Lindab International AB (publ) Interim Report January - June 2020

Lindab's adjusted operating margin increased during the second quarter, while net sales decreased due to restrictions related to covid-19. All business areas showed strong results under prevailing circumstances, with Profi le Systems increasing both net sales and the operating margin.

The covid-19 impact on Lindab was mainly related to the extent of each country's restrictions, and thus to the effect on the construction activity, rather than changes in demand for specifi c products. The assessment is that covid-19 will continue to have a dampening effect on sales for the rest of the year.

Second quarter 2020 January - June 2020

Net sales decreased by 14 percent to SEK 2,218 m (2,569). Organically, sales declined with 12 percent.
Adjusted1) operating profi t decreased by 7 percent to SEK 222 m (238).
Operating profi t amounted to SEK 148 m (238).
Adjusted1) operating margin increased to 10.0 percent (9.3).
Operating margin amounted to 6.7 percent (9.3).
Profi t for the period amounted to SEK 76 m (181).
Earnings per share, before and after dilution, amounted to SEK 1.00 (2.38).
Cash fl ow from operating activities increased to SEK 295 m (177).
In June Lindab acquired 95 percent of the Irish ventilation company Smofi r Trading Ltd., licensor of the technology under the trademark Thor Duct.
The quarter includes one-off items and restructuring costs of SEK -74 m (-) due to Lindab´s strategic decision to close the IMP Klima Group.
Net sales decreased by 7 percent to SEK 4,550 m (4,884). Organically, sales declined with 7 percent.
Adjusted1) operating profi t decreased by 6 percent to SEK 406 m (430).
Operating profi t amounted to SEK 332 m (430).
Adjusted1) operating margin increased to 8.9 percent (8.8).
Operating margin amounted to 7.3 percent (8.8).
Profi t for the period amounted to SEK 212 m (323).
Earnings per share, before and after dilution, amounted to SEK 2.78 (4.23).
Cash fl ow from operating activities increased to SEK 321 m (256).

Key Figures	2020 Apr-Jun	2019 Apr-Jun	Change, %	2020 Jan-Jun	2019 Jan-Jun	Change, %
Net sales, SEK m	2,218	2,569	-14	4,550	4,884	-7
Adjusted1) operating profi t, SEK m	222	238	-7	406	430	-6
Operating profi t, SEK m	148	238	-38	332	430	-23
Adjusted1) operating margin, %	10.0	9.3	-	8.9	8.8	-
Operating margin, %	6.7	9.3	-	7.3	8.8	-
Profi t for the period, SEK m	76	181	-58	212	323	-34
Earnings per share, before and after dilution, SEK	1.00	2.38	-58	2.78	4.23	-34
Cash fl ow from operating activities, SEK m	295	177	66	321	256	25

1) Adjusted operating profi t/operating margin does not include signifi cant one-off items and restructuring costs. See 'Reconciliations' page 21.

A word from the CEO

Photo: Mette Ottosson

Lindab shows strength during the quarter, in very challenging times. Thanks to rapid cost saving measures, Lindab delivers a good result and strengthened operating margin. Our customer-oriented organisation has shown strong delivery performance and we have continued to maintain a high pace in the investment program.

Sales have been negatively affected by lockdowns of several of Europe's major economies, as a consequence of the corona pandemic.

Recovery in June

During the month of June, we have seen a recovery when countries have re-opened and construction activity in Europe has gradually increased. Lindab's employees have made every effort to help the thousands of customers around Europe who depend on our deliveries to do their everyday job. We can proudly say that we have stayed open throughout the crisis and kept our promises to customers. Delivery performance has been exceptionally high thanks to our customer-oriented production and distribution systems.

Continued investments

Improved profi tability and a strong balance sheet enable Lindab to continue the strategic investments. We continue to develop new products and digital solutions for the future. The pace is high in the investment program, which increases our productivity and capacity within prioritised product segments. The returns on these investments are good.

Acquisitions strengthen Lindab

Bolt-on acquisitions are an important part of the strategy. In June, Thor Duct was acquired to strengthen Lindab's position in fi re and smoke protection ventilation systems in Ireland and the United Kingdom.

In early July, Lindab acquired Crenna, a leader in rectangular ventilation ducts in Sweden. With the acquisition, Lindab and Crenna can together offer customers throughout Sweden a complete range of ventilation ducts and accessories.

