Beijer Ref AB Q3 2014

Supplementary acquisitions deliver growth
Quarter 3 2014

  · Net sales amounted to SEK 1,947.4M (1,830.4).

  · Operating profit amounted to SEK 157.8M (146.7).

  · Net profit amounted to SEK 107.0M (100.2).

  · Profit per share amounted to SEK 2.49 (2.30).

  · Sales growth of 6.4 per cent and an operating profit improvement of 7.6 per
cent compared with the corresponding quarter in the previous year. Organic
decrease of turnover by 1.1 per cent and organic increase of operating profit by
1.4 per cent.

  · Three new acquisitions and the creation of the new Beijer Ref OEM business
area for own manufacturing.


Comments by the CEO

Slower growth in troubled Europe
The third quarter of 2014 shows that Beijer Ref continues to deliver growth with
an increase in sales of 6.4 per cent and an operating profit of SEK 157.8M in
spite of an unusually cold summer in southern Europe and the slowdown in demand
due to the Ukraine crisis.

In Central Europe, the Group’s companies in the United Kingdom continue to
report good results with strong sales as well as increased market share. In
three years, Beijer Ref has progressed from third place to a position as leader
in the British market. Beijer Ref’s business concept, where rapid service and
security of delivery are decisive for end customers such as leading
supermarkets, together with acquisitions, important reasons for the increased
market share. Holland and Germany developed well during the third quarter and
continue to report growth and increased market share.

In Eastern Europe, Poland continues to pull the region in a positive direction
whilst sales in Southern Europe were affected by a squeezed macro-economy as
well as bad summer weather throughout the region. The cold and rainy summer in
France, Spain and Italy affected both demand within comfort cooling, HVAC
(heating, ventilation and air conditioning), and commercial refrigeration.

After the expectant start of the first six months for Beijer Ref’s Nordic market
region, the trend changed during the third quarter with increased sales of 21
per cent.

In Africa and Asia (A&A), Thailand fell slightly, whereas southern Africa
reported strong growth. In this region, all integration costs relating to the
acquisition of Eurocool have been absorbed and, with a sales increase of 13 per
cent, the operation in southern Africa currently exceeds the plans.

Significant acquisitions
During the third quarter, Beijer Ref strengthened its position as one of the
three largest refrigeration wholesalers with three important acquisitions. Among
other things, the Group chose to bring forward the option to acquire the
remaining 49 per cent of the shares in the Italian SCM Frigo Group, a leading
manufacturer in Europe of refrigeration units based on environment-friendly
technology.

In addition Beijer Ref in August acquired all the shares in Børresen Cooltech
AS, a leading refrigeration wholesaler in Norway. Børresen Cooltech reports
sales of just under SEK 60M, has 20 employees and will be integrated into of
Beijer Ref’s Norwegian organisation.

In September, Beijer Ref strengthened its growing position in the German
refrigeration wholesale market when it acquired the net assets in Grün
Großhandel für Kälte- und Klimazubehör in Stuttgart. With this, Beijer Ref has
acquired operations in Düsseldorf, Nuremberg, Munich and Leipzig since it
established an operation in Germany in 2011 and now also an excellent geographic
location in Stuttgart.

In addition to the aforementioned, the Group has made yet another acquisition
after the end of the reporting period when it acquired all the shares in the
French refrigeration wholesaler, GFOI (Générale Frigorifique Océan Indien) in
October. GFOI is located on the Réunion Island approximately 800 kilometres east
of Madagascar in the Indian Ocean, a French département with a rapidly expanding
tourist industry.

Own manufacturing becomes a new business area
With SCM Frigo as the base, the Group has created the new business area, Beijer
Ref OEM, during the third quarter with the aim of carrying out own manufacturing
of customer-adapted refrigeration systems. Since it was established in 1979, SCM
Frigo has built up a unique technical competence and is currently one of the
leading manufacturers in the world of environment-friendly refrigeration
systems.

Several companies within the Beijer Ref Group already carry out own
manufacturing of customer-adapted refrigeration systems. However, with the
creation of Beijer Ref OEM this operation will be carried out in an even more
structured and efficient form under the leadership of the leading manufacturer
in Europe, which is expected to provide a number of positive synergy effects.

Logistics the next focus area
In an increasingly borderless and homogenous Europe, logistics is increasingly
becoming a decisive factor for competitiveness. With more than 200 branches in
Europe, Beijer Ref will, in the future, place a strong focus on making the flow
of products still more efficient with increased service and reduced costs as the
objective.

Per Bertland
CEO, Beijer Ref AB

About Beijer Ref
Beijer Ref is one of the three largest refrigeration wholesalers in the world
and the leading company in Europe. The Group offers competitive and innovative
solutions within refrigeration and air conditioning providing customer-adapted
products, refrigeration units developed by the company itself and an efficient
service.

Sales
Beijer Ref increased its sales by 6.4 per cent to SEK 1,947.4M (1,830.4) for the
third quarter of 2014. Adjusted for exchange rate fluctuations and acquisitions,
the organic change in sales was minus one per cent. Accumulated for nine months,
the organic growth amounts to three per cent.

Beijer Ref operates in three market areas: commercial refrigeration, industrial
refrigeration and HVAC (comfort cooling). The Group splits its operation in the
global market into five geographic segments: The Nordic countries, Central
Europe, Eastern Europe, Southern Europe and A&A.

Behind the quarter’s sales increase lie acquisitions and a weaker Swedish krona
as well as a good development in Central Europe, Nordic countries and A&A.
However, sales for the quarter were affected by the slightly weaker south
European markets and a cold summer in Europe.

