Following divestments, closure of production facilities and slow recovery in Americas, Nilfisk lowers full-year 2018 organic growth guidance and expects earnings in the lower end of the guided range

Company announcement

October 11, 2018

Announcement No. 17

In the Group’s Q2 2018 Interim Report released August 14, 2018, Nilfisk guided a full-year organic growth of 3.0%-4.0% and an EBITDA margin before special items of 11.5%-12.0%. Lower than expected growth in Americas brings organic growth in the continuing branded professional business to approximately 3% while divestments and closure of production facilities lead Nilfisk to lower total full-year 2018 organic growth guidance to approximately 2%.

The change of organic growth expectations relates primarily to business areas with earnings below Group average, hence Nilfisk still expects full-year EBITDA margin before special items to be within the previously guided range, however in the lower end.

Preliminary results for Q3 2018 and outlook

The preliminary Q3 2018 financial results show revenue of approximately 250 mEUR and total organic growth of approximately 2.6%. The preliminary Q3 2018 operational EBITDA margin before special items is 10.5% against 8.9% in Q3 2017.

Q3 demonstrates with 4.5% the strongest organic growth so far this year in the professional business excluding private label with EMEA 8.2%, Americas flat growth, and APAC 2.0% organic growth. Specialty Professional grows 5.7%. With negative growth of 1.4% Specialty Consumer grows less than expected while private label in line with expectations has negative growth of 15.5% against a very strong Q3 2017.

With a flat organic growth in Q3 2018, the performance in Americas is below expectations, primarily caused by timing of strategic account revenue as well as cancellation of industrial orders due to longer delivery time.

Nilfisk expects positive organic growth in Americas in Q4 2018 and organic growth in the professional business excluding private label to continue the Q3 2018 performance. However, total organic growth for Nilfisk for Q4 2018 is expected to be negative since private label revenue will be approximately 15 mEUR lower, the majority of which was expected, than the exceptionally high Q4 2017.

Simplification

Nilfisk has executed significant initiatives supporting the ongoing multi-year simplification strategy aiming to improve long-term profitability: 

Nilfisk has decided to exit the Outdoor business (35 mEUR annual revenue). The Danish-based part of the business is sold effective January 1, 2019, while the Italian-based part of the business will be exited immediately with an expected completion in Q1 2019.

In addition, Nilfisk has sold its US carpet restoration business (15 mEUR annual revenue) effective October 29, 2018, and the high pressure washer business Rottest in Turkey (1 mEUR annual revenue) effective September 2018.

The exits of the Outdoor and the US restoration businesses will have negative impact on Q4 growth as both businesses had organic growth rates above Group average and the exit meant a cancellation of an expected new product launch in the Outdoor business.

The exits are expected to be slightly cash positive, but lead to loss under special items of 30-35 mEUR of which 25-30 mEUR is expected in 2018. The exits are expected to have a positive impact on Nilfisk’s EBITDA margin before special items of 0.2-0.3 percentage points in 2019.

Nilfisk has closed its production facilities in Suzhou, China, and outsourced production of consumer products and private label products, while consolidating the production of professional products into one site in Dongguan, China. The closure of the site in Suzhou was planned for Q4 2018 but after labor discussions and strikes at the factory, the closure was executed already in August, 2018. The earlier than expected closure had a negative impact on consumer revenue in Q3, and will also impact Q4 consumer and private label revenue.

The implemented actions will lead to an intended reduction of five facilities, hence simplifying Nilfisk’s production set-up.

Further details relating to Q3 performance will be published in the Q3 2018 Interim Report on November 14, 2018.

Conference call

Nilfisk will host a conference call today at 10:00 CET. Please visit investor.nilfisk.com to access the call. Presentation materials will be available on the website prior to the conference call.

To dial in

Denmark:

UK: +44 (0)330 336 9411

US:

Conference ID: 5201865

Link to webcast:

Contact

Investor Relations

Henrik Mølgaard

Head of Investor Relations

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Media Relations

Louise Refsgaard Klinge

Global Media Relations

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