In Q2, Solar realised a continually positive organic growth in line with
expectations. The earnings performance in the Norwegian subsidiary was clearly
unsatisfactory, while the other companies in total delivered results that were
in line with expectations. Subsequently, the earnings performance did not meet
expectations.
For Q2, the following can be highlighted:
• Revenue increased by 13% to € 377.5m (333.6)
• Organic revenue growth amounted to 10% (18)
• EBITA amounted to € 14.9m (15.9)
For H1 2008, the following can be highlighted:
• Revenue increased by 13% to € 738.3m (653.0)
• Organic revenue growth amounted to 8.7% (18)
• EBITA amounted to € 30.2m (33.4)
• Earnings before tax were € 23.3m (28.8)
• Working capital amounted to 17.9% of revenue and will be reduced as planned
Comments on Q2 in general:
• Growth was negatively affected by decreasing activity levels within new
housing construction
• New build activities on commercial buildings are declining
• The activity level within modernisation and repairs is high
• Activities within industry are at a continually high level
• Freight costs are continuously high
Expectations/comments for 2008:
• Growth will be on the decline, but continuously with positive organic growth.
• The competitive situation has toughened as a result of a change in ownership
among the major players in the electricity business and generally decreasing
growth.
• The geographical expansion continues in Sweden, Poland and Germany among
others. A unique opportunity to appoint 55 employees from a competitor in
Germany will have a negative impact on net profit for this year.
• Freight costs will affect the group's total net profit negatively by 0.5
percentage points compared to 2007. Several initiatives have been implemented
in order to compensate for this cost increase.
• A restoration plan has been established in the Norwegian subsidiary, but this
will not show full effect until 2009.
• Staff reductions have been initiated, and a number of new appointments have
been suspended. Cost reduction initiatives have been launched.
Earnings expectations for 2008:
• Based on the above, the expectations for 2008 have been downgraded from
revenue of € 1,500m to € 1,475m.
• Expectations for EBITA have been reduced from € 86m to € 73m.
The effect of the possible acquisitions of Eltomont Sp. z o.o., Poland, and
Vegro B.V., the Netherlands, has not been included in the expectations for
2008.
The company's capital structure:
• At the Annual General Meeting in April 2009, it will be proposed that 364,120
treasury B shares be cancelled, equating to 5% of the share capital.
Yours faithfully,
Solar A/S
Flemming H. Tomdrup
Enclosure: Quarterly report Q2 2008 pages 1-16 + cover
