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Bergs Timber Interim / Quarterly Report 2020
3144_10-q_2020-11-03_82cc0d37-b124-4db6-92fd-7f66cd432fe2.pdf
Interim / Quarterly Report
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BERGS
Interim Report
1 January–30 September 2020
SUMMARY
Interim Report
1 January–30 September 2020
THIRD QUARTER (1 JULY–30 SEPTEMBER) *
- Net sales increased by 12% to SEK 518 million (463). The higher net sales were mainly related to higher sales volumes of processed wood products to the DIY sector.
- EBITDA amounted to SEK 53 million (31). Adjusted EBITDA (adjusted for items affecting comparability) amounted to SEK 53 million (21), an increase primarily related to higher margin for sawn products but also to higher sales volumes for the DIY sector. Adjusted EBITDA margin was 10.2% (4.5).
- EBITDA, including earnings from discontinued operations prior to the sale of the Swedish sawmills, amounted to SEK 62 million (28). Adjusted EBITDA amounted to SEK 62 million (18), corresponding to an EBITDA margin of 8.7% (2.5).
- Operating profit amounted to SEK 31 million (12). Adjusted operating profit amounted to SEK 31 million (2).
- Cash flow from operating activities, including discontinued operations, amounted to SEK 167 million (151). The cash flow was positively affected by lower working capital.
- Earnings per share, before and after dilution, was SEK 0.08 (0.01). Earnings per share, before and after dilution, including discontinued operations, was SEK 0.27 (-0.01).
- The sale of the Swedish sawmill business to Vida was finalised on 1 September. The earnings from the sale totalled SEK 87 million and was recognised in earnings from discontinued operations.
INTERIM PERIOD (1 JANUARY–30 SEPTEMBER) *
- Net sales declined by 4% to SEK 1,591 million (1,651), mainly related to lower sales volumes and lower sales prices for sawn products.
- EBITDA amounted to SEK 134 million (127). Adjusted EBITDA amounted to SEK 134 million (106). Lower sales volumes and sales prices for sawn products were offset by lower costs for raw material. Higher sales volumes to the DIY sector contributed positively. Adjusted EBITDA margin was 8.4% (6.4).
- EBITDA, including earnings from discontinued operations prior to the sale of the Swedish sawmills, amounted to SEK 173 million (169). Adjusted EBITDA amounted to SEK 186 million (148), corresponding to an adjusted EBITDA margin of 7.6% (5.9).
- Operating profit amounted to SEK 79 million (81). Adjusted operating profit amounted to SEK 79 million (60).
- Cash flow from operating activities, including discontinued operations, amounted to SEK 304 million (145).
- Earnings per share, before and after dilution, was SEK 0.18 (0.18). Earnings per share, before and after dilution, including discontinued operations, was SEK 0.36 (0.22).
*) The Swedish sawmill business was sold on 1 September 2020 and was recognised as discontinued operations. Comparative periods in the consolidated income statement have been restated. The consolidated income statement, balance sheet (current period) and key performance indicators reflect the continuing operations, unless otherwise indicated. For more information on discontinued operations, see pages 6 and 15. Comparison of discontinued operations are affected by that the operations comprise 2 months in quarter 3 2020 and 8 months in the period January-September 2020.
The Group’s key performance indicators
| AMOUNTS IN SEK million | 2020 Jul–Sep 3 months | 2019 Jul–Sep 3 months | 2020 Jan–Sep 9 months | 2019 Jan–Sep 9 months | 2019 Jan–Dec 12 months |
|---|---|---|---|---|---|
| Net sales | 518 | 463 | 1,591 | 1,651 | 2,056 |
| EBITDA | 53 | 31 | 134 | 127 | 133 |
| Adjusted EBITDA (adjusted for items affecting comparability) | 53 | 21 | 134 | 106 | 115 |
| Adjusted EBITDA margin, % | 10.2 | 4.5 | 8.4 | 6.4 | 5.6 |
| Operating profit | 31 | 12 | 79 | 81 | 73 |
| Operating margin, % | 6.0 | 2.6 | 5.0 | 4.9 | 3.6 |
| Adjusted operating profit | 31 | 2 | 79 | 60 | 55 |
| Adjusted operating margin, % | 6.0 | 0.4 | 5.0 | 3.6 | 2.7 |
| EBITDA incl. discontinued operations | 149 | 28 | 261 | 169 | 172 |
| Adjusted EBITDA incl. discontinued operations | 62 | 18 | 186 | 148 | 154 |
| Adjusted EBITDA margin incl. discontinued operations, % | 8.7 | 2.5 | 7.6 | 5.9 | 4.8 |
| Earnings per share, before and after dilution, SEK | 0.08 | 0.01 | 0.18 | 0.18 | 0.13 |
| Earnings per share, including discontinued operations, SEK | 0.27 | -0.01 | 0.36 | 0.22 | 0.13 |
| Equity per share, SEK | 3.54 | 3.30 | 3.54 | 3.30 | 3.18 |
Note: For a reconciliation of alternative performance measures including adjusted EBITDA and adjusted operating profit and corresponding margins, see page 18.
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
CEO COMMENTS
Bergs reports improved result for the third quarter
IMPROVED EARNINGS AND STRONG CASH FLOW
Demand in the third quarter remained strong for the majority of the Group's products. It was especially strong for products in the DIY market and in renovation. This has benefited Bergs's specialisation in pressure-treated wood, garden products, windows, doors and timber for construction. The volumes for our core markets in the UK, US, France, Sweden and Latvia have increased. The prices for wood products have increased in pace with strong demand and limited supply. Sales prices for sawdust, pellets and wood chips fell as a result of an excess supply of wood for pulp and energy.
EBITDA for the quarter, including earnings from discontinued operations and earnings from the sale of the Swedish sawmill business, totalled SEK 149 million. Earnings from the sale amounted to SEK 87 million. EBITDA, adjusted for earnings from the sale, amounted to SEK 62 million, an improvement of SEK 44 million year-on-year. The improved earnings are an effect of higher margins for the sawmills and high sales volumes of processed wood products to the DIY sector.
