No. 8 2020 Quarterly Report Q1 2020
Revenue was on par with our expectations, while a strong focus on improved profitability resulted in an EBITA above our expectations. Like other companies, Solar is affected by the challenges caused by the COVID-19 pandemic. However, Solar has an agile business model and is fundamentally a digital business, which means that we are well positioned for the next normal.
CEO Jens Andersen says:
"We are pleased to see that EBITA from core business was up by more than 20% in Q1 and thereby exceeded our expectations. Like other companies, Solar is affected by the challenges caused by the COVID-19 pandemic, and we experienced a limited effect in April with a decline in group revenue resulting in a negative organic growth of -1.6%.
Solar has an agile business model with strong supplier partnerships, a high and ever-increasing share of e-business and an enhanced group mindset, which will enable us to manage the challenges brought about by COVID-19. We have taken the necessary precautions and introduced a number of initiatives to limit the risk of infection.
Being a digital company with strong logistics, Solar is well positioned for the digital transformation of our industry. In these times of COVID-19 and social distancing, it has become even clearer how digital solutions can support a healthy business environment. We are currently seeing the rapid adoption of digital tools to communicate, coordinate, and order materials.”
| Financial highlights (DKK million)* | Q1 2020 | Q1 2019 | 2019 |
| Revenue | 3,045 | 2,957 | 11,679 |
| EBITA | 97 | 80 | 360 |
| Cash flow from operating activities | -43 | -132 | 300 |
| Financial ratios (%) | |||
| Organic growth adj. for number of working days | 1.4 | 5.8 | 4.9 |
| EBITA margin | 3.2 | 2.7 | 3.1 |
| Net working capital, period-end/revenue (LTM) | 12.2 | 11.8 | 11.0 |
| Gearing (NIBD/EBITDA), no. of times | 1.9 | 2.5 | 1.7 |
| * Due to the divestment of our Norwegian training business, STI, in Q1 2019, 2019 and 2020 figures in this announcement relate to our continuing operations. | |||
Q1 2020 Revenue
- Group revenue was on par with expectations.
- Adjusted organic growth amounted to 1.4% (5.8%).
Q1 2020 EBITA
- Group EBITA was above expectations.
- EBITA from core business was up by more than 20% at DKK 97m (DKK 81m) corresponding to an EBITA margin of 3.3% (2.9%). This was driven by improvements in Solar Danmark, Solar Sverige and Solar Norge.
- As expected, Solar Danmark’s and Solar Norge’s respective performance included a negative effect from the roll-out costs for SAP eWM of approx. DKK 7m and approx. DKK 2m. Overall, we continue to expect one-off costs of DKK 30m relating to SAP eWM implementations in 2020.
BIMobject valuation
• Based on the share price on 31 March 2020, the value of BIMobject amounted to DKK 110m. Solar thus identified a need for a write-down of DKK 24m (DKK 57m).
2020 outlook
- Solar’s Q1 results were above expectations. However, due to COVID-19, we began to see a slight decline in revenue in some markets in the last week of March. Based on this development, Solar withdrew our previously announced outlook for 2020 cf. announcement no. 6 2020 dated 27 March.
- April revenue showed a negative adjusted organic growth of -1.6%. Core business ended with a negative organic growth of -2.5% while related business saw positive organic growth of 14.1%.
- As soon as a more stable external environment has been established and we have a clear overview of the effects of COVID-19 on Solar, we will issue a new guidance for 2020.
Audio webcast and teleconference today
The presentation of Quarterly Report Q1 2020 will be made in English on 6 May 2020 at 11:00 CET. The presentation will be transmitted as an audio webcast and will be available at Participation will be possible via a teleconference.
Teleconference call-in numbers:
DK: tel.
UK: tel. 5
US: tel.
Yours faithfully,
Solar A/S
Jens Andersen
Contacts
CEO Jens Andersen - tel.
CFO Michael H. Jeppesen - tel.
Director, Stakeholder Relations Charlotte Risskov Kræfting - tel.
Enclosure: Quarterly Report Q1 2019, pages 1-27.
Facts about Solar
Solar is a leading European sourcing and services company mainly within electrical, heating and plumbing, ventilation and climate and energy solutions. Our core business centres on product sourcing, value-adding services and optimisation of our customers’ businesses.
We facilitate efficiency improvement and provide digital tools that turn our customers into winners. We drive the green transition and provide best in class solutions to ensure sustainable use of resources.
Solar Group is headquartered in Denmark, generated revenue of approx. DKK 11.7bn in 2019 and has approx. 3,000 employees. Solar is listed on Nasdaq Copenhagen and operates under the short designation SOLAR B. For more information, please visit .
Disclaimer
This announcement was published in Danish and English today via Nasdaq Copenhagen. In the event of any inconsistency between the two versions, the Danish version shall prevail.
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