Year-end Report January – December 2016
Rejlers strengthens its financial platform
- Sales increased by 15 per cent to SEK 673.7 million (586.7)
- Organic growth was 7 per cent, adjusted for exchange rate effects
- Operating profit was SEK 6.0 million (9.1), corresponding to an operating margin of 0.9 per cent (1.6)
- Restructuring costs amounted to SEK 11.8 million (-)
- Operating profit adjusted for restructuring costs amounted to SEK 17.8 million (9.1), providing an adjusted operating margin of 2.6 per cent (1.6)
- Profit after tax was SEK 0.0 million (5.2)
- Cash flow from operating activities totalled SEK 68.2 million (21.1)
- Earnings per share before and after dilution were SEK -0.03 (0.40)
- The Board of Directors proposes a rights issue of SEK 200 million. An Extraordinary General Meeting is scheduled for 13 March 2017
- Sales increased by 25 per cent to SEK 2,341.4 million (1,875.5)
- Organic growth was 0 per cent, adjusted for exchange rate effects
- Operating profit amounted to SEK 27.5 million (71.0), corresponding to an operating margin of 1.2 per cent (3.8)
- Restructuring costs amounted to SEK 21.5 million (-)
- Operating profit adjusted for restructuring costs amounted to SEK 49.0 million (71.0), providing an operating margin of 2.1 per cent (3.8)
- Profit after tax was SEK 14.0 million (51.2)
- Cash flow from operating activities totalled SEK 41.2 million (42.5)
- Earnings per share before and after dilution were SEK 1.03 (4.15)
- The Board of Directors proposes that no dividend be paid
Comments from the President and CEO, Peter Rejler
The growth rate during the quarter reached 15 per cent and is mainly attributable to acquisitions, which developed according to plan. Organic sales growth, adjusted for currency, amounted to 7 per cent. Operating profit amounted to SEK 6.0 million with a margin of 0.9 per cent. The quarter’s weak earnings trend is mainly related to continued losses in the ICT and railway area in Norway and cut-backs in the processing and nuclear power operations in Sweden as a result of lower demand. The earnings trend is of course not satisfactory and we have been working for some time on several initiatives to again achieve our long-term margin target of 8 per cent over time. Operating profit adjusted for restructuring costs increased to SEK 17.8 million (9.1) during the quarter, corresponding to an operating margin of 2.6 per cent (1.6).
Since the summer, the coverage rate has increased and several of the steps we have taken are gradually contributing to greater efficiency and profitability. It is also pleasing that we recently renegotiated an important ICT agreement in the Norwegian market, which will have a significant effect on earnings in this business.
Embriq and Orbion, which were both acquired at the end of 2015, have been integrated well and are delivering according to plan.Through Embriq, we can now supply services, solutions and systems for the smart electrical grids of the future and handle and analyse large amounts of data, which opens new business opportunities. As of year-end, we have gathered our range of IT services and energy services in the Rejlers Embriq segment. With Orbion as a base, we are well positioned in the ICT area in every country in which we have a presence and with good profitability in Sweden and Finland.
Strong demand in construction and energy
Our Construction and Property segment generally shows a good coverage rate and is experiencing a positive trend in all countries in terms of profitability. We see continued potential for growth in the energy business where the industry is facing extensive investments in energy efficiency improvements, power supplies and sustainable electricity generation. In the Industry segment, general price pressure is a contributing cause of our reduced profitability. During the year, we adapted the business to prevailing market conditions, and are continuously working to achieve the right efficiency.
In the Infrastructure segment, there has been a positive trend in Sweden and Finland. Rejlers Sweden has recruited for continued organic growth and, in Rejlers Finland, the acquisition of CMN Oy complemented the offering in the railway area. Rejlers and the energy and environmental specialist Entro entered a strategic partnership for energy efficiency improvements in the construction, industrial and infrastructure area. The collaborative agreement strengthens both of the companies’ positions as energy and environmental consultants in Norway, Sweden and Finland.
New share issue for operational and financial flexibility
The on-going transformation of the Group’s operations through efficiency enhancements, overhauls of unprofitable areas and greater focus on the digitisation of processes and IT solutions is continuously showing a higher order volume. We follow an overall strategy and have the intention of further intensifying this transition to secure and strengthen our market position. We continue to expand in the Nordic region, as well as pursue selective strategic acquisitions. As a result of this and with the aim of strengthening the company’s financial position and increasing operating flexibility, the Board proposes a rights issue comprising approximately SEK 200 million for existing shareholders.
Rejlers’ dividend-policy, that around 50 per cent of the company’s profit after tax should be distributed as dividend, remains unchanged. However, in view of the fact that the company is conducting a rights issue, the Board is proposing to the Annual General Meeting that no dividend be paid for the financial year. Our long-term goal to improve the operating margin to 8 per cent over time stands fast, as does achieving the growth target of 2020-3030-4040 by focusing on selected areas and on becoming more efficient and more profitable.