shown what the world looks like when the air is not polluted by industrial emissions. This is the world that Nederman is working to create by offering effective industrial air filtration instead of a paralyzing pandemic. We demonstrate every day that this can be achieved, at every installation that we implement.

Outlook
There is currently extreme uncertainty regarding the development of the global economy. For the fourth quarter of the year, Nederman expects the effects of the COVID-19 pandemic to remain considerable in most of the Group’s markets. We are doing our utmost to navigate successfully in a highly unpredictable time and have a high level of readiness to adapt our operations. A contributing factor to these difficulties is the major differences in COVID-19 restrictions between different countries. Prevailing regulations are often changed in one direction or another and the signs from authorities all over the world are often difficult to interpret from a long-term perspective. Accordingly, it is currently not possible to provide detailed forecasts of developments in the coming quarters.”

Sven Kristensson, CEO

 

For further information, please contact:

Sven Kristensson, CEO                                                                      
Telephone: +46 42 18 87 00                                                            
e-mail:
sven.kristensson@nederman.com

Matthew Cusick, CFO
Telephone: +46 42 18 87 00
e-mail:
matthew.cusick@nederman.com

This information is information that Nederman Holding AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 08:00 a.m. CET on October 23, 2020.
 

About Nederman
Nederman is a global leader in industrial air filtration dedicated to capturing, measuring, controlling and cleaning air to make industrial production more efficient, safe and sustainable. Based on industry leading products, solutions and services in combination with an innovative IoT platform we deliver knowledge and facts needed to optimise performance and guarantee emissions compliance.  

The Nederman Group is listed on Nasdaq Stockholm. The Group has approximately 2200 employees and presence in more than 50 countries. Learn more at
nedermangroup.com

Nederman Holding AB (publ), P.O. Box 602, SE-251 06 Helsingborg, Sweden. 
Corporate registration number: 556576-4205

The full report (PDF)