As a result of the divestment of the Swedish sawmill business and inventory reductions in other operations, cash flow for the quarter was strong and has substantially strengthened our financial position. Net financial debt at the end of the quarter was SEK 11 million, compared with SEK 664 million year-on-year.
EFFECTS OF COVID-19
Industrial construction in 2020 has decreased in several countries as a result of workplaces and plants being shut down. At the same time, the DIY, renovation and gardening product ranges performed well and have been favourable for Bergs's sales. At present, we are seeing this trend continue.
Our personnel have been healthy, and to date we have been able to maintain full production capacity. Like the rest of society, Bergs is gradually becoming better at managing the current situation with an increased share of working and meeting remotely. We are prepared for the possibility that the prevailing situation will continue for a long period of time.
BERGS'S STRATEGIC DEVELOPMENT
The disposal of the Swedish sawmill business was a major decision for Bergs, and at the same time marked the beginning of a new strategic direction. After completing the divestment and other measures, we now have a financially strong company and continuing operations are solid. At present, Bergs is carrying out comprehensive strategy initiatives to clarify our future direction and how we will achieve growth, a higher and more stable margin over time and increased shareholder value.
The results of the review will be ready during the winter and communicated at that time.
FUTURE PROSPECTS
The ongoing pandemic will continue to leave its mark on the economy. Apart from normal seasonal variations, at present we are not witnessing any slowdown in demand for the Group's products, and order intake remains strong. Despite normal stockpiling during the winter period, we expect cash flow to remain positive over the remainder of the year. The market for raw forestry materials in the Baltics and Sweden remains affected by an excess supply of pulp and energy wood, potentially reducing the pace of harvesting and by extension access to saw logs.
Vimmerby, 3 November 2020
Peter Nilsson
Chief Executive Officer
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
4
Net sales and operating profit
JULY-SEPTEMBER 2020, COMPARED TO JULY-SEPTEMBER 2019
Net sales for the third quarter 2020 amounted to SEK 518 million (463). The increase of SEK 55 million was mainly related to higher sales volumes of processed wood products to the DIY sector.
EBITDA increased to SEK 53 million (31). Adjusted EBITDA increased to SEK 53 million (21), which corresponds to an adjusted EBITDA margin of 10.2% (4.5). The increase was mainly due to higher margins for the sawmills due to lower costs for raw material. Higher sales volumes to the DIY sector contributed positively.
Operating profit amounted to SEK 31 million (12). Adjusted operating profit amounted to SEK 31 million (2).
JANUARY-SEPTEMBER 2020 COMPARED WITH JANUARY-SEPTEMBER 2019
Net sales were SEK 1,591 million compared to SEK 1,651 million for the year-earlier period, down SEK 60 million. The decrease was attributable to lower sales volumes and sales prices for sawn products.
Cash flow and financing
Cash flow from operating activities for January–September, including discontinued operations, amounted to SEK 304 million (145). The cash flow effect of changes in working capital was SEK 159 million (22). The lower tied-up capital was mainly explained by lower stocks. Investments in property, plant and equipment amounted to SEK 58 million (96). Cash flow from operating activities in the third quarter amounted to SEK 167 (151) million, positively affected by reduced operating receivables and stock levels.
The Group's net financial debt at 30 September 2020 totalled SEK 11 million, compared to SEK 675 million at 31 December 2019. The net debt/equity ratio was 0.01. The decrease in net debt was attributable to the sale of the Swedish sawmill business alongside higher earnings and lower working capital.
In conjunction with the sale of the Swedish sawmill business, repayments of SEK 364 million in term loans and SEK 70 million to
EBITDA amounted to SEK 134 million (127). Adjusted EBITDA amounted to SEK 134 million (106), corresponding to an adjusted EBITDA margin of 8.4% (6.4). Lower sales volumes and sales prices for sawn products were offset by lower costs for raw material. Higher sales volumes to the DIY sector contributed positively.
Operating profit amounted to SEK 79 million (81). Adjusted operating profit amounted to SEK 79 million (60).
JULY-SEPTEMBER 2020 COMPARED WITH APRIL–JUNE 2020
Net sales for the third quarter 2020 amounted to SEK 518 million compared to SEK 545 million for the second quarter 2020, down SEK 27 million. The decrease was attributable to lower seasonal sales volumes for sawn products.
EBITDA amounted to SEK 53 million (52), corresponding to an EBITDA margin of 10.2% (9.5).
Operating profit amounted to SEK 31 million (35).
Norvik pertaining to a vendor's mortgage were made. The revolving credit facility limit was lowered to SEK 100 million from SEK 250 million as a consequence of reduced borrowing needs.
Summary of loans and credit facilities at 30 September 2020, SEK million:
| Loan | Repayments, years | Total utilised | |||
|---|---|---|---|---|---|
| Limit | 0-1 | 1-2 | 2- | ||
| Term loans | 23 | 176 | 199 | ||
| Revolving credit facility | 100 | 0 | |||
| Overdraft facilities | 120 | 2 | |||
| Total | 23 | 176 | - | 201 |
Available cash and cash equivalents, including unutilised credit facilities, totalled SEK 422 million. In addition, there were granted but unused bank guarantee limits of SEK 25 million. Net financial items for the January-September period amounted to SEK -22 million (-20).
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
SEGMENTS
Segment reporting
Bergs has identified two segments that are reported and monitored on an ongoing basis: Sawmills and Further processed. The distribution and port business in the UK and Group-wide activities are reported in Other. The now-sold Swedish sawmill business, previously reported in the Sawmills segment, is recognised as discontinued operations. Comparative periods have been restated; see pages 6 and 15 for more information on discontinued operations.
SAWMILLS
Sawmills consist of Vika Wood in Latvia and Laesti in Estonia. The now-sold sawmills in Sweden are recognised as discontinued operations, see pages 6 and 15.
| Amounts in SEK m | Jul–Sep 2019 | Jul–Sep 2019 | Jan–Sep 2020 | Jan–Sep 2019 |
|---|---|---|---|---|
| Net sales | 175 | 171 | 579 | 694 |
| EBITDA | 18 | 2 | 58 | 43 |
| Operating profit | 12 | -8 | 35 | 18 |
| EBITDA margin, % | 10.3 | 1.2 | 10.0 | 6.2 |
| Operating margin, % | 6.9 | – | 6.0 | 2.6 |
| Sales volumes, thousand m3 | 77 | 77 | 254 | 296 |
| Production volume, thousand m3 | 70 | 78 | 249 | 302 |
Net sales for the third quarter amounted to SEK 175 million (171). The increase was attributable to higher sales prices.
