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Purmo Group’s Interim Report 1 January – 31 March 2022: Solid start to the year (MFN)

2022-05-12 07:15

Purmo Group Plc, stock exchange release, 12 May 2022 at 08:15 EEST

January-March 2022

  • Net sales improved by 24 per cent to EUR 236.2 million (190.4). Organic growth was 21 per cent.
  • Adjusted EBITDA reached EUR 29.2 million (29.1), corresponding to an adjusted EBITDA margin of 12.4 per cent (15.3 per cent).
  • EBIT was EUR 14.1 million (18.7), which included EUR -7.5 million (-2.9) of comparability adjustments.
  • Cash flow from operating activities was EUR -38.9 million (-7.0)
  • The first strategic acquisition completed, Thermotech consolidated into the ICS division as of 1 March 2022.

Financial guidance for 2022
Purmo Group has decided to initiate its financial guidance for 2022, due to improved visibility:

For 2022, Purmo Group expects net sales to increase from 2021 (EUR 843.6 million). Adjusted EBITDA is expected to be comparable to 2021 (EUR 103.9 million) i.e. to change not more than 5 per cent from the previous year.

The outlook remains uncertain due to the ongoing geopolitical situation caused by the war in Ukraine, which is impacting market demand and supply chains, as well as causing raw material price inflation. Purmo Group is actively managing the situation including price increases to offset cost inflation and mitigating supply chain constraints.

Key figures and financial performance

EUR million 1-3/2022 1-3/2021 Change, % 2021
Net sales 236.2 190.4 24% 843.6
Adjusted EBITDA 29.2 29.1 0% 103.9
Adjusted EBITDA margin 12.4% 15.3%
12.3%
Adjusted EBITA 22.3 22.4 0% 70.8
Adjusted EBITA margin 9.5% 11.7%
8.4%
EBIT 14.1 18.7 -25% 3.5
EBIT margin 6.0% 9.8%
0.4%
Profit for the period 6.5 11.9 -46% -18.8
Adjusted profit for the period 14.0 14.9 -6% 51.4
Earnings per share, basic, EUR 1) 0.16 0.41 -61% -0.65
Adjusted earnings per share, basic, EUR 1) 0.34 0.51 -33% 1.77
Cash flow from operating activities -38.9 -7.0 -458% 35.4
Adjusted operating cash flow, last 12 months 2) 18.6 96.9 -81% 53.1
Cash conversion 3) 17.8% 101.7%
51.1%
Operating capital employed 4) 328.2 259.6 26% 271.8
Return on operating capital employed 5) -0.3% 19.9%
1.3%
Net debt 301.0 86.2 249% 239.5
Net debt / Adjusted EBITDA 2.9 0.9 220% 2.3

1) The 2021 earnings per share calculations are based on shares of Purmo Group Ltd.
2) Adjusted EBITDA on a rolling 12-month basis deducted by the change in net working capital and capex on a rolling 12-month basis.
3)Adjusted operating cash flow divided by Adjusted EBITDA, both on a rolling 12-month basis.
4)Net working capital, other intangible assets, property, plant and equipment, and right-of-use-assets.
5)EBIT based on a rolling 12-month calculation divided by operating capital employed. Return on operating capital employed without non-recurring items was 22% (25%).

Unless otherwise stated, the comparison figures in parentheses refer to the corresponding period in 2021. The 2021 non-adjusted key figures are affected by a one-time, non-cash IFRS 2 merger impact of EUR 52.3 million as a result of the merger of Virala Acquisition Company Plc and Purmo Group Ltd, as well as EUR 17.9 million other items affecting comparability

CEO review: Solid start to the year in uncertain market conditions
Net sales of Purmo Group improved by 24 per cent to EUR 236.2 million in the first quarter of 2022, supported by continued strong net sales growth of above 20 per cent in both divisions. Organic growth was 21 per cent. Adjusted EBITDA was EUR 29.2 million reaching the same level as in the first quarter of 2021. The adjusted EBITDA margin was 12.4 per cent which was lower than last year, when margins benefited from temporarily lower cost-levels post COVID-19, but higher than the first quarter in both 2019 and 2020 (9.5 and 11.0 per cent, respectively).

We had a solid performance in the first quarter, a tough challenge given the current challenges in the markets. Adjusted EBITDA reached EUR 104.0 million (95.3) on a rolling 12-month basis.

