Interim report 1 January – 30 September 2023
Q3 2023: Weak operationally. Key strategically.
THIRD QUARTER 2023
- Revenue increased by 56% to SEK 643m (412)
- Operating profit adjusted1 decreased by 37% to SEK -28m (-21)
- Operating profit decreased by 109% to SEK -28m (300)
- Operating margin adjusted1 increased to -4.4% (5.0)
- The result for the period decreased by 124% to
SEK -89m (366)
- Basic earnings per share2 amounted to SEK -6.16 (25.20)
- Cash flows from operating activities amounted to
SEK -88m (240)
JANUARY - SEPTEMBER 2023
- Revenue increased by 54% to SEK 1,948m (1,268)
- Operating profit adjusted1 increased by 29% to SEK -53m (-75)
- Operating profit decreased by 121% to SEK -53m (246)
- Operating margin adjusted1 increased to -2.7% (5.9)
- The result for the period decreased by 104% to
SEK -19m (461)
- Basic earnings per share2 amounted to SEK -1.29 (31.70)
- Cash flows from operating activities amounted to SEK -174m (263)
1 “Adjusted” here and in the rest of this report means excluding the effect of a compensation payment from Volvo of SEK 321m in Q3 2022.
2 Before dilution.
Lars Corneliusson, CEO Ferronordic
Third quarter 2023
“A few days ago, Ferronordic signed an agreement to acquire Rudd Equipment Company, a major Volvo CE dealer in the US, for USD 105m, using a combination of own cash and debt. In 2022, Rudd had sales of USD 308m and an operating income of USD 16.5m. This transaction is transformational. It is a first step into the world’s second largest market for construction equipment and a big step towards rebuilding Ferronordic as a leading service and sales company and key partner to Volvo.
Meanwhile, we have plenty of work to do in our current markets. Operationally, the third quarter 2023 was a setback. Sales increased in both Germany and Kazakhstan, but less than expected, and far below the potential we see. Margins were low, costs were high, and our working capital grew. In Germany, revenue grew by 60% to SEK 574m, but the operating income slipped back to negative and decreased to SEK -16m. Against this backdrop and in the current economic environment, reaching a positive operating result in Germany for the full year 2023 now looks more challenging. In Kazakhstan, revenue grew by 30% to SEK 69m, but operating profit decreased to break-even. As a result, the Group's operating profit for the quarter decreased to
SEK -28m. Net cash decreased to SEK 378m, mainly due to higher working capital and exchange rate effects.
During and after the quarter, we launched initiatives to reduce the Group's costs and bring down working capital. The effects of these measures are expected to become visible in 2024. Most of the cost cuts will be in Germany and mainly affect administrative functions.
Uncertainty about the German economy increased during the quarter. Although there were also some early signs of improvement, higher interest rates and inflation make customers more cautious. The Kazakh market for construction equipment declined despite the economy growing. Longer-term, we however believe that the underlying conditions and business opportunities in our markets are strong. Despite the setback in the third quarter, we remain convinced that our operations in Germany and Kazakhstan have significant potential to grow long-term. Together with our expansion into the US, we therefore look to the future with confidence and optimism.”