EBITDA for the third quarter was SEK 18 million (2). The increase was mainly due to lower costs for raw material.
Net sales for the January–September period decreased to SEK 579 million (694). The decrease was related to lower sales volumes and sales prices. The lower sales volumes were attributable to the discontinued sawmills in Broakulla and Savi.
EBITDA for the January–September period amounted to SEK 58 million (43). Lower sales prices and sales volumes were compensated by lower costs for raw material.
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
SEGMENTS
FURTHER PROCESSED
Further Processed comprises Byko-Lat in Latvia, Bitus, Fagelfors and Woodworks by Bergs in Sweden. The product range comprises planed wood products for the DIY sector, doors and windows, prefabricated element- and modular houses, garden products and pellets. Bitus is one of Europe's largest plants for wood preservatives. Fagelfors is a major producer of pellets and fire logs for the energy market. Woodworks by Bergs is a newly established sales company for further processed products in the Swedish market.
| Amounts in SEK m | Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 |
|---|---|---|---|---|
| Net sales | 339 | 265 | 983 | 867 |
| EBITDA | 31 | 21 | 79 | 65 |
| Operating profit | 18 | 12 | 49 | 48 |
| EBITDA margin, % | 9.1 | 7.9 | 8.0 | 7.5 |
| Operating margin, % | 5.3 | 4.5 | 5.0 | 5.5 |
OTHER
Other consists of the distribution and port business in the UK and Group-wide activities. Net sales for the January–September period
Discontinued operations
The Swedish sawmill business was sold on 1 September 2020 and is recognised as discontinued operations. For more information on discontinued operations, see page 15.
| Amounts in SEK m | 2020 Jul–Sep | 2019 Jul–Sep | 2020 Jan–Sep | 2019 Jan–Sep |
|---|---|---|---|---|
| Net sales | 194 | 258 | 858 | 868 |
| EBITDA | 96 | -3 | 126 | 42 |
| Adjusted EBITDA | 9 | -3 | 52 | 42 |
| Operating profit | 95 | -10 | 91 | 19 |
| Adjusted operating profit/loss | 8 | -10 | 34 | 19 |
| Adjusted EBITDA margin, % | 4.6 | - | 6.1 | 4.8 |
| Adjusted operating margin, % | 4.1 | - | 4.0 | 2.2 |
Net sales for the third quarter amounted to SEK 339 million (265). The increase was primarily attributable to higher sales volumes for the DIY sector.
EBITDA for the third quarter was SEK 31 million (21). The higher earnings were mainly attributable to higher sales volumes and lower costs for raw material.
Net sales for the January–September period increased to SEK 983 million (867). The increase was mainly due to higher sales volumes and the pellet business that was acquired in the second quarter of 2019.
EBITDA for the January–September period amounted to SEK 79 million (65). The higher earnings were mainly attributable to higher sales volumes and lower costs for raw material.
2020 amounted to SEK 185 million (162). EBITDA amounted to SEK -3 million (18). Adjusted EBITDA amounted to SEK -3 million (-3).
Net sales for the third quarter amounted to SEK 194 million (258). The decrease was primarily attributable to lower sales volumes. The sawmills were sold on 1 September 2020.
EBITDA for the third quarter amounted to SEK 96 million (-3), whereof SEK 87 million in earnings from the disposal of the sawmills. Adjusted EBITDA was SEK 9 million (-3). The increase was primarily attributable to lower costs for raw material.
Net sales for the January–September period decreased to SEK 858 million (868). The decrease was primarily attributable to lower sales volumes due to the disposal of the sawmills and lower sales prices.
EBITDA for the January–September period amounted to SEK 126 million (42). Adjusted EBITDA amounted to SEK 52 million (42). Lower sales prices were offset by lower costs for raw material.
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
OTHER INFORMATION
Other information
TAX
Recognised tax for the January–September period 2020 was SEK 4 million (2). The effective tax rate was -7 per cent, lower than Sweden’s corporate tax rate. The lower effective tax rate was attributable to no tax having been recognised for the Baltic companies.
In Latvia and Estonia, the corporate income tax is 0 per cent on reinvested profits. Corporate tax is applicable and payable when dividends are distributed. No corporate income taxes have been recognised for the Group companies in the Baltics. Unrecognised deferred taxes on undistributed profits in the Baltic companies totalled approximately SEK 65 million at 30 September 2020.
SEASONAL FLUCTUATIONS
Bergs’s business is subject to seasonal fluctuations. The demand for processed wood products in the construction sector is generally higher in April–October. The demand for sawn products is normally higher in March–June and September–November. Sales volumes during the winter and summer months are normally lower. The market for pellets correlates to the winter season. The production volume in the sawmills is lower in the third quarter as a result of the summer holidays and maintenance work.
DIVESTMENT OF THE SWEDISH SAWMILL BUSINESS
The sale of Bergs’s Swedish sawmill business to Vida was completed on 1 September. The transaction encompassed the sawmills in Orrefors, Vimmerby and Mörlunda. All personnel employed at each sawmill and in the purchasing organisation for raw materials were offered employment at Vida. Vida also acquired the assets of the already discontinued operation at Gransjö.
The total purchase consideration for the operations, including the working capital involved, was SEK 390 million, of which SEK 303 million pertained to non-current assets. Earnings from the sale amounted to SEK 87 million.
The transaction, taken together with the liquidation of other working capital, means that Bergs’s financial net debt has been substantially reduced. Net debt at 30 September totalled SEK 11 million, corresponding to a net debt/equity ratio of approximately 1 per cent.
