Interim Report Rejlers AB January–September 2017
• Sales increased by 8.9% to SEK 544.9 million (500.3)
• Organic sales growth excluding exchange rate fluctuations amounted to -5.0 %
• EBITA (adjusted) amounted to SEK 3.5 million (7.9) and the adjusted EBITA margin amounted to 0.6 % (1.6)
• Operating profit amounted to SEK 0.5 million (4.9) and the operating margin was 0.1 % (1.0)
• Profit/loss after tax was a loss of SEK 5.7 million (profit: 1.1)
• Earnings per share before and after dilution were SEK -0.37 (0.12)
• Cash flow from operating activities totalled SEK -35.0 million (-24.4)
• Sales increased by 7.8 % to SEK 1,797.9 million (1,667.7)
• Organic sales growth excluding exchange rate fluctuations amounted to 5.3 %
• EBITA (adjusted) amounted to SEK 37.3 million (40.2) and the adjusted EBITA margin amounted to 2.1 % (2.4)
• Operating profit amounted to SEK 15.8 million (21.5) and the operating margin was 0.9 % (1.3)
• Profit after tax was SEK 5.0 million (14.0)
• Earnings per share before and after dilution were SEK 0.33 (1.06)
• Cash flow from operating activities totalled SEK -61.2 million (-27.0)
Statement by the President and CEO
Rejlers is showing good growth at the same time that continued profitability problems have marked the seasonally weak third quarter. The profit decreased as a result of efficiency problems for the telecom operations in Norway, a significant project impairment in Sweden and one working day less in all three countries. At the same time, the billing ratio continued to rise in all segments during the quarter, compared with both the previous year and the first half of 2017. During the quarter, Rejlers Norway implemented the first part of the announced programme of measures to reduce the cost base and improve profitability on the long term.
Growth regained speed in the third quarter with an organic sales growth excluding exchange rate fluctuations of 5 per cent. It is primarily the segments Finland and Embriq that have contributed to the sales increase, while Rejlers Norway reports a negative growth during the quarter. The market continued to develop well, primarily in Finland, and the delivery of smart electric meters contributed to a positive growth in Embriq. The transformation work with the discontinuation of less profitable areas in the Swedish operation is continuing.
Focus on improved efficiency
However, we are still struggling with profitability problems in certain segments and individual transactions. Adjusted EBITA amounted to SEK 3.5 million (7.9), where the decline is mainly attributable to continued profitability problems for Rejlers Norway, a project impairment in the infrastructure operations in Sweden and low efficiency in certain parts of the Swedish industrial operations. Profitability was also negatively impacted by having one working day less, but we also see that the on-going transformation resulted in improved efficiency in several business areas and that the billing ratio increased in all segments during the quarter, compared both with last year and the first half of 2017.
In August, the Board of Directors decided to appoint Viktor Svensson the new President and CEO of Rejlers beginning in the first quarter of 2018. I am very pleased that Viktor has chosen to take over as the CEO. Viktor has extensive experience and thorough expertise in the technical consulting industry and with it a significant understanding of Rejlers’ strategy, our markets and our business areas.
In September, we launched Rejlers Accelerated, a portfolio of new digital solutions adapted to a number of different industries and business areas to be able to meet the customers’ growing needs in digitalisation. Initially, we are offering practical solutions for design, operation and maintenance adapted mainly to the industrial and energy area.
Strong financial position
The quarter’s cash flow of SEK -35 million (-24) from operating activities is mainly due to the losses in Norway and the uneven cash flow in Embriq. We nonetheless have a good equity/assets ratio and are well equipped to continue the on-going transformation work. The demand for our services remains strong in all segments and we are continuing work towards our financial targets through a more efficient organisation and operations.