Interim report January-June 2023

April-June 2023

  • Net sales were 506.6 MSEK (546.4), a decrease of 7.3% compared to the equivalent period in 2022. Organic growth was -11.6% for the period.
  • EBITA was 64.5 MSEK (90.8), an EBITA margin of 12.7% (16.6). The period was affected by one-off costs of 1.3 MSEK regarding an efficiency program in Sweden. The previous year was affected by a cost reduction of 6.6 MSEK regarding a repayment from Fora.
  • Earnings per share were 0.93 SEK (1.45).
  • Cash flow after investing activities was -3.4 MSEK (9.0).

January-June 2023

  • Net sales were 1,039.8 MSEK (1,043.0), a decrease of 0.3% compared to the equivalent period in 2022. Organic growth was -4.4%.
  • The period was affected by one-off costs of 2.9 MSEK regarding an efficiency program in Sweden. The previous year was affected by a cost reduction of 6.6 MSEK regarding a repayment from Fora.
  • Earnings per share were 2.18 SEK (3.01).
  • Cash flow after investing activities was 36.4 MSEK (-20.1).

Significant events during and after the quarter

  • Between February and April, FM Mattsson Group implemented an efficiency program that reduced staffing in Sweden by approximately 20 employees. Within the programme, we have chosen to strengthen the organisation in the strategically important areas of digitalisation and sustainability. The assessment is that the program should lead to annual cost savings of around 10-12 MSEK starting in the second quarter.

Stable earnings despite weaker demand

Sales in the second quarter amounted to 507 MSEK, which is just over 7% lower than the corresponding quarter in 2022. The EBITA margin for the quarter was 12.7% compared to 16.6% in the corresponding quarter of 2022. The second quarter of 2022 showed very high sales and profitability, which makes the comparative figures challenging, especially considering the current market situation. Therefore, it is gratifying that the business shows a stable result, despite the weaker demand during this quarter.

The market situation continues to be challenging as a result of the well-known external factors inflation and interest rates. In all our countries and customer segments, we see signs of lower demand, especially for new construction and private renovation of bathrooms and kitchens. We see a slightly higher level of activity in commercial renovation projects, which constitute a large part of our Nordic business in particular. Undeniably, the market situation is uncertain for all players in the industry and our assessment is that this will continue throughout 2023. The forecasts for new construction projects are those that show the clearest decline. We therefore see our high presence in the renovation market as a clear strength to balance a lower level in new construction. In the long term, we also see a large need in all our markets to build new homes and renovate existing bathrooms and kitchens.

During the quarter, the gross margin was stable, while the EBITA margin weakened due to lower demand and higher selling costs. These are partly due to the weaker Swedish currency and we have also chosen to invest in sales resources and marketing that will develop our market positions in the long term. The currency development means that our Swedish manufacturing will be even more of an advantage for us when compared to competitors who import products from other countries. However, given the current market situation, we continue to have a clear focus on being cost-effective in all parts of the business. The efficiency program implemented at our head office and factory in Mora, having been communicated earlier this year, also makes us better equipped to handle a continued challenging market situation. We are also continuing to adjust our inventory, which remains high due to a seasonal increase ahead of the summer holiday period for the factory in Mora, preparation for coming product launches and lower demand as well as exchange rates and inflation. Several improvement initiatives have been implemented and several more are ongoing which will enable us to reduce inventory levels in the coming quarters.

Despite challenging times, we see a strength in our strategy with a decentralized, customer-oriented organization and our goal to continue to develop attractive, sustainable products and services combined with excellent customer service. In May, our Nordic brands participated in the HVAC fair in Odense, Damixa's hometown, with great success. Among other things, the new product series Damixa Core and FM Mattsson 9000XE were presented, which will be delivered to our customers during the third quarter. Both product lines clearly meet customer demand for modern and sustainable material choices, low energy and water consumption, and attractive design. With these two new product series as additions to our already strong product portfolio, we look forward with excitement to continue to develop our role as a long-term sustainable partner for them together with our customers.