After the sale, Bergs consists of wood processing operations in wood preservatives, planing, buildings, windows, doors, garden products and pellets. Annual net sales total approximately SEK 2,000 million, with a margin that over time has been higher and more stable than that reported by the Swedish sawmill business. In addition, Bergs conducts sawmill business in Latvia and Estonia with annual production of approximately 350,000 cubic metres, as well as port and distribution operations in the UK.
For further information on the effects of the sale, refer to Note 3.
EVENTS AFTER THE END OF THE QUARTER
There are no events after the end of the quarter to be reported.
PARENT COMPANY
The activities of the Parent Company pertain to the management of shares in subsidiaries, Group-wide administrative tasks and Group financing. Operating loss for the Parent Company for the January–September period amounted to SEK -12 million (-10).
2021 ANNUAL GENERAL MEETING
The Annual General Meeting for 2020 financial year will be held on 5 May 2021. Additional information on time and venue will be released later.
REPORTING PERIODS
| Year-end report for 2020 | 3 February 2021 |
|---|---|
| Interim Report, January–March 2021 | 5 May 2021 |
| Interim Report, January–June 2021 | 29 July 2021 |
| Interim Report, January–September 2021 | 28 October 2021 |
The undersigned declare that the interim report provides a fair review of the Parent Company’s and Group’s operations, financial position and earnings and describes the material risks and uncertainty factors facing the Parent Company and the Group companies.
Vimmerby, 3 November 2020
Peter Nilsson
Chief Executive Officer
Further information regarding the interim report can be provided by the CEO, Peter Nilsson, on telephone number +46 70 315 09 27 or CFO, Anders Marklund, on +46 70 284 47 96.
The information in this interim report is such that Bergs Timber AB (publ) is obliged to disclose pursuant to the EU’s Market Abuse Regulation. The information was released for publication on 3 November 2020 at 1:00 p.m. The interim report is available on the company’s website, www.bergstimber.com
Bergs Timber AB (publ), corporate registration number: 556052-2798, Stora Torget 3, SE-598 37 Vimmerby, Tel: +46 010-199 85 00
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
REVIEW REPORT
8
Review Report
Bergs Timber AB (publ), corp. reg. no. 556052-2798
INTRODUCTION
We have reviewed the interim condensed financial information (interim report) for Bergs Timber (publ) for 30 September 2020 and the nine-month period then ended. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim report 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.
SCOPE OF REVIEW
We conducted our review in accordance with the International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information 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 ISA and other generally accepted auditing practices. 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.
CONCLUSION
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 Annual Accounts Act for the Group, and in accordance with the Annual Accounts Act for the Parent Company.
Kalmar, 3 November 2020
Deloitte AB
Magnus Andersson
Authorised Public Accountant
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
STATEMENT OF INCOME AND BALANCE SHEET
Condensed consolidated statement of income
| Amounts in SEK m (Pertains to continuing operations unless otherwise stated) | 2020 Jul–Sep 3 months | 2019 Jul–Sep 3 months | 2020 Jan–Sep 9 months | 2019 Jan–Sep 9 months | 2019 Jan–Dec 12 months |
|---|---|---|---|---|---|
| Net sales | 518 | 463 | 1,591 | 1,651 | 2,056 |
| Changes to products in process and finished goods | 9 | -13 | -20 | 4 | 18 |
| Other operating income | 0 | 19 | 4 | 37 | 42 |
| Total | 527 | 469 | 1,575 | 1,692 | 2,116 |
| Operating expenses | |||||
| Raw materials and consumables | -298 | -305 | -1,002 | -1,144 | -1,431 |
| Other external costs | -106 | -72 | -252 | -227 | -298 |
| Personnel costs | -70 | -61 | -187 | -194 | -254 |
| Depreciation/amortisation and impairment | -22 | -19 | -55 | -46 | -60 |
| Other operating expenses | 0 | 0 | 0 | 0 | 0 |
| Total operating expenses | -496 | -457 | -1,496 | -1,611 | -2,043 |
| Operating profit | 31 | 12 | 79 | 81 | 73 |
| Finance income | 0 | 0 | 0 | 2 | 1 |
| Financial expenses | -5 | -8 | -22 | -22 | -34 |
| Profit after financial items | 26 | 4 | 57 | 61 | 40 |
| Tax on profit for the period | 2 | 1 | 4 | 2 | 3 |
| Profit for the period from continuing operations | 28 | 5 | 61 | 63 | 43 |
| Profit/loss from discontinued operations, net after tax | 67 | -8 | 64 | 14 | 2 |
| Profit/loss for the period | 95 | -3 | 125 | 77 | 45 |
| Attributable to | |||||
| Parent Company shareholders | 95 | -3 | 125 | 77 | 45 |
| Non-controlling interests | - | - | - | - | - |
| Earnings per share, before and after dilution, SEK* | 0.08 | 0.01 | 0.18 | 0.18 | 0.13 |
| Earnings per share, before and after dilution, including discontinued operations, SEK* | 0.27 | -0.01 | 0.36 | 0.22 | 0.13 |
| Average number of shares, thousands | 346,728 | 346,728 | 346,728 | 342,768 | 343,758 |
*) When calculating earnings per share, the average number of shares held is used
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
STATEMENT OF INCOME AND BALANCE SHEET
10
Statement of comprehensive income (net after tax)
| Amounts in SEK m | 2020
Jul–Sep
3 months | 2019
Jul–Sep
3 months | 2020
Jan–Sep
9 months | 2019
Jan–Sep
9 months | 2019
Jan–Dec
12 months |
| --- | --- | --- | --- | --- | --- |