In our effort to increase the profi tability of the Lindab Group, we decided at the end of June to close IMP Klima in Slovenia. The company that manufactures air handling units was acquired in 2015 and has shown weak profi tability for many years. The corona crisis

further worsened the situation. We do not see a reasonable path to profi tability and growth for IMP Klima. Operations will be discontinued during this year.

We create a sharper Lindab by investing in areas with growth potential where we have high competence, at the same time as we remove unprofi table operations outside our core competencies. In our decentralised structure, high demands are put on all business units to deliver the highest customer satisfaction and results in line with the Group's goals.

Maintained dividend to shareholders

At Lindab's Annual General Meeting on 29 April, it was decided that Lindab would pay as large dividend this year as last year (SEK 1.75 per share). Although lower than what was originally proposed, the Board's aim was to fi nd a balance between short-term caution with cash fl ow, and the long-term shareholder interest. Lindab demonstrates that we care about customers, employees and shareholders, even in tough times.

Well positioned for the future

When we now look ahead, we assess that the general market situation over the next year will be subdued compared to the situation before the crisis. However, the long-term demand for Lindab's ventilation products benefi ts from an increased interest in solutions that reduce energy consumption and create healthy indoor environments. EU's directives for renovation and new construction of buildings, as well as miscellaneous new support packages, have increased the demand for high quality ventilation products.

Lindab's employees have shown that they can grow in a crisis. A decentralised organisation has enabled quick decisions. Our local managers have taken great responsibility for employees, customers and results. Together we shape a Lindab that is ready for a new global environment. Thank you to all employees for your efforts during this diffi cult time.

Grevie, July 2020

Ola Ringdahl President and CEO

Covid-19

Lindab has the construction industry as its primary target segment and sales are concentrated in Europe with less than two percent of sales outside of Europe. Sales are affected by activity in the European construction industry, with emphasis on the countries in Northern Europe.

Lindab is today present in Europe with 128 branches in 31 countries and more than 3,000 independent retailers. The largest market is the Nordic region, which represented 43 percent of sales in 2019.

During the second quarter, Lindab was primarily affected by closed construction sites in Italy, France, UK, Ireland, Belgium and Poland. Demand for Lindab's products on the Nordic construction market has remained stable.

Lindab's goal is to keep factories, distribution centers and sales channels open as far as possible. Lindab customers value high availability and delivery precision. By ensuring that critical deliveries can be made, Lindab strengthens its competitiveness and increases customer loyalty. During the second quarter, operations were open in all countries, with reduced opening hours and staffi ng in the countries with the lowest construction activity.

Deliveries in Europe have worked well despite increased border controls and lack of drivers. Lindab has good possibilities to secure deliveries to customers thanks to over 30 production facilities around Europe. Stock levels have increased to further reduce the risks. Lindab has limited dependency on raw materials and components from countries outside

Europe, which reduces the risk of transport disruptions. Alternative suppliers have been used when deemed necessary and this has thus reduced the dependency on individual suppliers.

At Lindab's facilities, routines have been introduced to prevent the spread of infections and to increase the safety of employees. A few cases have been identifi ed among Lindab employees, but further spread of infection to colleagues has been prevented in all cases. Protective equipment has been put on stock to secure future availability.

Lindab's assessment is that covid-19 will affect sales negatively during the rest of the year. Construction projects are delayed or postponed and is it is unclear how long and to what extent restrictions will last.

Lindab has also initiated measures to reduce costs and to utilise the support measures implemented by several European countries. Short time work has been implemented in countries where revenue and production have been impacted the most.

Lindab has a strong fi nancial position. Effi ciency measures in 2018 and 2019 have resulted in a solid balance sheet and a strong result. The development is closely monitored and Lindab continuously evaluates different scenarios to be able to adapt operations to prevailing circumstances.

Long-term fi nancial targets

Annual growth, 5–8% Net debt / EBITDA, <3,0 1) Operating margin, 10%

1) Organic and acquired growth.

2) Rolling 12 Months (R12 M).

Q2 2020

3) Excluding the effect of implemented new accounting standard IFRS 16 Leases, operating margin amounted to 9.0 percent in 2019 and 9.1 percent in 2020.

