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

First quarter 2020

Lindab's sales and profit during the first quarter were on a par with the previous year. Profile Systems showed high sales growth while Building Systems' sales declined. Ventilation Systems was the business area with the highest profitability with an adjusted operating margin of 10 percent.

The Group continued to develop positively until mid-March when the negative effects of covid-19 became noticeable. Overall, covid-19 had a minor impact on the first quarter's sales and profit, but is expected to have a greater impact on the coming quarters.

Net sales increased by 1 percent to SEK 2,332 m (2,315), of which organic growth was -1 percent.
Operating profit1) decreased by 4 percent to SEK 184 m (192).
Operating margin1) amounted to 7.9 percent (8.3).
Profit for the period amounted to SEK 136 m (142).
Earnings per share, before and after dilution, amounted to SEK 1.78 (1.85).
Cash flow from operating activities amounted to SEK 26 m (79).
On 23 March, the Board of Directors revised the previous dividend proposal from SEK 3.60 per share to SEK 1.75 (1.75) per share. It is proposed that the dividend will be paid on two occasions.

Key Figures	2020 Jan-Mar	2019 Jan-Mar	Change, %	2019 Jan-Dec
Net sales, SEK m	2,332	2,315	1	9,872
Operating profit1), SEK m	184	192	-4	915
Operating margin1), %	7.9	8.3	-	9.3
Profit for the period, SEK m	136	142	-4	678
Earnings per share, before and after dilution, SEK	1.78	1.85	-4	8.89
Cash flow from operating activities, SEK m	26	79	-67	1,017

1) No one-off items or restructuring costs have been reported in 2020 or 2019, whereby adjusted operating profit and adjusted operating margin are not reported for these periods.

A word from the CEO

Photo: Mette Ottosson

Lindab had a strong start of the year and the positive trends from the previous year continued also in early 2020. Until mid-March, sales and profit followed our plan. After that, the effects of covid-19 became noticeable, especially in the countries in Europe that shut down large parts of the economy.

The operating margin of 7.9 percent for the quarter is in line with the strong result for the previous year and significantly above the levels from the corresponding period in earlier years. The gross margin has continued to strengthen this quarter, thanks to increased efficiency.

Ventilation Systems has continued to improve profitability and reached ten percent operating margin during the first quarter. The business area has continued to keep a high pace in the implementation of investments to increase automation and thereby further raise the quality and efficiency in production.

Profile Systems had a strong first quarter with organic growth of 13 percent, partly due to a mild winter and strong project sales. The operating profit improved slightly, but the operating margin was lower than last year due to changed product and customer mix.

Building Systems showed a positive result for the first quarter, which normally is the seasonally weakest period of the year. As sales were record strong the corresponding period last year, the profit did not quite reach the same level during the first quarter. Sales and profit for Building Systems vary between quarters as it is a project-based business.

During the first quarter, the corona pandemic had only a limited impact on the Group's sales and profits. Lindab has 98 percent of its sales in Europe. The supply chain is robust and Lindab has been able to benefit from its established logistics and production network to ensure delivery to customers.

The extensive restrictions imposed in some countries have resulted in reduced construction activity. During the month of March this has mainly affected our sales in Italy and France. The relatively stable construction activity in the Nordic region, on the other hand, has made a positive contribution to sales development.

When we look into the second quarter, we will also see the negative effects of imposed restrictions in countries such as the UK and Ireland, and in several countries in Continental Europe. How deep this decline will be, and how long it will last, is hard to predict.

The continued focus for Lindab in 2020 will be profitability and customer satisfaction. We have initiated measures to reduce cost, based on different scenarios for how covid-19 can affect demand. Every single part of Lindab should continue to improve its long-term profitability. This requirement remains, also when the market conditions have changed in the short term.

Customer satisfaction is even more important in turbulent times. Customers should be able to rely on Lindab, and with a long-term approach we ensure that customers are still there when the corona crisis is over. Even in countries where the construction activity is very low, we stay open on a small scale to ensure delivery to customers.