Results
The Group’s operating profit amounted to SEK 157.8M (146.7) for the third
quarter. The result increase can mainly be explained by increased sales,
especially in Central Europe and Eastern Europe where Poland continues to be a
driving market. Adjusted for exchange rate fluctuations and acquisitions, the
organic change in operating profit was 1.4 per cent.

In the previous year’s figures, the accumulated operating result is charged with
one-time costs of SEK 34.2M. For the first nine months, the operating profit
amounted to SEK 366.0M (278.8). Excluding one-time costs, the operating profit
was SEK 313.0M in the previous year.

The Group’s financial income/expense amounted to SEK -10.6M (-9.0) for the third
quarter. Profit before tax was SEK 147.2M (137.9). Profit after tax was SEK
107.0M (100.2). Profit per share amounted to SEK 2.49 (2.30). For the nine
months of the year, the Group’s financial income/expense amounted to SEK -26.7M
(-24.0). Profit before tax was SEK 339.3M (255.0). Profit after tax amounted to
SEK 242.0M (183.0). Profit per share was SEK 5.56 (4.13).

Other financial information
Consolidated capital expenditure, including acquisitions, amounted to SEK 136.5M
(41.2) for the first nine months of 2014. Of this, the major portion refers to
the acquisition of the remaining 49 per cent in SCM Frigo. Liquid funds,
including unutilised bank overdraft facilities, were SEK 598.9M (513.1) on 30
September 2014. Shareholders’ equity amounted to SEK 2,457.5M (2,305.1). The net
debt was SEK 1,528.9M (1,302.2). The equity ratio amounted to 41.6 per cent
(44.0). The average number of employees during the period was 2,194 (2,119).

Significant events during the year
In January, Beijer Ref acquired all the shares in Eurocool (Pty) Ltd, a leading
refrigeration wholesaler in South Africa. Eurocool was founded in 1999 and
currently holds a strong market position within Beijer Ref’s priority segments.
The company reports sales of approximately SEK 65M and has 36 employees. The
acquisition is estimated to provide cost synergies, increased efficiency and
increased purchasing volumes through the co-ordination with Beijer Ref’s
existing operation in southern Africa. The acquisition is deemed to have a
marginal positive effect on Beijer Ref’s profit per share in 2014. Eurocool is
included in Beijer Ref’s accounts from January 2014.

On 12 March, the EU Parliament voted ‘yes’ to the proposal about a new F-gas
ordinance which was confirmed by the Council of Ministers in a vote on 14 April.
As a result, the decision to phase out refrigerants with fluorised greenhouse
gases (F-gases) has come into force which is predicted to have a positive effect
on Beijer Ref through the investments in new technology which the end customers
will gradually need to make and where Beijer ref is well prepared for the new
rules and regulations.

On 14 May, the Swedish Companies Registration Office approved the Group’s change
of name from G & L Beijer to Beijer Ref. A classic Swedish industrial company’s
modern operation is now also reflected in the company name.

In July, Beijer Ref acquired the remaining 40 per cent of the shares in the
Italian SCM Frigo Group, a leading manufacturer in Europe of, among other
things, refrigeration units based on environment-friendly technology. The
company reports sales of around SEK 240M and has 90 employees. The acquisition
is deemed to have a positive effect on Beijer Ref’s profit per share already in
2014.

In August, Beijer Ref acquired all the shares in a leading refrigeration
wholesaler in Norway, Børresen Cooltech AS. Børresen Cooltech reports sales of
SEK 60M, has 20 employees and will be integrated into Beijer Ref’s organisation.
The acquisition is deemed to have a marginally positive effect on Beijer Ref’s
net income. Børresen Cooltech is included in the consolidated accounts from
August 2014.

In September, Beijer Ref strengthened its position in the rapidly growing German
refrigeration wholesale market when it acquired the net assets in Grün
Großhandel für Kälte- und Klimazubehör. The company reports sales of
approximately SEK 25M, has seven employees and gives the Group a strategically
important presence in Stuttgart. The acquisition is deemed to have a marginally
positive effect on Beijer Ref’s net income. The company is included in the
consolidated accounts from October 2014.

After the end of the reporting period
In October, Beijer Ref acquired all the shares in the French refrigeration
wholesaler, GFOI (Générale Frigorifique Océan Indien). GFOI is located on the
Réunion Island approximately 800 kilometres east of Madagascar in the Indian
Ocean. The company reports sales of around SEK 50M, has seven employees and is a
step in the Group’s expansion outside Europe. The acquisition is deemed to have
a marginally positive effect on Beijer Ref’s net income.

Risk assessment
The operations of the Beijer Ref Group are affected by a number of external
factors, the effects of which on the Group’s operating profit can be controlled
to a varying degree. The Group’s operation is dependent on the general economic
trend, especially in Europe, which controls the demand for Beijer Ref’s products
and services. Acquisitions are normally linked with risks such as, for example,
staff defection. Other operating risks, such as agency and supplier agreements,
product responsibility and delivery undertaking, technical development,
warranties, dependence on individuals, etc., are continually being analysed and,
when necessary, action is taken to reduce the Group’s risk exposure. In its
operation, Beijer Ref is exposed to financial risks such as currency risk,
interest risk and liquidity risk. The parent company’s risk picture is the same
as that of the Group. For further information see the Group’s Annual Report.

Financial information
- The Year-end Report for 2014 will be published on 10 February 2015.
- The Annual Report for 2014 will be published in April 2015.

Malmö, 22 October 2014
Beijer Ref AB (publ)
Per Bertland, CEO

For further information, please contact:
Per Bertland, CEO
switchboard +46 40-35 89 00, mobile +46 705-98 13 73
Jonas Lindqvist, CFO
switchboard +46 40-35 89 00, mobile +46 705-90 89 04

www.beijerref.com