4) Excluding the effect of implemented new accounting standard IFRS 16 Leases, net debt to EBITDA amounted to 1.0 in 2019 and 0.9 in 2020.

Sales, profi t and cash fl ow

Sales and markets

Net sales during the quarter amounted to SEK 2,218 m (2,569), a decrease of 14 percent. Organically, sales decreased by 12 percent and currency effects had a negative impact on growth by 2 percent.

The quarter began with a subdued sales development due to the imposed restrictions related to covid-19, primarily in the regions Western and Eastern Europe. As the restrictions have been eased, a steady recovery of the sales volumes has taken place, especially at the end of the quarter. The Group's largest region in terms of sales, the Nordics, has had a lower degree of limitations than the rest of Europe. Therefore, the Nordics showed continued positive organic sales growth, while all other regions reported reduced sales during the quarter.

Sales growth varied between the segments during the quarter. Profi le Systems reported continued strong organic growth while Ventilation Systems and Building Systems had negative organic sales development. Profi le Systems' continued positive growth was mainly driven by increased sales of major industrial projects in the Nordics. Ventilation Systems had a negative sales development, as the segment has a greater exposure to those European markets which have been completely or partly closed, at the beginning of the quarter due to covid-19. Sales in Building Systems decreased during the quarter, mainly explained by particularly large deliveries to primarily Western Europe during the corresponding period previous year, but also because of delayed projects as a result of covid-19.

Net sales during the period January-June amounted to SEK 4,550 m (4,884), a decrease of 7 percent compared with the corresponding period previous year. Organically, sales decreased by 7 percent, while neither currency effects nor structural changes had any noticeable effect on growth.

Profi t

Adjusted operating profi t for the quarter amounted to SEK 222 m (238). Operating profi t is adjusted for one-off items and restructuring costs, amounting to SEK -74 m (-), see Reconciliations on page 21. Adjusted operating margin for the quarter increased to 10.0 percent (9.3).

Profi le Systems' adjusted operating profi t increased to SEK 92 m (60), while the adjusted operating profi t in Ventilation Systems amounted to SEK 125 m (163) and Building Systems amounted to SEK 15 m (27).

The improved adjusted operating margin is mainly a result of reduced operating costs but also strengthened gross margin. A smaller part of the reduced operating costs are related to received governmental grants. The Group's slightly lower adjusted operating profi t, compared with the historically strong second quarter previous year, is mainly explained by reduced sales volume due to covid-19. The adjusted operating profi t in the quarter was particularly strong in Profi le Systems, primarily driven by volume growth and lower costs.

The quarter is affected by one-off items and restructuring costs of SEK -74 m (-), which are related to Lindab's strategic decision to close IMP Klima in Slovenia and its subsidiaries in Serbia, Montenegro and Bosnia-Herzegovina. This is reported as other operating expenses. Of the amount, SEK 55 m is related to impairment losses, of which SEK 32 m is related to properties, see Reconciliations page 21. Lindab acquired IMP Klima in 2015 to establish a presence in the market for air handling units. IMP Klima Group has had a weak development and covid-19 has further worsened the situation. Sales in 2019 amounted to SEK 269 m and were reported as part of Ventilation Systems. A total of 226 employees will be affected.

Profi t for the quarter amounted to SEK 76 m (181). Earnings per share amounted to SEK 1.00 (2.38).

Adjusted operating profi t for the period January-June amounted to SEK 406 m (430). Operating profi t is adjusted for one-off items and restructuring costs, amounting to SEK -74 m (-), see Reconciliations on page 21. Adjusted operating margin increased to 8.9 percent (8.8).

Profi t for the period for January-June amounted to SEK 212 m (323) and earnings per share amounted to SEK 2.78 (4.23).

Seasonal variations

Lindab's business is affected by seasonal variations in the construction industry, and the highest proportion of net sales is

Net sales, SEK m Adjusted operating profi t, SEK m

Sales, profi t and cash fl ow (cont.)

normally seen during the second half of the year. The largest seasonal variations can be found in the segments Profi le Systems and Building Systems. Ventilation products are mainly installed indoors which is why the Ventilation Systems segment is less dependent on season or weather conditions.

