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Beijer Ref AB Q3-2018

Continued strong quarter

Net sales for the third quarter of 2018 increased by 41% compared with the corresponding period in the previous year and totalled SEK 3,607 million (2,555).

The operating profit for the third quarter of 2018 totalled SEK 339 million (217), an increase of 57% compared with the same period last year.

The profit for the period totalled SEK 240 million (149).

Profit per share totalled SEK 1.88 (1.16).

Beijer Ref AB and Mitsubishi Heavy Industries Air Conditioning Europe LTD completed the formation of the subsidiary 3D Plus in the UK, with Beijer Ref as the majority shareholder.

The acquisition of the Spanish air conditioning company Lumelco S.A. strengthens the Group’s position in field of air conditioning in Southern Europe.

Repurchases of 181,559 class B shares took place during the quarter. The purpose of the repurchase is to secure access to shares in accordance with the company’s long-term incentive scheme, 2018-2021.

Comments by the CEO

Growing market creates strong quarter

We can look back on another quarter of strong growth. Net sales increased by 41 per cent and the profit increased by 57 per cent compared with the same period in 2017. This is our strongest third quarter ever. Adjusted for acquisitions and currency effects, net sales increased organically by approximately 16 per cent and the profit by 42 per cent. All regions are reporting growth in line with our expectations, although Europe does stand out. Of the European regions, the Nordic region has distinguished itself just a little extra. An unusually warm summer resulted in record net sales and profits for the region, with an organic increase in net sales of 30 per cent, while the profit doubled.

The profit for the quarter shows once again that our market is strong. The F-gas regulation in Europe is accelerating the phasing out of existing refrigerants, known as fluorinated gases, and is one of the main reasons why demand for Beijer Ref’s products is increasing. The phase-out programme is continuing, and we see no signs of reduced activity. The UN recently issued an updated climate report highlighting how urgent it is that global warming remains at a maximum of 1.5 degrees by the year 2100. This is half a degree lower than the goal of the Paris Agreement. Achieving this new goal requires substantially increased measures, according to the IPCC, the UN’s climate panel. Our industry has a great responsibility in this matter and we must be proactive if this goal is to be achieved. Beijer Ref’s focus on developing eco-friendly solutions therefore feels even more urgent. We have a long tradition and a great deal of knowledge of such technology in Europe. We are now passing on this know-how to our companies on other continents. The fact that the economy remains strong also means that end customers are prepared to invest and upgrade their refrigeration and air-conditioning systems to an even greater extent, which benefits us.

We also want to grow through acquisitions in Europe and in the rest of the world. During the quarter, Beijer Ref acquired the Spanish air conditioning distributor Lumelco. This deal consolidates the Group’s position within the HVAC segment in Beijer Ref’s biggest region, Southern Europe. The company distributes several strong brands, but primarily has exclusive distribution rights with Mitsubishi Heavy Industries, one of Beijer Ref’s strategic partners. Strengthening and developing relationships with our main suppliers is in line with our strategy. Lumelco is included in our accounts as of August this year.

During the transfer phase to eco-friendly refrigeration technology, we have seen sharp increases in the price of HFC refrigerants with the most negative environmental impact. These price increases are a direct consequence of the European regulatory framework for the phasing out of F-gases. At present these price rises have slowed down, and the assessment is that prices will remain stable over the next few quarters.

Our logistics chain is one of our strengths, and we are working to create sustainable, modern solutions that deliver efficiency throughout the entire flow. At the beginning of the year we opened a new, large, automated logistics centre in the Netherlands, known as the Beijer Ref Support Center. This enables us to achieve efficiency improvements above all in the areas of purchasing, logistics and back office. As another step in the same direction, we recently opened a similar centre in Auckland, New Zealand. Passing on best practice within the Group is important and an advantage that we want to use to the maximum.

All in all, we are satisfied with the period and we enter the fourth quarter with both humility and strong self-belief. Going forward, we want to grow further. With increased profits, low interest rates and a strong cash flow, we are well placed to make more supplementary acquisitions.

Per Bertland 


Third quarter of 2018


Beijer Ref increased its net sales by 41 per cent to SEK 3,607 million (2,555) in the third quarter of 2018. A strong global economy, favourable weather conditions that increase demand for air conditioning, and price rises in particular for refrigerants have resulted in continued strong growth in net sales. All regions report an increase in net sales of more than 20 per cent in the third quarter. Adjusted for exchange rate changes and acquisitions, organic growth in net sales was 16 per cent. A weakened Swedish krona resulted in currency effects of SEK 195 million (-22), corresponding to 8.8% since most of the company’s net sales take place in currencies other than Swedish kronor.


