Lindab International

First quarter 2024

• Net sales amounted to SEK 3,147 m (3,224), a decrease of 2 percent. Organic sales growth was negative by 10 percent while acquisitions contributed positively by 7 percent.
• Adjusted1) operating profit amounted to SEK 225 m (264).
• Operating profit amounted to SEK 225 m (264).
• Adjusted1) operating margin amounted to 7.1 percent (8.2).
• Operating margin amounted to 7.1 percent (8.2).
• Profit for the period amounted to SEK 117 m (180).
• Earnings per share before and after dilution amounted to SEK 1.53 (2.35).
• Cash flow from operating activities amounted to SEK 208 m (355).
• During the quarter Lindab acquired Danish Airmaster and American Vicon. In March, an agreement was signed to acquire the business TGA KlimaPartner in Germany. The acquisition of TGA KlimaPartner was completed in April 2024.

1) Adjusted operating profit/operating margin does not include significant one-off items and restructuring costs.

Lindab’s President and CEO, Ola Ringdahl, comments:

“Lindab Ventilation Systems delivered a stable result in the first quarter despite a continued weak market. Sales and gross margin increased while operating profit showed resilience. Lindab’s ventilation business is growing and three acquisitions were made during the quarter. In Business Area Profile Systems, volumes declined which led to a weak profitability.
 

As in previous quarters, the first quarter was characterised by lower demand in the construction market, particularly in the Nordic region. However, several countries in southern and western Europe have shown relatively good market development, such as France, Italy, Switzerland and Ireland.

Ventilation Systems benefits from energy efficiency

Ventilation Systems has increased sales during the quarter through acquisitions. The underlying market has weakened by around five percent, but despite this the business area achieved an operating margin of 9.6 percent. Adjusted for acquisition costs, the operating margin was 10.0 percent. Selective price increases are being implemented and the cost base is being reviewed to further strengthen profitability.
 

During the quarter, Lindab announced several pilot projects with ventilation ducts in fossil-free steel, which are important milestones for significantly reducing both Lindab’s and customers’ environmental impact. We are experiencing increased demand for sustainable and energy-efficient products, which benefits Lindab’s ventilation business in both the short and long term.

Profile Systems was affected by lower demand

The reduced construction activity in the Nordic region has a direct impact on demand for Profile Systems. The first quarter is the seasonally weakest period for Profile Systems and this year it was also a quarter with fewer working days due to public holidays. Sales decreased by 21 percent, which led to a slighlty negative operating result for the business area. Lindab is implementing price increases and further cost savings to immediately strengthen profitability to an acceptable level. Structural measures are being evaluated.

Prepared for higher demand

Ventilation Systems, which accounted for 80 percent of the quarter’s sales, has withstood the recession well and adapted its costs to the prevailing market situation. When the market turns, Lindab is in a good position to quickly take advantage of higher demand. With investments already made in increased capacity and automatisation, production can increase without major cost increases, leading to a noticeable strengthening of the operating margin.

Acquisition creates conditions for further growth

During the first quarter, the acquisition of Airmaster, the European leader in decentralised ventilation for commercial buildings, was completed. This lays the foundation for a new product area for decentralised ventilation within Lindab, creating another platform for growth. We see Airmaster as the start of more acquisitions with the goal of the product area reaching SEK 2 billion in sales by 2027.
 

During the first quarter, we also acquired Vicon, the US leader in machines for manufacturing of rectangular ventilation ducts. Lindab is currently a leader in machinery for the manufacture of ventilation ducts in Europe. The acquisition doubles the sales of machines for duct production while giving Lindab an expanded foothold in the US, which is a market that has great potential in the longer term.
 

In March, Lindab’s subsidiary Felderer signed an agreement to acquire the operations of TGA KlimaPartner, a German ventilation distributor. With the acquisition, Lindab strengthens its sales and distribution in northern Germany. Germany has grown to become the largest single ventilation market for Lindab and has thus passed Sweden in sales.

With a continued strong cash flow and a good financial position, more acquisitions will be added to Lindab in 2024.

Lindab - a leading European ventilation company

For 2027, the goal is to achieve sales of SEK 20 billion with at least a 10 percent operating margin. Growth will take place within Ventilation Systems, in a combination of organic growth and acquisitions. The core of Profile Systems will be refined, especially in Scandinavia where there are significant synergies between our operations. Product areas and geographies that do not meet our high standards of organic growth and stable profitability will be evaluated.

The market may begin to recover in 2024

The market situation is subdued, with many paused projects and uncertainty about the cost of financing. The accumulated need is high and if interest rate cuts take place during the summer of 2024, it will probably lead to an increased willingness to invest, which will benefit the construction industry. Lindab believes in gradually increasing volumes during the second half of 2024, from a low level. From 2025, our assessment is that the ventilation market will enter a multi-year growth phase.”

Press and analyst meeting:

A live webcast will be held at 10:00 am (CEST) on May 3. The Interim Report will be presented by Ola Ringdahl, President and CEO, and Lars Ynner CFO.

If you wish to participate via webcast please use the link below.

Lindab Q1 Report 2024 (financialhearings.com)

If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.

Call Access (financialhearings.com)