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G & L Beijer (under a change of name to Beijer Ref) Quarter 1, 2014

  • Net sales amounted to SEK 1,581.0M (1,463.8).
  • Operating profit amounted to SEK 71.3M (48.7).
  • Net profit amounted to SEK 45.6M (32.4).
  • Profit per share amounted to SEK 1.03 (0.70).
  • The positive trend continued for the first quarter with a growth in sales of eight per cent and an improved operating profit of 46 per cent compared with the first quarter in the previous year.
  • Acquisition of the South African refrigeration wholesaler, Eurocool.

Comments by the CEO

Economic thaw in Europe
After a challenging period with a crisis in the European economy and subdued demand during the second half of 2012 and the beginning of 2013, we note with cautious optimism that the first quarter of 2014 confirms a positive trend.

The operating profit of SEK 71.3M shows that we have still some way to go to reach the levels of 2011 and 2012 but, nevertheless, it should be seen as a sign of an improvement. There are several reasons for this. The strongest reason could be that, after many years of economic crisis in Europe, the need for new investments in, and service of, existing refrigeration installations is now becoming so significant that it is no longer possible to postpone them. Furthermore, as the largest refrigeration wholesaler in Europe, Beijer Ref is well positioned to satisfy this requirement.

Among our market regions, the United Kingdom & Ireland must be mentioned as markets to celebrate with strong growth. Spain and Italy have also revived, where a more positive trend has coincided with warm spring weather and the ensuing strong demand for both air-conditioning and refrigeration products.

Interesting development in southern Africa
The work of integrating Eurocool, one of the largest refrigeration wholesalers in South Africa, has been intensive since the company was acquired in January 2014. Beijer Ref has a well-functioning acquisition strategy which, among other things, is aimed at creating synergies as soon as possible with regard to purchasing, distribution and the operation’s costs.

The acquisition strengthens our presence in the rapidly growing market for refrigeration and air-conditioning products is southern Africa. The end customers’ need for investment within all the three market segments within which we operate – commercial refrigeration, industrial refrigeration and comfort cooling – is rapidly increasing and, with our operations in South Africa, Namibia, Mozambique, Zambia and Botswana, we stand well equipped to meet the demand. The fact that Africa will be a significant part of Beijer Ref’s growth in the future is, therefore, a safe prediction to make.

EU at the forefront of natural refrigerants
In March and April this year, the EU Parliament and Council of Ministers, as anticipated, took the eagerly awaited decision to phase out fluorised greenhouse gases from refrigerants. This F-gas ordinance has a large number of time guidelines during the coming decades and will gradually replace the old technology’s greenhouse-effect refrigerants with natural and environmentally sustainable alternatives.  

There are already natural refrigerants based on, for example, carbon dioxide or ammonia and innovations will no doubt continue at an ever increasing pace in the next few years. For Beijer Ref, the EU’s decision is welcome as it puts a badly needed focus on the modern and more environment-friendly refrigeration technology with which we and our collaboration partners are ready to replace the old solutions.

New world, new opportunities – new name
Ever since the brothers Gottfried and Lorens Beijer, for the first time, advertised under the company name ‘G. & L. Beijer’ in Sydsvenska Dagbladet in Malmö in 1878 it has been the company’s name. Thereafter, all other Beijer companies operating in Sweden have developed from this Beijer heritage.

We are building further on this proud trading tradition. However, with an international refrigeration wholesale and air-conditioning operation as the Group’s primary focus, we have chosen to adapt the name in a way which more directly communicates what we do. The proposed new name is Beijer Ref, where Ref is well-known in this sector as an abbreviation for refrigeration. The decision regarding the change of name will be taken at the Annual Meeting of shareholders on 24 April.

Per Bertland
CEO, G & L Beijer AB

About Beijer Ref
G & L Beijer is one of the three largest refrigeration wholesalers in the world and the leading company in Europe. The Group offers competitive and innovative solutions within refrigeration and air conditioning with customer-adapted products, products of its own development and efficient service.

G & L Beijer (under a change of name to Beijer Ref) increased its sales by eight per cent to SEK 1,581.0M (1,463.8) for the first quarter of 2014. Adjusted for exchange rate fluctuations and acquisitions, the organic sales increase was 5.4 per cent.

Beijer Ref operates in three market areas: commercial refrigeration, industrial refrigeration and comfort cooling. The Group splits its operation in the global market into five geographic segments: The Nordic countries, Central Europe (including the United Kingdom and Ireland) Eastern Europe, South Europe and the Rest of the World (currently consisting of southern Africa and Thailand).

