Stable quarter with focus on integration and efficiency improvements
” We deliver stable earnings and the integration of Pöyry is proceeding according to plan. To increase profitability and meet a more unstable market we are raising our ambitions for cost synergies and implementing efficiency improvements", said Jonas Gustavsson, President and CEO.
Third quarter 2019
– Net sales amounted to SEK 4,562 million (2,995)
– EBITA, excl. items affecting comparability, was SEK 345 million (220)
– EBITA margin, excl. items affecting comparability, was 7.6 percent (7.4)
– EBITA totalled SEK 309 million (220)
– EBITA margin was 6.8 percent (7.4)
– EBIT (operating profit) amounted to SEK 274 million (211)
– Basic earnings per share: SEK 1.67 (1.84)
January – September 2019
– Net sales amounted to SEK 14,345 million (10,018)
– EBITA, excl. items affecting comparability, was SEK 1,216 million (911)
– EBITA margin, excl. items affecting comparability, was 8.5 percent (9.1)
– EBITA totalled SEK 1,041 million (911)
– EBITA margin was 7.3 percent (9.1)
– EBIT (operating profit) amounted to SEK 978 million (875)
– Basic earnings per share: SEK 6.50 (8.13)
COMMENTS BY THE CEO
We experienced a continued stable development in the third quarter and can see that with the strategic acquisition of Pöyry, we have created a leading engineering and design company in the Nordics. We have strengthened our international platform, the integration goes according to plan and we are seeing several new assignments as a result of the merger.
We have in the quarter noted a more uncertain market in some segments. Combined net sales, including Pöyry, amounted to SEK 4,562 million (4,398) in the quarter, with total growth of 3.7 percent. The corresponding figure for January to September was 8.6 percent. We delivered stable earnings with combined EBITA excluding items affecting comparability amounting to SEK 345 million (335), and the corresponding EBITA margin to 7.6 percent (7.6).
Integration according to plan and cost synergies continuing into 2020
ÅF’s and Pöyry’s businesses have been integrated faster than planned in a number of areas, while each division is clarifying its strategic direction and its customer offering. Ongoing cost synergies, where the goal is to achieve an annual run-rate of SEK 180 million by the end of 2019, are proceeding as planned. At the end of September, the synergies amounted to an annual run-rate of SEK 165 million. To increase profitability and meet a more unstable market we are raising our ambitions for cost synergies and implementing efficiency improvements, which means that the cost program will continue into 2020.
We will also continue implement essential IT investments in 2020 to streamline operations, but also to successfully integrate our various business units.
Clearer position for Energy Division
In the third quarter of 2018, extensive work was initiated to develop a clearer position for the Energy Division. The division implements a global/local business model, which involves streamlining the sales structure, fewer subsidiaries with some projects being discontinued, and shutting down or selling under-performing units. The negative impact on earnings is estimated at SEK 130-150 million in the fourth quarter, of which around 20 percent is expected to have a cash flow impact. This will give the Energy Division a solid, integrated business model, with the aim of lifting the margin in 2020.
Focus on growth and efficiency improvements in all divisions
During the quarter we signed a number of new contracts, and I am particularly proud of the new partnership with Rottneros, where we will be contributing towards optimising their operations. The collaboration is consistent with our strategy of offering our clients more packaged digital solutions and end-to-end projects.
The market for our services and projects is generally stable, however, we note that certain segments have had a slightly weaker performance in the quarter.
Within the Infrastructure Division, we see a continued underlying need for investments in our core markets. The division has a clear focus on further improving efficiency and increase profitability. Profitability in the quarter was negatively impacted by a weaker development in Denmark and a somewhat lower utilisation rate at the beginning of the quarter.
Within Industrial & Digital Solutions, we still notice the effects of a slowdown in the automotive- and manufacturing industry, however a number of industry segments are displaying persistently healthy demand, for example the defence industry and food & pharma.
The Process Industries Division is continuing to strengthen the order backlog and delivered stable earnings, with all segments displaying increased profitability.
The Energy Division also had a stable performance in the quarter, with high levels of activity in several segments. Demand for our strategic consultants within energy and process industries remains high.
One of the most attractive employers
The merger has further strengthened our attractiveness as an employer, and I am delighted that in Universum’s most recent ranking, ÅF Pöyry was named the second-best employer by engineering graduates in Sweden.
ÅF Pöyry creates sustainable solutions for clients operating within infrastructure, industry and energy. In the autumn we will take the next step in our development by launching a joint brand that showcases our ambition to take on even bigger, more complex assignments in a market fuelled by megatrends such as digitalisation, urbanisation and climate change.
This report has been subjected to scrutiny by the company’s auditors.
This information fulfils ÅF Pöyry AB’s (publ) disclosure requirements under the provisions of the EU’s Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication through the agency of the contact person set out above at 08.00 CET on 29 October 2019.
All assumptions about the future that are made in this report are based on the best information available to the company at the time the report was written. As is the case with all assessments of the future, such assumptions are subject to risks and uncertainties, which may mean that the actual outcome differs from the anticipated result.
This is a translation of the Swedish original. The Swedish text is the binding version and shall prevail in the event of any discrepancies.
The full report including tables (pdf) is available for download.
Link to press-images
For further information:
Juuso Pajunen, CFO, +358 10 33 26 632
ÅF Pöyry is a leading international engineering, design and consultancy company. We create solutions for our clients from a sustainability perspective and based on global trends such as urbanisation and digitalisation. We bring together over 16,000 dedicated experts in the fields of infrastructure, industry and energy, all of whom work globally to create sustainable solutions for future generations.
ÅF Pöyry AB (publ), SE-169 99 Stockholm, Sweden
Visitors’ address: Frösundaleden 2, 169 70 Solna, Sweden
Tel. +46 10 505 00 00 Fax +46 10 505 00 10
www.afconsult.com / email@example.com
Corporate ID number 556120-6474
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