Inwido

Fourth quarter

• Net sales amounted to SEK 2,273 million (2,613), down 13 percent. Organic growth amounted to negative 21 percent.
• Total order intake was unchanged, while the order backlog increased to SEK 1,937 million (1,583) as of December 31.
• Operating EBITA amounted to SEK 290 million (315) and the operating EBITA margin increased to 12.7 percent (12.1).
• Earnings per share amounted to SEK 3.20 (4.11).
• Net debt amounted to a multiple of 0.9 in relation to operating EBITDA (0.6 excluding IFRS 16).
• Fredrik Meuller was appointed the new President and CEO and will be taking office on April 10, 2024. CFO Peter Welin is the acting President and CEO from the beginning of the year.

January–December 2023

• Net sales amounted to SEK 8,970 million (9,547), down 6 percent. Organic growth amounted to negative 14 percent.
• Operating EBITA amounted to SEK 1,027 million (1,090) and the operating EBITA margin was 11.4 percent, unchanged compared with the preceding year.
• Cash flow from operating activities strengthened to SEK,153 million (1,071).
• Return on operating capital amounted to 15.4 percent (18.3).
• Earnings per share amounted to SEK 11.72 (13.74).
• The Board of Directors proposes a dividend of SEK 6.50 (6.50).

CEO comments:
After more than 25 years in the company, I am writing my first CEO’s comments, and I can state that the the rapid decline in volume witnessed in the market in 2023 is extraordinary and something I have never seen before. The slowdown, which is primarily associated with new build in Sweden and Finland, has impacted both order intake during the year as well as sales during the fourth quarter. The fact that Inwido is not only succeeding in defending its margins under these circumstances, but is also strengthening them, is something I’m proud of. At the same time as we are working on a market that remains challenging, we are also now in the midst of the cold winter months, when consumers are less likely to replace their windows. It is therefore reassuring to note that, in addition to delivering stable profitability, we are also strengthening our cash flow and finishing the year with continued low indebtedness, despite the fact that we completed our largest acquisition to date during 2023.

During the last quarter of the year, net sales were down 13 percent (negative 21 percent organically) to SEK 2,273 million (2,613). Operating EBITA amounted to SEK 290 million (315) and the operating EBITA margin rose to 12.7 percent (12.1). The increase in the gross margin for the fourth consecutive quarter is due to lower production costs in our units and a more favorable mix. The reduced volumes have also been compensated by implemented savings in fixed costs. Total order intake is unchanged compared with the corresponding quarter last year (down 6 percent adjusted for acquisitions).

As regards financial targets, our return on operating capital decreased to 15.4 percent, although it is still above the target of 15 percent. In the key ratios for sustainability work, unit-related figures are being challenged by lower production volumes. The key ratios for health, safety and sick leave improved in the quarter. It is gratifying to note that the 75 percent target for employee satisfaction was achieved in the Group’s annual employee survey, Great Place to Work, conducted in November.

Business Area Scandinavia operated in a continued weak market over the quarter, resulting in sales decreasing by 21 percent. The profitability trend was stable with a gradual improvement in the gross margin. The operating EBITA margin was largely unchanged at 15.0 percent (14.8), compared with the corresponding quarter last year.

Business Area Eastern Europe shows significantly increased profitability, resulting in an operating EBITA margin of 14.5 percent (11.0), driven by the full impact of price increases and the continued favorable cost control and adjustment of plant costs.

The volumes were under great pressure, however, which is illustrated by a 34 percent decline in sales over the quarter. It is primarily the new build market in Finland that is losing volumes.

Business area e-Commerce operates in a highly competitive market. Sales and order intake were unchanged in the quarter, while the margin decreased to 5.0 percent (8.6). The Danish Chamber of Commerce, recently released its index report for e-commerce in Denmark in 2023. The report describes a challenging market characterized by cautious consumers, increased costs and strong price pressure. In this environment, the Danish brands working within e-commerce are beating the indices for all the parameters, which may be considered a proof of our strength.

Business Area Western Europe was also positively impacted during the fourth quarter by the recently acquired Sidey Group. Over the quarter, the business area’s sales increased by 86 percent, operating EBITA increased by an impressive 174 percent and the margin increased to 10.8 percent (7.3). Despite these good figures, we can observe that the consumer market in the UK in particular is under pressure. Two of the five largest players in the field of windows and doors went bankrupt during the second half of the year, which at the same time is creating opportunities for Inwido’s business units. The market in Ireland has remained stable, on the other hand, and our business unit there performed well during the quarter.

Outlook
In the short term, we are anticipating a market that will remain challenging with low activity in relation to new build and
consumers, and which, in addition to the general market situation, is being affected by the unusually cold and snowy winter. There are positive signs, however, namely that interest rates appear to have peaked and inflation is dropping back. Our task is to maintain good cost control and be flexible in our planning, at the same time as driving the initiatives that will develop the business.

The outlook in the slightly longer term remains positive, and the green transition is promoting growth. There is a great deal of interest in energy efficiency, both among consumers and politicians. The EU’s clear ambition to enhance energy performance in properties over the upcoming years means that there are still favorable growth opportunities for energy-efficient windows and doors. 

Inwido is continuing to stand firm in a time of uncertainty. Our stable profitability, healthy cash flows and strong balance sheet demonstrate the strength of our business model and are enabling continued investments despite a challenging market.

MALMÖ, FEBRUARY 8, 2024
Peter Welin, CFO and acting President & CEO