Despite the uncertain market situation in Europe and the challenges it poses, we continue to prepare Lindab for the future. Lindab's strong financial position enables implementation of prioritized investments in order to build long-term competitive advantages. The stable platform we created in 2019 gives us room for action and we will continue to drive Lindab towards our long-term goals.

Finally, I would like to thank all the staff for their efforts during this special period.

Grevie, April 2020

Ola Ringdahl President and CEO

Annual growth, 5–8% Net debt / EBITDA, <3,0 1) Operating margin, 10% 2016 2017 2018 2019 Q1 2020 6.5 6.2 6.8 9.33) 9.22)3) 2016 2017 2018 2019 Q1 2020 4.3 3.7 3.3 8.9 2.12) 2016 2017 2018 2019 Q1 2020 2.5 2.2 1.6 1.64) 1.52)4)

Long-term financial targets

1) Organic and acquired growth.

2) Rolling 12 Months (R12 M).

3) Excluding the effect of implemented new accounting standard IFRS 16 Leases, operating margin amounted to 9.0 percent in 2019 and 8.9 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 1.1 in 2020.

A word from the Chairman

Photo: Mette Ottosson

These are challenging times for people and businesses all over the world, which has also impacted the work of the Board of Directors. Together with The CEO and Group Management we have analysed the various scenarios for how Lindab's operations can be affected by covid-19. Our financial targets remain, although it may take longer to achieve them in these uncertain times. Lindab has a well-designed plan to reduce cost, increase efficiency and work towards the financial targets, with different level of actions depending on how long the pandemic lasts.

The efforts to strengthen Lindab and create added value have resulted in noticeable positive effects in recent years. The Board of Directors considers it important to ensure that the long-term perspective is maintained also when short-term measures are needed. We have previously decided on a number of invest-

Covid-19

1) Organic and acquired growth. 2) Rolling 12 Months (R12 M).

3) Excluding the effect of implemented new accounting standard IFRS 16 Leases, operating margin amounted to 9.0 percent in 2019 and 8.9 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 1.1 in 2020.

The construction industry is Lindab's primary target segment. Lindab's sales is concentrated to Europe with less than two percent of sales outside Europe. Sales is primarily affected by the activity in the European construction industry, with emphasis on the countries in Northern Europe. Lindab's assessment is that revenue will be negatively affected by covid-19 during the rest of the year.

Construction projects are delayed or postponed, especially in UK, France, Italy and parts of Eastern Europe. It is unclear how long the restrictions will last and it increases the uncertainty for whether construction projects will be able to proceed according to plan. Management is continuously working with different scenarios to respond to the future development.

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. Lindab's goal is to keep factories, distribution and sales channels open as long as possible. Lindab's business operations are currently open in all countries, with greatly reduced capacity in countries such as Italy, France, Ireland and the UK.

ments to strengthen Lindab's long-term competitiveness. We are convinced that these should be implemented, although some projects will be temporarily delayed.

To secure prioritised investments, we have chosen to be careful with the cash flow. The Board has therefore proposed a revised dividend, in line with the previous year's level. The proposal also stipulates that the payment is divided into two occassions, to preserve the cash flow during the period when the effects of covid-19 are likely to be the most noticeable. With the revised dividend proposal, the Board sees that a balance has been reached between building long-term value and providing direct returns to Lindab's owners.

Lindab is today a well-functioning company with a strong financial position. We will together navigate through this challenging time and be ready when demand increases again.

Grevie, April 2020

Peter Nilsson Chairman of the Board

Deliveries within Europe may be delayed due to increased border controls and lack of drivers. With its 30 production facilities around Europe, Lindab has good possibilities to reduce production disruptions. Lindab continues to deliver on customer orders.