There is normally a deliberate stock build-up of mainly fi nished goods during the fi rst six months, which gradually becomes a stock reduction during the second half of the year, as a result of increased activity within the construction market.

Depreciation/amortisation and impairment losses

Depreciation/amortisation for the quarter amounted to SEK 99 m (98), of which SEK 7 m (7) was related to intangible assets and SEK 57 m (54) to right of use assets related to rental and leasing agreements. Impairment losses of SEK 42 m due to decided structural changes have been reported in the period, of which SEK 32 m was related to properties. The impairment losses have been reported as other operating expenses in the income statement, of which SEK 40 m was classifi ed as one-off items and restructuring costs. In the corresponding period previous year impairment losses of SEK 3 m was reported.

For the period January-June depreciation/amortisation amounted to SEK 197 m (193), of which SEK 14 m (13) was related to intangible assets and SEK 114 m (107) to right of use assets related to rental and leasing agreements. Impairment losses of SEK 42 m due to decided structural changes have been reported in the period, of which SEK 32 m was related to properties. The impairment losses have been reported as other operating expenses in the income statement, of which SEK 40 m was classifi ed as one-off items and restructuring costs. In the corresponding period previous year impairment losses of SEK 3 m was reported.

Tax

Tax on profi t for the quarter amounted to SEK 63 m (47). Earnings before tax was SEK 139 m (228). The effective tax rate amounted to 45 percent (21). The average tax rate was 20 percent (20). The higher effective tax rate during the quarter, compared to previous year, was mainly explained by the fact that Lindab was not able to fully recognise carry-forward tax losses in order to reduce the total tax on profi t. The carry-forward tax losses were mainly attributable to recognised restructuring costs related to the decision to close down the IMP Klima Group. Furthermore, the effective tax rate during the quarter has been impacted by withholding tax. The higher effective tax rate compared to the average tax rate is explained by the same reasons.

Tax on profi t for the period January-June amounted to SEK 103 m (87). Earnings before tax was SEK 315 m (410). The effective tax rate amounted to 33 percent (21). The average tax rate was 20 percent (20). The higher effective tax rate during the period, compared to previous year, was mainly explained by the fact that Lindab was not able to fully recognise carry-forward tax losses in order to reduce the total tax on profi t. The carry-forward tax losses were mainly attributable to recognised restructuring costs related to the decision to close down the IMP Klima Group. Furthermore, the effective tax rate during the period has been impacted by withholding tax. The higher effective tax rate compared to the average tax rate is explained by the same reasons.

Cash fl ow

During the quarter, cash fl ow from operating activities improved with SEK 118 m and amounted to SEK 295 m (177). The improvement was mainly related to change in working capital, which had a positive cash fl ow of net SEK 41 m (-117). In comparison with the same period previous year, the largest positive cash fl ow effects from working capital was attributable to the settlements of accounts receivables, other current liabilities, and customer advances from customers within Building Systems. Cash fl ow before change in working capital amounted to SEK 254 m (294). Operating profi t decreased during the quarter to SEK 148 m (238) but included non-cash fl ow affecting impairment losses/provisions of SEK 74 m attributable to the decision to close down IMP Klima Group.

Cash fl ow from fi nancing activities amounted to SEK -143 m (-50) for the quarter. The main explanation for the lower cash fl ow was the change in borrowings and utilisation of credit limits. At the same time, the Group had a lower dividend paid to shareholders, amounting to SEK -67 m (-134) during the quarter. At the Annual General Meeting in April 2020 it was decided that dividends to shareholders will be paid at two occasions during the year, in

Cash fl ow from operating activities, SEK m

Sales, profi t and cash fl ow (cont.)

May and November, respectively. The total amount of dividend resolved is on the same level as previous year.

For the period January-June, cash fl ow from operating activities improved by SEK 65 m and amounted to SEK 321 m (256). The outcome was mainly related to change in working capital, which amounted to SEK -160 m (-266). In comparison with the same period previous year, the positive development from working capital was mainly related to a minor change of capital tied up in stock and accounts receivable. Cash fl ow before change in working capital amounted to SEK 481 m (522). The underlying operating profi t amounted to SEK 332 m (430), but included non-cash fl ow affecting impairment losses/provisions of SEK 74 m attributable to the decision to close down IMP Klima Group compared with the same period previous year.