| Profit/loss for the period | 95 | -3 | 125 | 77 | 45 |
| Change in hedge reserve (net after tax) | -2 | -4 | 2 | -4 | -1 |
| Translation differences | 0 | 13 | -3 | 35 | 22 |
| Comprehensive income for the period | 93 | 6 | 124 | 108 | 66 |
| Attributable to: | | | | | |
| Parent Company shareholders | 93 | 6 | 124 | 108 | 66 |
| Non-controlling interests | - | - | - | - | - |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
STATEMENT OF INCOME AND BALANCE SHEET
11
Condensed consolidated balance sheet
| Amounts in SEK m | 30 Sep 2020 | 30 Sep 2019 | 31 Dec 2019 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 193 | 194 | 193 |
| Property, plant and equipment, incl. right-of-use assets | 698 | 955 | 948 |
| Financial assets | 1 | 9 | 3 |
| Deferred tax assets | 25 | 0 | 6 |
| Total non-current assets | 917 | 1,158 | 1,150 |
| Current assets | |||
| Inventory | 294 | 655 | 667 |
| Current receivables | 356 | 387 | 328 |
| Cash and bank balances | 204 | 107 | 86 |
| Total current assets | 854 | 1,149 | 1,081 |
| TOTAL ASSETS | 1,771 | 2,307 | 2,231 |
| Equity and liabilities | |||
| Equity | 1,226 | 1,144 | 1,102 |
| Liabilities | |||
| Non-current liabilities | |||
| Interest-bearing liabilities | 180 | 611 | 604 |
| Other non-current liabilities and provisions | 6 | 17 | 2 |
| Deferred tax liabilities | 32 | 12 | 17 |
| Total non-current liabilities | 218 | 640 | 623 |
| Current liabilities | |||
| Interest-bearing liabilities | 35 | 160 | 157 |
| Non-interest bearing liabilities | 292 | 363 | 349 |
| Total current liabilities | 327 | 523 | 506 |
| TOTAL EQUITY AND LIABILITIES | 1,771 | 2,307 | 2,231 |
| CHANGES IN EQUITY *) | |||
| Amounts in SEK m | 2020 Jan–Sep 9 months | 2019 Jan–Sep 9 months | 2019 Jan–Dec 12 months |
| Equity, opening balance | 1,102 | 1,052 | 1,052 |
| New share issue after issue expenses | 0 | 18 | 18 |
| Dividend paid | 0 | -34 | -34 |
| Comprehensive income for the period | 124 | 108 | 66 |
| Total equity at the end of the period | 1,226 | 1,144 | 1,102 |
*) There is no minority.
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
CASH FLOW STATEMENT
12
Condensed cash flow statement (incl. discontinued operations*)
| Amounts in SEK m | 2020Jul–Sep3 months | 2019Jul–Sep3 months | 2020Jan–Dec9 months | 2019Jan–Sep9 months | 2019Jan–Dec12 months |
|---|---|---|---|---|---|
| Operating activities | |||||
| Profit/loss after financial items, incl. discontinued operations | 121 | -6 | 148 | 81 | 45 |
| Adjustments for non-cash items** | -69 | 17 | -3 | 42 | 64 |
| Income taxes paid | 0 | 0 | 0 | 0 | 0 |
| Cash flow from operating activities before changes in working capital | 52 | 11 | 145 | 123 | 109 |
| Change in inventory | 45 | 46 | 251 | 31 | 11 |
| Change in operating receivables | 137 | 159 | -30 | 15 | 71 |
| Change in operating liabilities | -67 | -65 | -62 | -24 | -44 |
| Cash flow from operating activities | 167 | 151 | 304 | 145 | 147 |
| Acquisition of subsidiaries | - | -10 | - | -25 | -25 |
| Acquisition of property, plant and equipment | -16 | -40 | -58 | -96 | -131 |
| Sale of operations | 390 | - | 390 | - | - |
| Sale of property, plant and equipment | 0 | 0 | 6 | 0 | 11 |
| Change in financial assets | 0 | 0 | 0 | 0 | 8 |
| Cash flows from investing activities | 374 | -50 | 338 | -121 | -137 |
| Change in financial receivables and liabilities | -448 | -68 | -525 | 40 | 35 |
| Dividend paid | - | - | - | -34 | -34 |
| Cash flow from financing activities | -448 | -68 | -525 | 6 | 1 |
| Cash flow for the period | 93 | 33 | 117 | 30 | 11 |
| Cash and cash equivalents at start of period | 110 | 73 | 86 | 74 | 74 |
| Translation differences in cash and cash equivalents | 1 | 1 | 1 | 3 | 1 |
| Cash and cash equivalents at end of period | 204 | 107 | 204 | 107 | 86 |
) All balance items have not been fully allocated to discontinued operations since the Swedish sawmill business was operated in the same legal entity as other continuing operations. Therefore, the cash flow statement includes the discontinued operations.
*) Pertains primarily to depreciation and earnings from the sale of operations.
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
KEY PERFORMANCE INDICATORS
13
The Group's key performance indicators and targets
| Amounts in SEK m | Financial targets | 2020 Jul–Sep 3 months | 2019 Jul–Sep 3 months | 2020 Jan–Sep 9 months | 2019 Jan–Sep 9 months | 2019 Jan–Dec 12 months |
|---|---|---|---|---|---|---|
| Net sales | 518 | 463 | 1,591 | 1,651 | 2,056 | |
| EBITDA | 53 | 31 | 134 | 127 | 133 | |
| Adjusted EBITDA | 53 | 21 | 134 | 106 | 115 | |
| Adjusted EBITDA margin, % | >7 | 10.2 | 4.5 | 8.4 | 6.4 | 5.6 |
| Operating profit | 31 | 12 | 79 | 81 | 73 | |
| Operating margin, % | 6.0 | 2.6 | 5.0 | 4.9 | 3.6 | |
| Adjusted operating profit | 31 | 2 | 79 | 60 | 55 | |
| Adjusted operating margin, % | 6.0 | 0.4 | 5.0 | 3.6 | 2.7 | |
| Return on capital employed, %, 12 months | >10 | - | - | - | - | 4.1 |
| Earnings per share, SEK | 0.08 | 0.01 | 0.18 | 0.18 | 0.13 | |
| Earnings per share, incl. discontinued operations, SEK | 0.27 | -0.01 | 0.36 | 0.22 | 0.13 | |
| Interest-bearing net debt | 11 | 664 | 11 | 664 | 675 | |
| Net debt/equity ratio | <1.0 | 0.01 | 0.58 | 0.01 | 0.58 | 0.61 |
| Equity/assets ratio, % | 69.2 | 49.6 | 69.2 | 49.6 | 49.4 | |
| Average number of shares, thousands | 346,728 | 346,728 | 346,728 | 342,768 | 343,758 | |
| Equity per share, SEK | 3.54 | 3.30 | 3.54 | 3.30 | 3.18 |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
PARENT COMPANY
14
Condensed Parent Company statement of income
| Amounts in SEK m | 2020
Jan–Sep