Behind the quarter’s sales increase lies increased demand in virtually all of these markets, where Central Europe as well as the United Kingdom and Ireland reported strong growth. Comfort cooling, which accounts for approximately 30 per cent of Beijer Ref’s sales, reported strong growth for the first quarter, partly as a result of the warm spring weather in southern Europe.

The Group’s operating profit amounted to SEK 71.3M (48.7) for the first quarter. The result increase can be explained as a combination of implemented savings measures taken during 2013 and increased sales as a result of accumulated investment needs within commercial refrigeration as well as industrial refrigeration and comfort cooling.

The Group’s financial income/expense amounted to SEK -7.5M (-5.4). Profit before tax was SEK 63.8M (43.3). Profit after tax was SEK 45.6M (32.4). Profit per share amounted to SEK 1.03 (0.70).

Other financial information
Consolidated capital expenditure, including acquisitions, amounted to SEK 28.4M (6.0) for the first quarter of 2014. The largest part of the increase compared with the previous year relates to acquisitions. Liquid funds, including unutilised bank overdraft facilities, were SEK 420.4M (629.1) on 31 March 2014. Shareholders’ equity amounted to SEK 2,467.2M (2,329.5). The net debt was SEK 1,234.8M (1,121.4). The equity ratio amounted to 46.6 per cent (47.4). The average number of employees during the period was 2,158 (2,116).

Significant events during the first quarter
In January, G & L Beijer acquired all the shares in Eurocool (Pty) Ltd, a leading refrigeration wholesaler in South Africa. Eurocool was founded in 1999 and holds a strong market position within G & L Beijer’s priority segments. The company reports sales of approximately SEK 65M and has 36 employees. The acquisition will provide cost synergies, increased efficiency and increased sales volumes through co-ordination with G & L Beijer’s existing operation in southern Africa. The acquisition is deemed to have a marginal positive effect on G & L Beijer’s profit per share in 2014. Eurocool is included in G & L Beijer’s accounts from January 2014.

On 12 March, the EU Parliament voted ‘yes’ to the proposal about a new F-gas ordinance which was confirmed by the Council of Ministers in a vote on 14 April. As a result, the decision to phase out fluorised greenhouse gases (F-gases) has come into force which is predicted to have a positive effect on Beijer Ref through the investments in new technology which the end customers will gradually need to make.

Beijer Ref is well prepared for this changeover to environment friendly refrigerants and is looking forward with confidence to the business opportunities which the new F-gas ordinance will involve.

Risk assessment
The operations of the Beijer Ref Group are affected by a number of external factors, the effects of which on the Group’s operating profit can be controlled to a varying degree. The Group’s operation is dependent on the general economic trend, especially in Europe, which controls the demand for Beijer Ref’s products and services. Acquisitions are normally linked with risks such as, for example, staff defection. Other operating risks, such as agency and supplier agreements, product responsibility and delivery undertaking, technical development, warranties, dependence on individuals, etc., are continually being analysed and, when necessary, action is taken to reduce the Group’s risk exposure. In its operation, Beijer Ref is exposed to financial risks such as currency risk, interest risk and liquidity risk. The parent company’s risk picture is the same as that of the Group. For further information see the Group’s Annual Report.

Financial information
- The Six-Month Report for 2014 will be published on 18 July 2014.
- The Nine-Month Report for 2014 will be published on 22 October 2014.
- The Year-end Report for 2014 will be published in February 2015.
- The Annual Report for 2014 will be published in April 2015.

The Annual Meeting of shareholders will be held on 24 April 2014.

Malmö, 23 April 2014
G & L Beijer AB (publ)
Per Bertland, CEO

For further information, please contact:
Per Bertland
switchboard +46 40-35 89 00, mobile +46 705-98 13 73

Jonas Lindqvist, CFO
switchboard +46 40-35 89 00, mobile +46 705-90 89 04

This interim report has not been the subject of examination by the company’s auditors.

Reporting principles
This interim report has been prepared in accordance with IAS 34, the Annual Accounts Act and RFR 2. G & L Beijer continues to apply the same accounting principles and valuation methods as those described in the latest Annual Report, with the exception of what is stated below.

The Group’s operation is split into operating segments based on how the company’s chief operating decision maker, i.e. the President, monitors the operation. A decision has been taken about a new segment classification when, as from 1 January 2014, the highest executive decision maker monitors the operation based on the following segments: South Europe, Central Europe, the Nordic Countries, Eastern Europe and the Rest of the World.

New and changed standards applicable as of 1 January 2014 are not expected to have any material effect on the financial position of either the group or the parent company.