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 financial position. Improvements in efficiency in 2018 and 2019 have resulted in a solid balance sheet and a strong result. As a precautionary measure, to give Lindab financial flexibility, the Board of Directors has revised the original dividend proposal. Dividend 2020 is now proposed to be at the same level as last year. The updated dividend proposal was communicated in a separate press release on 23 March 2020.

The development in Europe is closely monitored and Lindab adjusts its measures in accordance with the regulations and advice of local authorities. Information about the impact on covid-19 on the Lindab group will be published regularly on Lindab's website.

Sales, profit and cash flow

Sales and markets

Net sales increased by 1 percent to SEK 2,332 m (2,315) during the quarter. Organic growth was negative by 1 percent and currency contributed positively with 2 percent.

The sales development was positive until mid-March. During the second half of March a slowdown occurred, due to restrictions and prohibitions related to covid-19.

Profile Systems reported continued strong organic growth, while Ventilation Systems and Building Systems had negative organic sales development.

Due to the restrictions imposed during the quarter, the demand for Lindab's products, especially in the Ventilation Systems segment, was negatively affected. The circumstances have led to difficulties for Lindab's customers to complete their construction projects and some investment decisions have been delayed. The continued growth of Profile Systems was mainly driven by increased sales of industrial projects in the Nordic region. Sales within Building Systems decreased during the quarter, mainly explained by particularly large deliveries to Western Europe during the corresponding period previous year.

Profit

Adjusted operating profit for the quarter amounted to SEK 184 m (192). No one-off items or restructuring costs were reported during the quarter or in the previous year. Adjusted operating margin for the quarter amounted to 7.9 percent (8.3).

Ventilation Systems' adjusted operating profit increased to SEK 151 m (149) and Profile Systems to SEK 44 m (43). Adjusted operating profit for Buildings System amounted to SEK 2 m (9).

The Group's slightly lower adjusted operating profit compared with the strong first quarter last year was mainly explained by strategic investments and a somewhat lower organic sales growth. This has partly been compensated by a strengthened gross margin.

Profit for the quarter amounted to SEK 136 m (142). Earnings per share amounted to SEK 1.78 (1.85).

Seasonal variations

Lindab's business is affected by seasonal variations in the construction industry, and the highest proportion of net sales is normally seen during the second half of the year. The largest seasonal variations can be found in the segments Profile 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 finished goods during the first 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 and amortisations for the quarter amounted to SEK 98 m (95), of which SEK 7 m (7) was related to intangible assets and SEK 57 m (53) to right of use assets related to rental and leasing agreements.

No impairment losses occurred in the period nor in the corresponding period previous year.

Tax

Tax on profit for the quarter amounted to SEK 40 m (40). Earnings before tax was SEK 176 m (182). The effective tax rate amounted to 23 percent (22), while the average tax rate was 19 percent (20). The slightly higher effective tax rate, compared to the same period previous year, was mainly due to the fact that last year's result included higher non-taxable income. Additionally, Lindab generated somewhat higher unrecognized tax losses carried forward compared to the first quarter previous year. The higher effective tax rate compared to the average tax rate was mainly explained by the fact that Lindab was not able to fully recognise the carry-forward tax losses generated in the quarter in order to reduce the total tax on profit. Also the effect from non-deductible costs/ non-taxable income has to some extent contributed to the slightly higher effective tax rate compared with the average tax rate.

Net sales, SEK m Adjusted operating profit, SEK m

Sales, profit and cash flow (cont.)

Cash flow

Cash flow from operating activities amounted to SEK 26 m (79). The reduced level of cash flow during the quarter was primarily related to changes in working capital, which amounted to SEK -201 m (-149). The change in working capital was mainly attribute to less favourable cash flow impact from accounts payable and decreased customer advances within Building Systems. However, the negative cash flow effects were partly offset by a lower change of capital tied up in stock compared to the corresponding period previous year. During the quarter, operating profit amounted to SEK 184 m (192) and cash flow before change in working capital amounted to SEK 227 m (228).