The geopolitical situation, caused by the war in Ukraine, is above all a humanitarian crisis. It also provides challenges for Purmo Group. The war has had negative effects on demand in many markets, worsening already strained supply chains and cost inflation.

In March, we took the decision to exit Russia. The work to divest the business has started and we are exploring options. Upon completion, we will no longer have a manufacturing operation or sales in Russia.

While the current operating environment is challenging, we continue to expect increased demand for sustainable, energy-efficient heating and cooling solutions. We expect this to be accelerated by high energy prices and the need to transition to more renewable energy sources. Residential buildings are responsible for 17 per cent of the total energy consumption in the EU. We are pursuing these demand drivers by implementing our three-pillar growth strategy.

Strong performance in ICS offset by weaker Radiators

In the ICS division both net sales and adjusted EBITDA improved strongly in the first quarter. Sales growth was achieved across many markets and in particular Italy, driven by demand for heat pumps and other related systems supported by government energy efficiency subsidies. In Italy ICS has its broadest offering including heat pumps, air-conditioners and ventilation.

Net sales in the Radiator division improved driven by sales price increases. However, adjusted EBITDA declined due to lower sales volumes than in the same period last year. The lower sales volumes were primarily driven by normalised demand from last year’s elevated levels and the geopolitical situation. In the first and second quarter of 2021 volumes benefited from pent-up demand and pre-buying.

Acquisition of Thermotech

The acquisition of Thermotech was completed during the review period providing growth opportunities for the ICS division in the Nordics. This was our first acquisition as a publicly listed company and supportive of the strategic direction of Purmo Group. Thermotech, a Nordic based company, manufactures and supplies customised, prefabricated underfloor heating systems to customers across the Nordic region. It brings smart technologies to our ICS offering, supports our solution-selling approach and strengthens our position in the Nordic underfloor heating market.

Initiated financial guidance for 2022

Purmo Group has decided to initiate its financial guidance for 2022, due to improved visibility:

For 2022, Purmo Group expects net sales to increase from 2021 (EUR 843.6 million). Adjusted EBITDA is expected to be comparable to 2021 (EUR 103.9 million) i.e. to change not more than 5 per cent from the previous year.

The outlook remains uncertain due to the ongoing geopolitical situation caused by the war in Ukraine, which is impacting market demand and supply chains, as well as causing raw material price inflation. Purmo Group is actively managing the situation including price increases to offset cost inflation and mitigating supply chain constraints.

We would like to thank all our customers, employees, suppliers and shareholders for their continued trust and commitment to Purmo Group. Despite considerable market uncertainty, Purmo Group remains well positioned to deliver on our ambition to become the global leader in sustainable indoor climate comfort solutions and to reach our long-term financial targets.

News conference and webcast for analysts, investors and media
Purmo Group’s Interim Report January–March 2022 has today been published and is available on Purmo Group’s website at https://investors.purmogroup.com/ir-material/ in English and Finnish.

CEO John Peter Leesi and CFO Erik Hedin will present the result to analysts, investors and media representatives in a live webcast at https://purmogroup.videosync.fi/q1-2022 on Thursday 12 May 2022 at 10:00 Finnish time (EEST). The event, including the Q&A session, will be held in English.

The webcast can be attended also via teleconference. To participate in the teleconference, participants are asked to dial in at least 5 minutes before the start of the event using one of the following telephone numbers:

Finland Toll: +358 981710310
Sweden Toll: +46 856642651
United Kingdom Toll: +44 3333000804
United States Toll: +1 6319131422

Teleconference PIN: 50253852#

A recording of the event will be available on https://investors.purmogroup.com/ir-material/ shortly after the event has ended.

Purmo Group Plc

Further information:
Erik Hedin, CFO of Purmo Group Plc, tel. +44 7979 363 473
Josefina Tallqvist, Investor Relations (interim), tel. +358 40 745 5276

Distribution:
Nasdaq Helsinki Ltd
Principal media
investors.purmogroup.com

Purmo Group Plc is a leader in sustainable indoor climate comfort solutions in Europe. We provide complete heating and cooling solutions to residential and non-residential buildings, including radiators, towel warmers, underfloor heating, convectors, valves and controls. Our mission is to be the global leader in sustainable indoor climate comfort solutions. Our approximately 3,500 employees operate through 46 locations in 21 countries, manufacturing and distributing top quality products and solutions to customers in more than 100 countries globally. Purmo Group Plc’s shares are listed on Nasdaq Helsinki (symbol: PURMO). www.purmogroup.com


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