Cash fl ow from fi nancing activities for the period January-June amounted to SEK -110 m (-2). The development is mainly explained by a lower change in borrowings and utilisation of credit limits. At the same time, the dividend paid to shareholders was lower than in the previous year.

Cash fl ow from investing activities is explained under the headings 'Investments' and 'Business combinations'.

Investments and fi nancial position

Investments

Investments in intangible assets and tangible fi xed assets for the quarter amounted to SEK 67 m (82), of which SEK 4 m (2) related to investments in intangible assets. The comparison period included the acquisition of the previously leased real estate in Switzerland of SEK 45 m.

Cash fl ow from investing activities, excluding business combinations, amounted to SEK -66 m (-80). The net cash fl ow included a positive effect from the divestment of tangible fi xed assets amounting to SEK 1 m (2).

For the period January-June, investments in intangible assets and tangible fi xed assets amounted to SEK 200 m (127), of which SEK 11 m (5) related to investments in intangible assets. The increased investments in tangible fi xed assets were mainly a result of the Group's objective to increase effi ciency and capacity in the production facilities.

Cash fl ow from investing activities, excluding business combinations, amounted to SEK -199 m (-124) for the period January-June. The net cash fl ow included a positive effect from the divestment of tangible fi xed assets amounting to SEK 1 m (3).

Business combinations

On June 5, 2020, Lindab acquired 95 percent of the Irish company Smofi r Trading Ltd. The business is mainly focused on licensing of certifi ed fi re ductwork systems and component sales related to these systems. The technology is licensed under the brand of Thor Duct. The acquisition is a step to further strengthen the offering in ventilation systems in Ireland and the UK. The company is registered in Dublin, Ireland and has an annual sales of approximately SEK 21 m.

For more information about above mentioned acquisition and company acquisitions during the second quarter of 2019, see Note 4.

Financial position

Net debt amounted to SEK 1,859 m (2,262) on 30 June 2020. Currency effects decreased net debt by SEK 126 m during the quarter compared to an increase by SEK 21 m in the corresponding period previous year.

The equity/assets ratio was 53 percent (49) and the net debt/ equity ratio was 0.4 (0.5). Financial items for the quarter amounted to SEK -9 m (-10). The improvement is mainly explained by lower net debt.

The current credit limits of SEK 1,400 m with Nordea and Danske Bank and EUR 50 m from Raiffeisen Bank International are valid until the third quarter 2022. The agreements contain covenants, which are monitored quarterly. Lindab fulfi lled all the conditions as at 30 June 2020.

Pledged assets and contingent liabilities

No signifi cant changes have been made in pledged collateral and contingent liabilities during the second quarter 2020.

Investment programme

Lindab has increased the rate of investments in production automation in order to achieve increased capacity, effi ciency and safer work environment.
In the second quarter further investments were made within Ventilation Systems, e.g. automation of production in the Czech Republic and Denmark.
During the second quarter in the previous year, the acquisition of the previously leased real estate in Switzerland was included with SEK 45 m.

Other

Parent company

Lindab International AB (publ), corporate identifi cation number 556606-5446, is a registered limited liability company with its domicile in Båstad, Sweden. Lindab´s shares are listed on Nasdaq Stockholm, Mid Cap.

Net sales for the quarter amounted to SEK 2 m (1). Loss for the period amounted to SEK 1 m (-1).

Net sales for the period January-June amounted to SEK 3 m (2). Loss for the period amounted to SEK 2 m (-1).

Signifi cant risks and uncertainties

There have been no significant changes to what was stated by Lindab in its Annual Report for 2019 under Risks and Risk Management (pages 52-54). Additionally, risks related to covid-19 has arisen in 2020, see page 3 and Note 2.

Employees

The number of employees at the end of the quarter, calculated as full-time equivalent employees, was 4,981 (5,277). Adjusted for acquisitions and divestment, the net decrease was 284 employees compared with the corresponding period of the previous year. The majority of the decrease is related to short term work due to covid-19.