Cash flow from financing activities contributed positively during the quarter and amounted to SEK 33 m (48). This included a cash outflow impact of SEK -57 m (-53) related to lease liabilities. Other changes within the financing activities were related to changes in borrowings and the utilisation of credit limits.

Cash flow from investing activities is explained under the headings 'Investments'.

Nordic region Western Europe CEE/CIS Other markets

R 12M

Quarter

Investments and financial position

Investments

Investments in intangible assets and tangible fixed assets for the quarter amounted to SEK 133 m (45), of which SEK 7 m (3) related to investments in intangible assets. The increased investments in tangible fixed assets were mainly a result of the Group's objective to increase efficiency and capacity in production facilities.

Cash flow from investing activities amounted to SEK -133 m (-44). The net cash flow included a positive impact from divestment of tangible fixed assets amounting to SEK 0 m (1).

Business combinations

There have been no acquisitions or divestments during the current quarter or the corresponding period previous year.

Financial position

Net debt amounted to SEK 2,093 m (2,130) on 31 March 2020. Currency effects increased net debt by SEK 143 m (38) during the quarter.

The equity/assets ratio was 52 percent (49) and the net debt/ equity ratio was 0.4 (0.5). Financial items for the quarter amounted to SEK -8 m (-10) and the improvement was 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 July 2022. The agreements contain covenants, which are monitored quarterly. Lindab fulfilled all the conditions as of 31 March 2020.

Pledged assets and contingent liabilities

No significant changes have been made in pledged assets and contingent liabilities during the first quarter 2020.

Gross investments in fixed assets, excl. business combinations SEK m

Investment programme

Lindab has increased the rate of investments in production automation in order to achieve increased capacity, efficiency and safety.
Significant investments were made during the first quarter within Ventilation Systems, e.g. automation of production in the Czech Republic and Denmark.

Other

Parent company

Lindab International AB (publ), corporate identification 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 1 m (1). Loss for the period amounted to SEK 1 m (0).

Significant 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 arised in 2020, see page 3.

Employees

The number of employees at the end of the quarter, calculated as full-time equivalent employees, was 5,162 (5,148). Adjusted for acquisitions and divestment the number of employees was 5,123 (5,133), a net decrease of 10 employees compared with the corresponding quarter of the previous year.

Annual General Meeting

The Board has decided that the Annual General Meeting will be held on 29 April 2020. Notice to the meeting has been given via press release.

Proposed dividend to shareholders

Lindab's Board of Directors proposes to the Annual General Meeting on April 29, 2020, to resolve on a cash dividend distribution of SEK 1.75 (1.75) per share. This is an amended and lowered dividend distribution proposal, which was communicated by a press release on March 23, 2020. The Board's amendment is made in order to take a cautious approach considering the general uncertainty created by the measures taken to slow down the spread of covid-19. The amended proposal means that the dividend level from previous year is maintained and it corresponds to a dividend totalling SEK 134 m. Additionally, the Board of Directors proposes that the dividend will be distributed semi-annually, by SEK 0.88 and SEK 0.87 per share and payment date. Proposed record dates for dividend distribution are May 4 and November 2, 2020, with expected dividend payments to shareholders on May 7 and November 5, 2020.

Significant events during the reporting period

On March 23 the Board of Director published an amended dividend proposal, as a consequence of the financial uncertainty in the light of covid-19. The changed proposal for dividend distribution equals SEK 1.75 per share, divided on two payments. See further 'Proposed dividend to shareholders'.

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.

Significant events after the reporting period

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.

General information

Unless otherwise indicated in this interim report, all statements refer to the Group. Figures in parentheses indicate the result for the corresponding period of the previous year. Unless otherwise indicated, amounts are in SEK m.

The report has not been audited by the company's auditors.

This is a translation of the Swedish original report. In case of differences between the English translation and the Swedish original, the Swedish text shall prevail.