9 months | 2019
Jan–Sep
9 months |
| --- | --- | --- |
| Other operating income | 8 | 7 |
| Total | 8 | 7 |
| Operating expenses | | |
| Other external costs | -10 | -7 |
| Personnel costs | -10 | -10 |
| Depreciation | 0 | 0 |
| Other operating expenses | 0 | 0 |
| Total operating expenses | -20 | -17 |
| Operating loss | -12 | -10 |
| Finance income | 18 | 1 |
| Financial expenses | -23 | -9 |
| Loss after financial items | -17 | -18 |
| Tax on profit for the period | 2 | 2 |
| Loss for the period | -15 | -16 |
Condensed Parent Company balance sheet
| Amounts in SEK m | 2020
30 Sep | 2019
30 Sep |
| --- | --- | --- |
| Assets | | |
| Financial assets | 1,239 | 1,366 |
| Total non-current assets | 1,239 | 1,366 |
| Receivables from Group companies | 54 | 247 |
| Other current receivables | 4 | 5 |
| Cash and bank balances | 44 | 1 |
| Total current assets | 102 | 253 |
| TOTAL ASSETS | 1,341 | 1,619 |
| Liabilities and equity | | |
| Equity | 850 | 849 |
| Non-current liabilities | 176 | 597 |
| Current liabilities | 315 | 173 |
| TOTAL EQUITY AND LIABILITIES | 1,341 | 1,619 |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
NOTES
Notes
1. ACCOUNTING POLICIES
This interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act. Other accounting policies and calculation methods that are applied for the Group and the Parent Company conform to the principles that were used when preparing the most recent annual report for 2019; refer to pages 56–62. There are certain new and changed standards and interpretations that will enter into force in 2020 or later, but these are not considered to have any significant impact on the company's accounts. Disclosures according to IAS 34 Interim Financial Reporting are provided both in notes and elsewhere of the interim report. Amounts in brackets refer to the amount for the same period in the previous financial year, unless otherwise stated. There may be differences due to rounding.
2. EXTERNAL NET SALES BY MARKET
| January–September 2020
Amounts in SEK m | Sawmills | Further processing | Other | Internal sales | Group total |
| --- | --- | --- | --- | --- | --- |
| Sweden | | 224 | | -50 | 174 |
| UK | 13 | 209 | 185 | -103 | 304 |
| Baltics | 322 | 35 | | -3 | 354 |
| Rest of Europe | 86 | 414 | | | 500 |
| Rest of world | 158 | 101 | | | 259 |
| Total | 579 | 983 | 185 | -156 | 1,591 |
| January–September 2019
Amounts in SEK m | Sawmills | Further processing | Other | Internal sales | Group total |
| Sweden | | 155 | | -8 | 147 |
| UK | 24 | 358 | 162 | -62 | 482 |
| Baltics | 394 | 4 | | -2 | 396 |
| Rest of Europe | 93 | 349 | | | 442 |
| Rest of world | 183 | 1 | | | 184 |
| Total | 694 | 867 | 162 | -72 | 1,651 |
3. DISCONTINUED OPERATIONS
On 1 September 2020, the sale the Swedish sawmill business to Vida Aktiebolag was completed. The transaction encompassed the sawmills in Orrefors, Vimmerby and Mörlunda. Vida also acquired the assets of the already discontinued operation at Gransjö. The purchase consideration, including liabilities assumed, amounted to SEK 390 million. The purchase consideration was paid in cash and has impacted the Group's cash and cash equivalents in a corresponding amount. Earnings from the sale amounted to SEK 87 million including transaction costs.
The Swedish sawmill business was recognised as discontinued operations. Comparative periods in the consolidated income statement are restated to reflect the classification of the Swedish sawmill business as discontinued operations. Profit/loss for the period, net after tax, is presented as a single amount in the consolidated income statement.
Net earnings from discontinued operations
| Amounts in SEK m | 2020
Jul–Sep
3 months | 2019
Jul–Sep
3 months | 2020
Jan–Sep
9 months | 2019
Jan–Sep
9 months | 2019
Jan–Dec
12 months |
| --- | --- | --- | --- | --- | --- |
| Net sales | 194 | 258 | 858 | 868 | 1,150 |
| Earnings from the disposal | 87 | – | 87 | – | – |
| Expenses | -185 | -261 | -819 | -826 | -1,111 |
| EBITDA | 96 | -3 | 126 | 42 | 39 |
| Depreciation | -1 | -7 | -35 | -23 | -34 |
| Operating profit/loss | 95 | -10 | 91 | 19 | 5 |
| Taxes | -28 | 2 | -27 | -5 | -3 |
| Net earnings from discontinued operations | 67 | -8 | 64 | 14 | 2 |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
NOTES
Assets and liabilities sold
Amounts in SEK m
| Property, plant and equipment, incl. right-of-use assets | 210 |
|---|---|
| Inventory | 119 |
| Assets | 329 |
| Interest-bearing liabilities, non-current | 2 |
| Interest-bearing liabilities, current | 15 |
| Other current liabilities | 9 |
| Liabilities | 26 |
| Disposed net assets | 306 |
Impact on cash and cash equivalents, purchase consideration 390
- RESULTS AND KEY PERFORMANCE INDICATORS—CONTINUING AND DISCONTINUED OPERATIONS
| Amounts in SEK m | 2020Jul–Sep3 months | 2019Jul–Sep3 months | 2020Jan–Sep9 months | 2019Jan–Sep9 months | 2019Jan–Dec12 months |
|---|---|---|---|---|---|
| Net sales | 712 | 721 | 2,449 | 2,519 | 3,206 |
| Continuing operations | 518 | 463 | 1,591 | 1,651 | 2,056 |
| Discontinued operations | 194 | 258 | 858 | 868 | 1,150 |
| Adjusted EBITDA | 62 | 18 | 186 | 148 | 154 |
| Continuing operations | 53 | 21 | 134 | 106 | 115 |
| Discontinued operations | 9 | -3 | 52 | 42 | 39 |
| Adjusted EBITDA margin, % | 8.7 | 2.5 | 7.6 | 5.9 | 4.8 |
| Continuing operations | 10.2 | 4.5 | 8.4 | 6.4 | 5.6 |
| Discontinued operations | 4.6 | - | 6.1 | 4.8 | 3.4 |
| Adjusted operating profit | 39 | -8 | 113 | 79 | 60 |
| Continuing operations | 31 | 2 | 79 | 60 | 55 |
| Discontinued operations | 8 | -10 | 34 | 19 | 5 |