Incentive programme

At the Annual General Meeting in April 2020, guidelines for the remuneration of senior executives were adopted. According to the adopted guidelines, the remuneration programme for these individuals shall among other things include variable cash pay elements. These variable elements shall be based on measurable criteria, which refl ects predetermined fi nancial and qualitative targets for Lindab. Based on the resolution at the Annual General Meeting, a long term incentive programme has been implemented. The programme has a three year measuring period and any outcome in terms of long term variable cash pay is presumed to be invested in shares or share related instruments in Lindab on market terms. The total cost in the event of maximum outcome for the three year measuring period of 2020 to 2022 was estimated at SEK 13 m. At the Annual General Meeting in 2018 and 2019, long term incentive programmes were respectively adopted, with essentially the same principles as the above decided programme. These programmes measuring period are 2018-2020 respectively 2019-2021.

Share option programme

At the Annual General Meeting in April 2020, it was resolved to establish a share option programme for senior executives in Lindab through a directed issue of maximum 275,000 share options. As a result of this programme, 210,000 share options have been acquired by senior executives in Lindab, according to a market valuation determined on the basis of the agreement. Each share option entitles the holder to acquire one share in Lindab at a strike price of SEK 101.90. Acquisitions of shares supported by share options may take place after Lindab has published the Q2 interim report for the year 2023 and up until 31 August of the same year. At the Annual General Meeting in 2017, 2018 and 2019, respectively, there were also resolutions to implement share option/warrant programmes for senior executives. From the 2017

warrant programme, there are 25,000 outstanding options with a subscription price of SEK 108.80 exercisable in July/August 2020. From the 2018 warrant programme, there are 110,000 outstanding options with a subscription price of SEK 86.40 exercisable during summer 2021. From the 2019 share option programme there are 175,000 outstanding options with a subscription price of SEK 120.00 during summer 2022.

Annual General Meeting

At Lindab International AB's Annual General Meeting on April 29, 2020, the following resolutions were made, among others:

Approval of the parent company's and the Group's income statement and balance sheet for 2019.
Granting of discharge of liability for the members of the Board of Directors and the CEO for the fi nancial year 2019.
Dividend of SEK 1.75 per share distributed half-yearly which the fi rst dividend of SEK 0.88 per share with record date May 4 and second dividend of SEK 0.87 per share with record date November 2, 2020.
Re-election of the Board members Peter Nilsson, Per Bertland, Sonat Burman-Olsson, Viveka Ekberg and Anette Frumerie and new elections of Marcus Hedblom and Staffan Pehrson. John Hedberg and Bent Johannesson have declined re-election. Peter Nilsson was re-elected as Chairman of the Board.
Re-election of Deloitte AB as the company's auditors, with Hans Warén as principal auditor.
Each of the three largest shareholders shall appoint a member to the Nomination Committee, and the Nomination Committee shall also include the Chairman of the Board.
Guidelines for the remuneration of senior executives and the establishment of a share option programme for senior executives and other key persons with a maximum of 275,000 share options issued.
Authorisation for the Board of Directors to decide on the transfer of treasury shares on one or more occasions.

Further information can be found in the documents from Lindab International AB's Annual General Meeting which are available at www.lindabgroup.com.

Signifi cant events during the reporting period

In June Lindab acquired the Irish company Smofi r Trading Ltd., licensor of Thor Duct, see Note 4.

In June Lindab decided to close the IMP Klima Group, see page 4.

For information about the impact on Lindab related to covid-19, see page 3.

There are no other significant events during the reporting period to report.

Signifi cant events after the reporting period

In July Lindab acquired Crenna Plåt AB, manufacturer of high-quality rectangular ventilation ducts on the Swedish market. With the acquisition, Lindab will have a complete range of ventilation ducts in Sweden. Crenna have yearly sales of approximately SEK 120 m.

For information about the impact on Lindab related to covid-19, see page 3.

There are no other significant events after the reporting period to report.

Segment – Ventilation Systems

Key performance indicators	2020 Apr-Jun	2019 Apr-Jun	2020 Jan-Jun	2019 Jan-Jun
Net sales, SEK m	1,297	1,560	2,807	3,073
Net sales growth, %	-17	8	-9	8
Adjusted1) operating profi t, SEK m	125	163	276	312
Adjusted1) operating margin, %	9.6	10.4	9.8	10.2
Number of employees by end of period	3,383	3,615	3,383	3,615

1) Adjusted operating profi t/operating margin does not include one-off items and restructuring costs of SEK -74 m (-). See 'Reconciliations' page 21.