Investors

Interim Report Rejlers AB January-March 2018

 

Restructuring strengthens the market position and earnings

First quarter
• Net sales amounted to SEK 603.2 million (629.6)
• Organic sales growth excluding exchange rate fluctuations amounted to -1.7%
• EBITA (adjusted) amounted to SEK 21.5 million (33.0) and the adjusted EBITA margin amounted to 3.6% (5.2)
• Operating profit (EBIT) amounted to SEK 5.1 million (29.7) and the operating margin was 0.8% (4.7)
• Profit after tax was SEK 1.5 million (21.2)
• Earnings per share before and after dilution were SEK 0.07 (1.59)
• Cash flow from operating activities totalled SEK 70.7 million (-10.2)
• Total costs for restructuring amounted to SEK 13.4 million in the first quarter and are estimated to amount to SEK 40 million in the second quarter of 2018

Statement by the President and CEO
With a strong belief in the future, I am pleased to present the interim report for the first quarter of 2018 as the new President and CEO. Rejlers has an established position in the Nordic market with a broad range of services and clear potential to strengthen both its market position and earnings in the future. And we have begun the work of creating a more efficient, profitable and sustainable Rejlers through changes mainly in the Swedish and Norwegian operations. In total, sales decreased slightly in the first quarter while profitability is weighed down by non-recurring costs related to structural changes. The restructuring will also substantially encumber the second quarter earnings. Cash flow was strong during the first quarter.

Change work 
Change is needed to achieve our full potential. We need to become more efficient internally and at the same time more specialized to better be able to challenge and support our customers. We need to revise our strategy and strengthen our brand. It is exciting work we have ahead of us that will be done in stages. The first stage will be to increase operational efficiency.

New organization in Sweden and Norway 
We have already begun the change work by introducing a new organizational model for the Swedish operations. An organization that focuses on industry specialization rather than geography. Our new organization will enter into effect on 1 May and consists of five divisions with a clear mandate: Energy, Buildings, Industry, Infrastructure and Telecom. The reorganization means that the previous matrix organization is disappearing and that the Swedish operations will have a smaller management group. We are now also initiating corresponding changes in the Norwegian operations, where Rejlers Embriq and Rejlers Norway are being combined into one operation.

Sales and profitability 
In the first quarter of the financial year, net sales decreased by 4.1 per cent to SEK 603.2 million (629.6) partly as a result of calendar effects. Adjusted EBITA decreased to SEK 21.5 million (33.0) and was negatively impacted by calendar effects, fewer consultants and a continued low billing ratio. The on-going change work entails restructuring costs, which are charged to the quarter’s profit in an amount of SEK 13.4 million (-). The change work will continue in the second quarter and are estimated to be charged to profit on a magnitude of SEK 40 million. The costs mainly consist of provisions for property contracts where co-location has occurred, closure of loss-generating operations and the discontinuation of several management positions. The rationalization affects all three Rejlers countries and is estimated to provide annual savings of SEK 30 million with full effect as of 2019. The objective is to create an operationally efficient Rejlers with greater focus on the market, profitability and growth.

Personal reflections 
It is inspiring to be on-site – since 22 February – to take Rejlers into the future together with the company’s managers and employees. Rejlers has a 75-year history, nearly 2,000 qualified engineers, a growing partner network and high customer satisfaction. With such a strong platform, my assessment is that we can and will play an even more active role in the digital development of business and society. We will take a position as the “digital innovator”. It is in the border zone between customers, technology and our operations that the future’s digital winners will be created. The aim is to establish the industry’s most exciting workplace with a clear focus on both customer benefit and shareholder value.


Stockholm, May 2018    
Viktor Svensson