| Adjusted operating margin, % | 5.5 | - | 4.6 | 3.1 | 1.9 |
| Continuing operations | 6.0 | 0.4 | 5.0 | 3.6 | 2.7 |
| Discontinued operations | 4.1 | - | 4.0 | 2.2 | 0.4 |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
NOTES
5. FINANCIAL INSTRUMENTS BY CATEGORY
| Amounts in SEK m | Level | Carrying amount 30 Sep 2020 | Fair value 30 Sep 2020 | Carrying amount 31 Dec 2019 | Fair value 31 Dec 2019 |
|---|---|---|---|---|---|
| Financial assets measured at fair value through profit or loss | |||||
| Financial investments | – | 1 | 1 | 1 | 1 |
| Financial assets at amortised cost | |||||
| Trade receivables | – | 304 | 304 | 265 | 265 |
| Other receivables | – | 52 | 52 | 28 | 28 |
| Cash and cash equivalents | – | 204 | 204 | 86 | 86 |
| Derivatives for hedge accounting | |||||
| Derivatives | 2 | 0 | 0 | 2 | 2 |
| 561 | 561 | 382 | 382 | ||
| Financial liabilities measured at amortised cost | |||||
| Liabilities to credit institutions | – | 205 | 205 | 680 | 680 |
| Accounts payable | – | 125 | 125 | 210 | 210 |
| Loans from Norvik | 3 | 0 | 0 | 70 | 70 |
| Earnout | 3 | 10 | 10 | 9 | 10 |
| Other liabilities | – | 40 | 40 | 31 | 31 |
| Derivatives for hedge accounting | |||||
| Derivatives | 2 | 0 | 0 | 2 | 2 |
| 380 | 380 | 1,002 | 1,003 |
Valuation levels:
1: Quoted prices in an active market for identical assets or liabilities, such as shares or obligations listed on the stock market.
2: Other observable inputs for the asset or liability than quoted prices included in Level 1, either direct (as quoted market prices) or indirect (obtained from quoted market prices), such as foreign exchange forwards or rate swaps.
3: Inputs for the asset or liability that is not fully based on observable market data.
6. INFORMATION ON RISKS AND UNCERTAINTIES
Price trends
The price trend for wood products is largely governed by how global consumption corresponds with global production. The cost of raw materials is a large component of the finished product's sales value, which is why the product is very sensitive to changes in prices for raw forestry materials. Raw material is best sourced locally and the supply and demand of raw material has a considerable effect on pricing in the short term.
COVID-19
The coronavirus crisis, the outcome and consequences of which are difficult to assess, has increased uncertainty and may impact the Group's performance and profitability; refer to page 3.
Financial risks
Bergs Timber is exposed to financial risks, which are primarily related to liquidity and cash flow risks in conjunction with liquidity and liability management and currency risks in export transactions. A large part of the financing is dependent on fulfilling conventional financial undertakings. Regarding exposure to exchange rate risk, the Group's policy states that normally 50–75 per cent of the expected currency flow for the next six months shall be hedged.
Cost of fixed assets
Owing to the existence of goodwill, the recognised cost of fixed assets tested for impairment. The test is based on our best assessment of the future performance. The testing performed in conjunction with the previous year-end report showed that there was no need for impairment. In light of the positive earnings performance in 2020, there are no indications of a need for impairment. A future negative deviation may affect the recognised cost of fixed assets. For a further description of impairment testing please, refer to page 74 of the 2019 Annual Report.
For a complete presentation of the identified risk as well as the company's risk management efforts, refer to pages 28–30 of the 2019 Annual Report.
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
NOTES
7. RELATED-PARTY TRANSACTIONS
Transaction with members of the Board, senior executives and related-party companies include advisory services, timber products and construction services as well as sales of mechanical equipment, by-products and impregnation services. All transactions took place at market value. The transactions did not have any material impact on the Group's financial position or results.
The Parent Company has conducted transactions with the Group's subsidiaries in the form of sales of management and administration services. The scope of transactions with related parties has not changed compared to the information provided in the 2019 Annual Report.
In September, the Parent Company amortised the vendor's mortgage of SEK 70 million that the primary shareholder, Norvik, issued in connection with Bergs's acquisition in May 2018 of Norvik's operations in the Baltics and the UK. As a result of this payment, the entire purchase consideration has been settled with the exception of any earnouts to be paid pertaining to earnings for 2020 that could total a maximum of SEK 10 million.
8. ALTERNATIVE PERFORMANCE MEASURES
Bergs Timber presents key performance indicators (KPI) in the interim report that supplement the financial measures defined according to IFRS, known as alternative performance measures (APM). The company believes that these performance measures provide valuable information to investors and the company's management since they enable, among other things, measurement of the company's performance, trends and financing. Because not all companies calculate financial key performance indicators in the same way, these are not always comparable. The alternative performance measures should be regarded as a supplement to the key performance indicators defined under IFRS. For further definitions and reasons for use, please refer to Note 32 in the 2019 Annual Report.