The Group’s operating profit totalled SEK 339 million (217) during the third quarter, an increase of 57 per cent. The ongoing transition to eco-friendly refrigeration systems had a positive impact on the profit for the period and also resulted in increased demand for HVAC and OEM, which are future growth segments for Beijer Ref. Adjusted for exchange rate changes and acquisitions, the organic improvement in the operating profit was 42 per cent.


Cash flow from operating activities before change in working capital was SEK 829 million during the first nine-month period of 2018, compared with SEK 500 million for 2017, primarily due to the significantly improved profit. Working capital increased by SEK 585 million during the first nine-month period compared with SEK 134 million the previous year. This produces cash flow from operating activities of SEK 243 million, compared with SEK 366 million the previous year. The change in working capital between the years is due primarily to sales growth and some build-up of stocks.


The Group’s investments in fixed assets including business combinations totalled SEK 1,011 million (72) during the first nine-month period and relate primarily to the acquisitions of Tecsa, Heatcraft and Lumelco, which were financed by external borrowing from existing bank partners. During the period the company also invested the net sum of SEK 70 million in the repurchase of own shares after deduction of the option premium received.


On 2 July 2018, Beijer Ref AB and Mitsubishi Heavy Industries Air Conditioning Europe Ltd completed the formation of the subsidiary 3D Plus, with Beijer Ref as the majority shareholder. The new company is now operating under the leadership of a new CEO. 3D Plus’s head office is in Slough, with regional offices planned in the UK and Ireland. The formation of the subsidiary is only having a marginal effect on net sales in 2018, but it is considered to have good growth potential.

The acquisition of the Spanish air conditioning company Lumelco S.A. is included in the company’s accounts as of August and strengthens the Group’s position in the HVAC segment in Beijer Ref’s biggest region, Southern Europe. The company is a long-time distributor of Mitsubishi Heavy Industries’ products in Spain and Portugal, one of Beijer Ref’s strategic suppliers. The company has net sales of approximately SEK 400 million and over 60 employees. The takeover has only a marginal effect on the profit in 2018. The acquisition is, however, expected to generate long-term positive effects in terms of both net sales and profit.

During the quarter, the company exercised the AGM’s authorisation to repurchase its own shares following a decision on a long-term incentive scheme for senior executives. In total, the company repurchased 181,559 shares during the quarter and now holds 774,809 shares at an average purchase value of SEK 107. The incentive scheme runs between 2018-2021. The costs of the scheme are in line with the Board’s proposal and the AGM’s decision, i.e. SEK 8 million, and were charged to the company’s operating profit in 2018.


In the fourth quarter, Beijer Ref AB will establish a commercial paper scheme with a financial envelope of SEK 1,500 million as a complement to Beijer Ref’s bank financing. The organiser of the scheme is Handelsbanken and the issuing agents are Handelsbanken and Nordea. The company will guarantee available credit facilities corresponding to the amount issued.


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 loss of key employees. 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 RFR 2. Beijer Ref continues to apply the same accounting policies and valuation methods as described in the most recent annual report.

Analyses of effects regarding the implementation of IFRS 15 - Revenue from Contracts with Customers and IFRS 9 - Financial Instruments have been performed at both Group and subsidiary level. The analyses show that the new standards do not have any material impact on the Group’s financial statements other than increased disclosure requirements. The prospective method is applied from January 2018.

IFRS 16 Leases – a new leasing standard that comes into effect on January 1, 2019. This standard requires that assets and liabilities attributable to all leases and rental agreements be recorded in the balance sheet. The Group is currently evaluating the effects. The Group’s total assets will increase and at the same time, operating profit will increase compared with the current amount because some of the leasing payments will be recognized as interest expenses. Also, a several of the Group’s key figures will be impacted by the new standard.

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

Malmö, 22 October 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 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 22 October 2018.


Beijer Ref AB (publ), corp. reg. no. 556040-8113


We have reviewed the condensed interim financial information (interim report) of Beijer Ref AB (publ) as of 30 September 2018 and the nine-month period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.


We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.


Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.

Malmö, 22 October 2018

PricewaterhouseCoopers AB

Lars Nilsson                                    Mikael Nilsson

Authorized Public Accountant            Authorized Public Accountant

Auditor in charge

Financial calendar 

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

The Annual Report for 2018 will be published in March 2019.

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

The Interim Report for the first quarter 2019 will be published on 16 April 2019.

The Interim Report for the second quarter 2019 will be published on 12 July 2019.

The Interim Report for the third quarter 2019 will be published on 22 October 2019.