Second quarter

• Net sales amounted to SEK 455.7 M (471.4), a decrease of 3 percent, of which -8 percent was organic growth
• EBITA amounted to SEK 57.6 M (64.6), corresponding to a margin of 12.6 percent (13.7)
• EBIT amounted to SEK 50.9 M (61.5), corresponding to a margin of 11.2 percent (13.0)
• Items affecting comparability amounted to SEK -4.0 M (-0.7)
• Profit before tax amounted to SEK 41.5 M (48.3)
• Earnings per share amounted to SEK 0.93 (1.10)
• Free cash flow amounted to SEK 100.3 M (25.5)
  

First half year

• Net sales amounted to SEK 931.4 M (959.5), a decrease of 3 percent, of which -6 percent was organic growth
• EBITA amounted to SEK 121.6 M (138.0), corresponding to a margin of 13.1 percent (14.4)
• EBIT amounted to SEK 112.4 M (131.7), corresponding to a margin of 12.1 percent (13.7)
• Items affecting comparability amounted to SEK -4.0 M (-1.3)
• Profit before tax amounted to SEK 93.3 M (114.9)
• Earnings per share amounted to SEK 2.12 (2.90)
• Free cash flow amounted to SEK 89.4 M (79.5)
  
  

CEO comment
Working together and close to our customers, product development and efficiency have been the focus of our work during the second quarter of 2023. Despite a challenging market, we have succeeded in strengthening the gross margin to 42.3 percent, (41.1 percent) and strengthened the cash flow SEK 106 M (SEK 38 M), which reflects our focus on compensating for the cost increases we have had. Our strategic focus areas of customer relations, product development and efficiency are central to ensuring a long-term success for our business.

Profit development and growth
Turnover decreased by 3 percent to SEK 456 M compared to the same period in the previous year. This is attributed to an organic growth of -8 percent, which reflects the negative growth that we faced in the Nordic markets. We are actively working to manage the effects that higher interest rates and inflation have on our business and achieved an EBITA margin of 12.6 percent.

Roper Rhodes develops strongly
We have seen a varied development within our various brand companies and markets. In the UK, Roper Rhodes continues to exceed our expectations, increasing both its profitability and reporting an organic sales increase of 5 percent in the quarter. This in what we believe is a declining British market. Sales success is based on successful product launches, successful sales efforts, and strong customer relationships.
Svedbergs continues to experience a decline in demand within the sales channels bathroom specialists and building trade and a slowdown within professional contracts as a result of a more strained market situation. Even in Macro Design, we see a lower demand in both Sweden and Norway.
Despite the market situation, Cassøe continues to report high profitability, which is also driven by a focus on strengthening customer relations with a strengthened product offering.

Cost control and efficiency
We continue to work towards operational excellence through efficiency and cost control. Early price adjustments at the beginning of the year have contributed to improved gross margin and in line with what we communicated in the first quarter further price adjustments will be implemented by Roper Rhodes at the beginning of Q3. We also expect the reduced freight costs, which we reported on previously this year, will have a positive effect during the third quarter of 2023. Our investment in the production facility in Dalstorp is progressing according to plan and the production line will be put into operation during Q3. When we have tuned the facility, it will contribute to increased flexibility regarding product variety and provide the opportunity to insourcing between our brand companies.

The strength of a comprehensive sales channel mix
By being active in several markets and having a comprehensive sales channel mix, we can achieve a spread of risk in our sales. A good example of this is the development in Roper Rhodes, which in a challenging time is strengthening its position in the British market. It is important to highlight that approx. 15 percent of our sales come from large company contracts, the remaining approx. 85 percent are minor renovations and constructions. We can continue to state that the demand for renovations, maintenance and improvements to bathrooms is the driving force for our sales in the quarter.

Sustainability work in focus
I am proud that we have reduced our CO2 emissions by roughly 14 percent in the year 2022, compared to the base year 2021 in relation to net sales. This significant progress is the result of Svedbergs Group's focused work and commitment to reducing our climate impact and contributing to a more sustainable future. We are determined to take our responsibility to fight climate change and reduce our carbon dioxide emissions. By implementing the GHG protocol, which includes scope 1, 2 and 3 emissions, we have gained a comprehensive overview of our emission sources and have taken steps to reduce them. Our goal is to reduce our CO2 emissions with 50 percent in relation to net sales by 2030 with a base year of 2021.

Future prospects
In conclusion, I can state that the second quarter of 2023 has been challenging, but we have demonstrated our ability to adapt and deliver stable results. We will continue to focus on strengthening customer relations, product development and efficiency to create growth and long-term profitability. We see a challenging future and are proactively managing it in the best possible way while carefully following developments. By being adaptable, we are well equipped to face future challenges on our journey towards our goal of becoming the leading bathroom group in Northern Europe.