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Beijer Ref AB Q1-2018

A good start to the year.

Net sales for the first quarter of 2018 increased by 18 per cent compared with the corresponding period in the previous year and amounted to SEK 2,605M (2,218).

The operating profit for the first quarter of 2018 amounted to SEK 172M (107), an increase of 61% compared with the same period last year.

The profit for the period amounted to SEK 121M (72).

Profit per share amounted to SEK 2.77 (1.63).

The acquisition of Tecsa (Pty) Ltd in South Africa is included in the company’s accounts as of 1 March 2018.

Beijer Ref has been granted exclusive rights to distribute Mitsubishi Heavy Industries’ HVAC products in the UK, as well as the distribution rights in Ireland.

During the quarter, Beijer Ref signed an agreement to acquire Heatcraft Australia Pty Ltd. The takeover is expected to take place at the beginning of May 2018.

Comments by the CEO

A strong first quarter.

A good start to the year. That is how the first quarter of 2018 can be summarised. All regions report a double-digit increase in net sales, and the result is our best-ever first quarter. Net sales increased by a total of 18 per cent compared with the corresponding period last year. Organic growth reached almost 13 per cent. At the same time, the profit increased by 69 per cent, a record in our company’s history.

All of our regions except Africa report a double-digit increase in profits compared with the same quarter last year. Africa is still feeling the effects of the weak economic situation, although there are some signs that the market is recovering. Northern, Central and Eastern Europe report profit increases of more than 100 per cent. The shift now under way to sustainable refrigeration and freezer solutions is particularly distinctive in these areas.

This trend can be explained by various factors. One is the strong economy. Even if our products are very much related to food products and therefore relatively insensitive to economic fluctuations, a positive market does of course contribute to our growth.

Another one is the F-Gas Regulation in Europe, which means a gradual phasing out of existing refrigerants, known as fluorinated gases. This Regulation extends until 2030 and is having increasingly noticeable effects on the market. Actors that use refrigeration and freezer systems must plan for a technology shift in which the new technology is based on eco-friendlier alternatives. Beijer Ref is in a good position to provide customers with sustainable solutions, which puts the Group in a favourable position in the market. Only a small part of the market has converted to the new technology. It is therefore our assessment that we have only seen the beginning of the transition.

The quarter also saw a company acquisition, which is a feature of our growth strategy. The fact that in March we were able to conclude an agreement to acquire Heatcraft, one of Australia’s biggest refrigeration wholesalers, which also has a manufacturing unit in China, gives us good opportunities to grow in the Asia Pacific region. The acquisition of the refrigeration wholesaler TecsaReco in South Africa, which we completed at the end of last year, was formally approved during the first quarter and consolidated into our books as of March. It is also pleasing that we have been granted exclusive distribution rights to Mitsubishi Heavy Industries’ HVAC products in the UK, as well as distribution rights in Ireland. Following these acquisitions, the European market will comprise 70 per cent of Beijer Ref’s net sales, while Asia Pacific will account for 20 per cent and Africa for 10 per cent.

Our initiative in the field of OEM manufacturing, primarily of eco-friendly refrigeration systems and condensers, continues according to the agreed plan. We want to pursue innovation and develop new products. Last year we launched a new condenser, CUBO2 Smart, which is an alternative for both refrigeration and freezer installations. Sales are now starting to take off, and I believe that we have designed a high-volume product of the future, which is pleasing. In total, the OEM segment reported growth of around 21 per cent compared with the same period last year.

In recent years we have been methodically expanding our OEM activities under the brand name SCM Ref. This is now established in all of our regions. Building an international platform for our eco-friendly technology is of major strategic importance and something on which we will continue to focus. We are well-positioned if F-gas regulations corresponding to the European one come into force outside Europe. On the same subject, we recently inaugurated a unique training centre – Beijer Ref Academy – near Padua in Italy. It is focused entirely on natural refrigerants and is equipped with the very latest in green technology. We will be inviting both customers and our own employees there in order to study and learn about this important area within our industry. This initiative is our way of showing how seriously we view environmental issues, and I hope that the centre will contribute to increased knowledge in the market in general.

We are growing strongly and have a sense of cohesion in the Group that contributes to our positive development. Thanks to our engaged employees, we can continue to aim even higher.

Per Bertland 

CEO & President

First quarter of 2018


Beijer Ref increased its net sales by 18 per cent to SEK 2,605 million (2,218) in the first quarter of 2018. A favourable economic situation and price rises, especially in refrigerants, have resulted in continued strong growth in demand in our key European markets. All regions report a double-digit increase in net sales in the first quarter. Adjusted for exchange rate changes and acquisitions, organic growth in net sales was 13 per cent.


