The Solar Group’s revenue for Q1 2013 failed to meet expectations, while EBITA matched the lowest level of our expectations. Gross profit was strengthened compared with figures for Q4 2012. Expectations for 2013 revenue and EBITA are changed.
Group CEO Flemming H. Tomdrup says:
”As expected, the year’s first quarter was characterised by weak earnings, primarily due to restructuring costs, decreasing revenue and the occurrence of Easter in March 2013 instead of in April as in 2012. Our gross profit was strengthened compared with figures for Q4 2012, but we do not expect gross profit improvements to be able to fully offset the lack of revenue in the remaining quarters of 2013. Our all-important objective is to increase profitability and that demands a long-haul effort.”
| Key figures (€ million) |
Q1 2013 |
Q1 2012 |
2012 |
| Revenue | 390.1 | 428.9 | 1,700.9 |
| EBITA | -3.8 | 9.1 | 38.0 |
| Earnings before tax | -7.9 | 5.5 | 23.2 |
| Cash flow from operating activities | -32.5 | 26.7 | 61.4 |
| Key financial ratios (%) | |||
| Organic growth | -10.1 | 5.7 | 0.1 |
| EBITA margin | -1.0 | 2.1 | 2.2 |
| Net working capital/last 12 months’ revenue * | 14.6 | 14.6 | 14.0 |
* Calculated as an average of the last four quarters’ inventories, trade receivables and trade payables.
Revenue in Q1 2013:
- Group revenue did not meet expectations.
- Revenue growth was -9.0% against 19.2% in Q1 2012.
- Organic growth was -10.1% against 5.7% in Q1 2012. Adjusted for number of working days organic growth was -5.7% in Q1 2013.
EBITA in Q1 2013:
- Group EBITA matched our lowest expectation levels.
- EBITA was negatively impacted by restructuring costs of € 4.2m against € 0.0m in Q1 2012.
- EBITA was also, as expected, negatively impacted by Solar 8000 costs of € 0.9m against € 2.0m in Q1 2012.
Net working capital:
- In Q1, the considerable build-up of inventories that we saw in Q4 2012 had a negative impact on net working capital. Efforts were made to reduce inventories, which will have a negative impact on trade payables in the short run.
- Efforts to reduce net working capital will carry on. Stated as an average of four quarters, our target for 2013 is to get net working capital under 14% of revenue.
Expectations for 2013:
- We do not expect the slowdown seen in most markets in Q1 to be offset in the following quarters. Thus, expectations for 2013 are changed from revenue of € 1,640-1,680m to revenue of € 1,590m -1,640m.
- The gross profit improvements, that we have seen in most group enterprises, will not be able to offset the lack of revenue in the remaining quarters. Expectations for EBITA are changed from € 32-39m to € 25-33m.
- Expectations for EBITA 2013 include restructuring costs of approximately € 6m, up from approximately € 5m, and Solar 8000 roll-out costs of approximately € 4m. Adjusted for these, normalised EBITA is expected at € 35-43m.
- The lower revenue expectation levels equal organic growth of approximately -4.5%, while the upper expectation levels equal organic growth of approximately -1.5%.
Solar 8000 (SAP):
- We are planning to roll out Solar 8000 in Solar Danmark in late Q3, and roll-out in Solar Sverige is expected 3-4 months after this.
- As always, quality and safety take centre stage when we roll out IT platforms in our group enterprises.
- We still expect the overall investment in Solar 8000 to total less than € 54m.
- We stick to our expectations for positive effects, still expecting the transition to Solar 8000 to increase earnings (EBITDA) by € 8-10m annually when fully implemented.
Q1 presentation - webcast and teleconference today
The presentation of quarterly report Q1 2013 will be transmitted online in English from NASDAQ OMX Copenhagen today at 11.00 CET, and the webcast will be accessible via www.solar.eu. It will be possible to make comments and ask questions via teleconference. Please use these numbers to participate:
Callers from Denmark: tel. +45 32 72 80 18
Callers from Great Britain: tel. +44 145 255 5131
Callers from the USA: tel. +1 866 682 8490
International callers: tel. +44 (0) 145 255 5131
Yours faithfully
Solar A/S
Flemming H. Tomdrup
Appendix: Quarterly report Q1 2013 pages 1-25
Solar facts
Solar A/S was established in 1919 and listed on the Copenhagen Stock Exchange in 1953. Solar is one of Northern Europe’s leading technical wholesalers within electrical, heating, plumbing and ventilation products. The group, based in Kolding, Denmark, has subsidiaries in Denmark incl. the Faroes, Sweden, Norway, the Netherlands, Belgium, Germany, Poland and Austria. In 2012, Solar Group revenue totalled € 1,700.9m, equating DKK 12.7bn. The group currently has some 3,500 employees. For more information, please visit www.solar.eu.
Disclaimer
This announcement was published in Danish and English today via NASDAQ OMX Copenhagen. In case of any discrepancy between the two languages, the Danish version shall prevail.
