We adjust our outlook for 2016 revenue from around DKK 10.9bn to around DKK 11bn and reconfirm our outlook for 2016 EBITA, although Q3 EBITA was slightly below our expectations.
CEO Anders Wilhjelm says:
”Costs from innovation and business development impacted our Q3 results and we also saw some non-recurring costs. However, we are determined to invest in our digital platforms to strengthen the customer experience, just as we are investing in growth in our new businesses MAG45 and EBS. We believe in networked development, and an outcome of this belief is our recent investment in two digital start-ups, GenieBelt and Minuba.”
| Financial highlights (DKK million)* |
Q3 2016 |
Q3 2015 |
Q1-Q3 2016 |
Q1-Q3 2015 |
| Revenue | 2,595 | 2,449 | 8,062 | 7,768 |
| EBITA | 67 | 89 | 176 | 197 |
| Earnings before tax | 44 | 65 | 109 | 135 |
| Cash flow from operating activities | -7 | -68 | -218 | -193 |
| Financial ratios (%) | ||||
| Organic growth adj. for number of working days | 3.1 | 3.8 | 0.9 | 6.6 |
| EBITA margin | 2.6 | 3.6 | 2.2 | 2.5 |
| Net working capital, period-end/revenue (LTM) | 12.2 | 13.3 | 12.2 | 13.3 |
| Net working capital, average/revenue (LTM)** | 10.9 | 12.2 | 10.9 | 12.2 |
| Gearing (NIBD/EBITDA), no. of times | 1.4 | 1.0 | 1.4 | 1.0 |
| Return on invested capital (ROIC) | 7.5 | 2.0 | 7.5 | 2.0 |
|
* Due to our divestment of the assets of Solar Deutschland GmbH, 2015 and 2016 figures in this announcement relate to our continuing operations. ** Calculated as an average of the past four quarters’ inventories, trade receivables and trade payables. |
||||
Q3 2016 revenue
- Organic growth was 3.1% against 3.8% in Q3 2015, adjusted for the number of working days.
Q3 2016 EBITA
- Q3 EBITA was slightly below our expectations.
- Compared to Q3 2015, the increase in both external operating costs and staff costs was mainly related to the acquisitions of MAG45 and EBS, innovation and development, as well as non-recurring costs.
- In addition, MAG45’s strategy of identifying growth opportunities was brought forward, which means that costs relating to recruitment and restructuring were also brought forward.
2016 outlook
- In Q3 2016, organic growth amounted to 3.1% with a better performance in the last part of the quarter. However, sales mix in Denmark was somewhat unfavourable from a margin perspective. This trend is expected to continue into Q4.
- Consequently, we now expect both modest market growth and organic revenue growth in 2016, giving us a revenue outlook of around DKK 11bn whereas we previously expected revenue of around DKK 10.9bn.
- We reconfirm our outlook for EBITA, expecting EBITA to remain at 2015 levels less the positive one-off of DKK 9m from a change in pension plans in the Netherlands that we saw in 2015, giving us an EBITA outlook of around DKK 287m.
- As previously announced, we are investing in our digital platforms to strengthen the customer experience, and we are investing in growth in our new businesses MAG45 and EBS. Together, this will have a negative impact on our profitability for 2016.
Audio webcast and teleconference today
The presentation of Quarterly Report Q3 2016 will be made in English on 28 October 2016 at 11:00 CET. The presentation will be transmitted as an audio webcast and accessible via www.solar.eu. Participation will be possible via a teleconference.
Teleconference call-in numbers:
DK: tel. +45 354 455 83
UK: tel. +44 203 194 0544
US: tel. +1 855 269 2604
Yours faithfully
Solar A/S
Anders Wilhjelm
Enclosure: Quarterly Report Q3 2016, pages 1-28.
Facts about Solar
Solar Group is a leading European sourcing and services company, operating primarily within the electrical, heating and plumbing, and ventilation technology sectors. Our core business centres on product sourcing, value-adding services and optimisation of our customers’ businesses.
Being a sourcing and services company, we focus on each individual customer. We always strive to understand our customers’ unique and genuine needs in order to provide relevant, personal and value-adding services, turning our customers into winners.
Solar Group is headquartered in Denmark, generated revenue of approximately DKK 10.6bn in 2015 and has some 3,000 employees. Solar has been listed on Nasdaq Copenhagen since 1953, and operates under the short designation SOLAR B. For more information, please visit www.solar.eu.
Disclaimer
This announcement was published in English and Danish today via Nasdaq Copenhagen. In the event of any inconsistency between the two versions, the English version shall prevail.