The Group’s operating profit totalled SEK 172 million (107) during the fourth quarter, an increase of 61 per cent. The phasing-out of refrigerants has resulted in price rises, which combined with continued healthy growth in HVAC and OEM had a positive impact on the profit in the period. Adjusted for exchange rate changes and acquisitions, the organic improvement in the operating profit was 56 per cent.


Cash flow from operating activities before change in working capital was SEK 153 million during the first quarter of 2018 compared with SEK 95 million for 2017, primarily due to the improved profit. Working capital increased during the first quarter by SEK 112 million, compared with a fall in working capital of SEK 88 the previous year. This produces cash flow from operating activities of SEK 41 million, compared with SEK 183 million the previous year. The change in working capital between the years is primarily due to the fact that working capital at the beginning of 2017 was at a higher than normal level, combined with a build-up of refrigerant stocks.


The Group’s investments in fixed assets including business combinations totalled SEK 349 million (21) during the first quarter and relate primarily to the acquisition of the shares in TecsaReco.


The company’s acquisition of TecsaReco, a wholesaler based in South Africa that offers a wide range of products and brands in commercial and comfort refrigeration, air conditioning and spare parts for white goods, is consolidated into the company’s accounts as of 1 March 2018, after the competition authorities in South Africa, Botswana and Namibia gave their approval. Total consideration for the acquired operation in Tecsa amounted to SEK 298 million. The acquired net assets, which mainly consist of stock and operating receivables and liabilities, amounted to SEK 145 million and give a surplus value of SEK 153 million. The surplus value relates to goodwill and other intangibles. Total yearly sales in Tecsa amounts to appr SEK 450 million. The business have around 300 employees and 23 branches. The acquisition has affected the Group’s net sales by SEK 40 million during the

In March 2018 a joint venture was formed between Beijer Ref AB and Mitsubishi Heavy Industries Air-Conditioning Europe, Ltd (MHIAE). Beijer Ref has been granted exclusive rights to distribute Mitsubishi Heavy Industries’ range of air conditioning and heat pumps in the UK, as well as distribution rights in Ireland.

During the quarter, Beijer Ref signed an agreement to acquire Heatcraft Australia Pty Ltd. The company has just over 300 employees and net sales in 2017 totalled approximately SEK 1.1 billion. Sales take place through a large distribution network with more than 65 branches. This transaction sees Beijer Ref doubling its net sales in the Asia Pacific region. The acquisition also includes an operation in Singapore and a manufacturing unit in China.


The Beijer Ref Group’s operations are subject to a number of business environment factors, the effects of which on the Group’s operating profit can be controlled to varying degrees. The Group’s operations depend on general economic trends, primarily in Europe, which determine demand for Beijer Ref’s products and services. Acquisitions are normally associated with risks, for example staff departures. Other operating risks, such as agency and supplier agreements, product liability and delivery commitments, technical development, warranties, dependence on key individuals, etc., are analysed continually. Where necessary, measures are taken to reduce the Group’s risk exposure. In its operations, Beijer Ref is subject to financial risks such as currency risk, interest rate risk and liquidity risk. The Parent’s risk profile is the same as that of the Group. For further information, see the Group’s Annual Report.


This interim report was prepared in accordance with IAS 34, the Swedish Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 2 ‘Accounting for legal entities’. Beijer Ref continues to apply the same accounting policies and valuation methods as those described in the most recent annual report. For more information on accounting policies and future standards applied as from 1 January 2018, see note 2 of the 2017 Annual Report.

This interim report for Beijer Ref AB (publ) has been submitted following approval by the Board of Directors.

Malmö, 23 April 2018

Beijer Ref AB (publ)

Per Bertland, CEO & President

For more information:

Per Bertland, CEO – +46 (0)705-98 13 73

Maria Rydén, CFO - +46 (0)73-429 25 65

This interim report has not been the subject of examination by the Company’s Auditors.

This information is information that Beijer Ref AB is obliged to make public pursuant to the EU Market
Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 08.30 CET on 23 April 2018.

Financial calendar 

The Interim Report for the second quarter 2018 will be published on 13 July 2018.

The Interim Report for the third quarter 2018 will be published on 22 October 2018.

The Interim Report for the fourth quarter 2018 will be published on 30 January 2019.

The Annual Meeting of shareholders will be held on 10 April 2019 in Malmö.

This document is a translation of the Swedish language version.

In the event of any discrepancies between this translation and the original Swedish document, the latter shall be deemed correct.