Solar Group generated revenue growth in Q2 2012 while EBITA was weak as expected. Group revenue and EBITA matched expectations. Expectations for revenue and EBITA for 2012 remain unchanged. Our Solar 8000 (SAP) roll-out in Solar Nederland proceeded satisfactorily.
Group CEO Flemming H. Tomdrup says:
”Of course, the most important event in Q2 is aour Solar 8000 roll-out in Solar Nederland. We implemented this in mid-June as planned and it proceeded satisfactorily, i.e. without major interruptions and inconveniences to our customers. So now we can continue to prepare for the coming roll-outs in the remaining enterprises.
Meanwhile, we are pleased that our Blue Energy truck has had almost 4,350 visitors - both contractors and their customers - in Denmark, Sweden and Norway. This highlights the great interest out there for our Blue Energy concept of energy efficient solutions.”
| Financial highlight (€ million) |
Q2 2012 |
Q2 2011 |
H1 2012 |
H1 2011 |
| Revenue | 413.3 | 358.5 | 842.2 | 718.3 |
| EBITA | 3.1 | 1.0 | 12.2 | 7.1 |
| Earnings before tax | (0.6) | (4.0) | 4.9 | (2.6) |
| Cash flow from operating activities | (17.4) | 20.2 | 9.3 | 14.6 |
| Financial ratios (%) | ||||
| Organic growth | 0.9 | 3.7 | 3.3 | 4.6 |
| EBITA margin | 0.8 | 0.3 | 1.4 | 1.0 |
| Net working capital/revenue last 12 months * | 14.1 | 15.3 | 14.1 | 15.3 |
* Adjusted for acquired enterprises and calculated as an average of the inventories, trade receivables and trade payables of the past four quarters.
Revenue in Q2 2012:
- Revenue for the group met expectations
- Revenue growth was 15.3% against 6.0% in Q2 2011.
- Organic growth was 0.9% against 3.7% in Q2 2011.
EBITA in Q2 2012:
- EBITA for the group met expectations.
- As expected, EBITA was negatively impacted by Solar 8000 costs of € 2.6m against € 1.6m in Q2 2011.
- EBITA was also negatively impacted by restructuring costs of € 1.0m against € 0.7m in Q2 2011.
- Normalised EBITA was 1.6% of revenue.
Net working capital:
- In connection with Solar Nederland’s transition to Solar 8000 we elected to settle any debts with suppliers by the end of Q2. This had an estimated € 8m negative impact on the group’s net working capital. We expect Solar Nederland’s net working capital to have normalised by the end of 2012.
- Group net working capital was also negatively impacted by the situation in Solar Norge where a number of customers failed to meet the agreed terms and conditions of payment. The monetary effect of this is estimated at some € 12m. Also, Solar Norge’s net working capital figure rose to 18.6% of the past 12 months’ revenue compared to a figure of just 14.2% at the end of Q1 2012. However, customer payment issues were normalised in July.
- We continue efforts to reduce net working capital in 2012. Determined as an average of four quarters, our net working capital target for 2012 is approx. 14% of revenue, while the actual 2011 level was 14.8%.
Expectations for 2012:
- Expectations for 2012 are maintained at revenue of € 1,660-1,720m and EBITA of € 44-55m. Normalised EBITA is expected at € 54-65m when adjusted for restructuring and Solar 8000 roll-out costs.
- The lower expectation level equals negative organic growth of approx. 1%, while the upper expectation level equals positive organic growth of some 3%.
- We have chosen not to adjust our 2012 expectations to match the present high exchange rates on SEK, NOK and PLN. Should these exchange rates remain at their present levels throughout 2012, we expect the translation of our enterprises’ results from SEK, NOK and PLN into euro to impact revenue and EBITA positively by approx. € 25m and € 1m, respectively.
- 2012 EBITA expectations include expected Solar 8000 implementation costs of € 8m and expected restructuring costs of approx. € 2m.
- The overall Solar 8000 (SAP) investment in 2012 is still expected to total approx. € 10m, whereof € 2m will be capitalised.
Solar 8000 (SAP):
- Solar 8000 was rolled out in Solar Nederland in mid-June as planned. The result was satisfactory and implementation was achieved without any major interruptions.
- Our central Solar 8000 organisations in Denmark and Poland have also been adjusted to match future rollout and optimisation tasks.
- Preparations for the coming roll-outs in Solar Danmark and Solar Sverige continue. We expect to roll-out Solar 8000 in Solar Danmark around the turn of the year. Next, we will roll out in Solar Sverige, and Solar Deutschland, the last major Solar enterprise to move to SAP, will follow later in 2013.
- We still expect the investment to total € 55m.
Q2 presentation and webcast today
The presentation of Quarterly Report Q2 2012 will be transmitted online from NASDAQ OMX Copenhagen today at 11.00 CET. A live webcast of the presentation, held in English, will be available at www.solar.eu.
Yours faithfully,
Solar A/S
Flemming H. Tomdrup
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 Faroe Islands, Sweden, Norway, the Netherlands, Belgium, Germany, Poland and Austria. Furthermore, Solar owns Aurora Group, a leading Scandinavian distributor of accessories for consumer electronics that operates in Denmark, Sweden, Norway and Finland. In 2011, Solar Group revenue totalled € 1,532.4m, equating DKK 11.4bn. The group has approximately 3,600 employees.
For further information, please visit: www.solar.eu.
Enclosure: Quarterly report Q2 2012 pages 1-25