Definitions of key performance indicators
| EBITDA | Operating profit before depreciation/amortisation and impairment of tangible and intangible assets. |
|---|---|
| EBITDA margin | EBITDA as a percentage of net sales |
| Adjusted EBITDA | Operating profit before depreciation/amortisation and impairment of tangible and intangible assets, adjusted for items affecting comparability. |
| Adjusted EBITDA margin | Adjusted EBITDA as a percentage of net sales |
| Operating profit | Earnings before financial items and tax |
| Operating margin | Operating profit as a percentage of net sales |
| Adjusted operating profit | Earnings before financial items and tax, adjusted for items affecting comparability |
| Adjusted operating margin | Adjusted operating profit as a percentage of net sales |
| Return on capital employed | Profit/loss after financial items plus financial expenses in relation to the average capital employed |
| Capital employed | Equity plus interest-bearing liabilities and provisions |
| Interest-bearing net debt | Interest-bearing liabilities and provisions less cash and cash equivalents and current investments |
| Net debt/equity ratio | Net interest-bearing liabilities in relation to equity |
| Equity/assets ratio | Equity as a percentage of the balance-sheet total |
| Equity per share | Equity in relation to the total number of shares outstanding |
| Items affecting comparability | Items affecting comparability comprise the financial effects from events or transactions with significant consequences that are relevant to understanding earnings in a comparison between periods. Items affecting comparability comprise non-recurring items such as restructuring, impairments, acquisitions, and earnings from disposal of assets or businesses. |
| Production volume | Nominal sawn volume in cubic metres less estimated offcuts and wastage in further internal production processes |
| Sales volumes | Nominal delivered volume in cubic metres (volume calculated before planing, if any) |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
NOTES
RECONCILIATION TABLE FOR PERFORMANCE MEASURES
Continuing operations
| Amounts in SEK m | 2020Jul-Sep3 months | 2019Jul-Sep3 months | 2020Jan-Sep9 months | 2019Jan-Sep9 months | 2019Jan-Dec12 months |
|---|---|---|---|---|---|
| Equity | 1,102 | ||||
| Interest-bearing liabilities | 761 | ||||
| Provisions | 5 | ||||
| Capital employed | 1,868 | ||||
| Profit/loss after financial items | 40 | ||||
| Financial expenses | 34 | ||||
| Total | 74 | ||||
| Average capital employed | 1,789 | ||||
| Return on capital employed, % | 4.1 | ||||
| Interest bearing liabilities, long-term | 180 | 611 | 180 | 611 | 604 |
| Interest bearing liabilities, short-term | 35 | 160 | 35 | 160 | 157 |
| Total interest-bearing liabilities | 215 | 771 | 215 | 771 | 761 |
| Cash and cash equivalents | -204 | -107 | -204 | -107 | -86 |
| Interest-bearing net debt | 11 | 664 | 11 | 664 | 675 |
| Interest-bearing net debt | 11 | 664 | 11 | 664 | 675 |
| Equity | 1,226 | 1,144 | 1,226 | 1,144 | 1,102 |
| Net debt/equity ratio | 0.01 | 0.58 | 0.01 | 0.58 | 0.61 |
| Equity | 1,226 | 1,144 | 1,226 | 1,144 | 1,102 |
| Total assets | 1,771 | 2,307 | 1,771 | 2,307 | 2,231 |
| Equity/assets ratio, % | 69 | 50 | 69 | 50 | 49 |
| Operating profit | 31 | 12 | 79 | 81 | 73 |
| Depreciation/amortisation and impairment | 22 | 19 | 55 | 46 | 60 |
| EBITDA | 53 | 31 | 134 | 127 | 133 |
| Items affecting comparability | - | -10 | - | -21 | -18 |
| Adjusted EBITDA | 53 | 21 | 134 | 106 | 115 |
| Net sales | 518 | 463 | 1,591 | 1,651 | 2,056 |
| Adjusted EBITDA margin, % | 10.2 | 4.5 | 8.4 | 6.4 | 5.6 |
| Operating profit | 31 | 12 | 79 | 81 | 73 |
| Net sales | 518 | 463 | 1,591 | 1,651 | 2,056 |
| Operating margin, % | 6.0 | 2.6 | 5.0 | 4.9 | 3.6 |
| Operating profit | 31 | 12 | 79 | 81 | 73 |
| Items affecting comparability | - | -10 | - | -21 | -18 |
| Adjusted operating profit | 31 | 2 | 79 | 60 | 55 |
| Net sales | 518 | 463 | 1,591 | 1,651 | 2,056 |
| Adjusted operating margin, % | 6.0 | 0.4 | 5.0 | 3.6 | 2.7 |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
NOTES
SPECIFICATION OF ITEMS AFFECTING COMPARABILITY
Continuing operations
| Amounts in SEK m | 2020 Q3 | 2020 Q2 | 2020 Q1 | 2019 Q4 | 2019 Q3 | 2019 Q2 | 2019 Q1 |
|---|---|---|---|---|---|---|---|
| Settlement of negative goodwill | – | – | – | – | – | 11 | – |
| Restructuring costs | – | – | – | -3 | -5 | – | – |
| Earnout reversed | – | – | – | – | 15 | – | – |
| Impact on EBITDA | – | – | – | -3 | 10 | 11 | – |
| Impact on operating profit | – | – | – | -3 | 10 | 11 | – |
Items affecting comparability recognised in Q2–Q3 2019 pertain to Other segment. Items affecting comparability in Q4 2019 pertain to the Sawmills segment.
RECONCILIATION TABLE FOR PERFORMANCE MEASURES
Discontinued operations
| Amounts in SEK m | 2020 Jul-Sep 3 months | 2019 Jul-Sep 3 months | 2020 Jan-Sep 9 months | 2019 Jan-Sep 9 months | 2019 Jan-Dec 12 months |
|---|---|---|---|---|---|
| Operating profit | 95 | -10 | 91 | 19 | 5 |
| Depreciation/amortisation and impairment | 1 | 7 | 35 | 23 | 34 |
| EBITDA | 96 | -3 | 126 | 42 | 39 |
| Items affecting comparability | -87 | - | -74 | - | - |
| Adjusted EBITDA | 9 | -3 | 52 | 42 | 39 |
| Net sales | 194 | 258 | 858 | 868 | 1 150 |
| Adjusted EBITDA margin, % | 4.6 | – | 6.1 | 4.8 | 3.3 |
| Operating profit | 95 | -10 | 91 | 19 | 5 |
| Net sales | 194 | 258 | 858 | 868 | 1 150 |
| Operating margin, % | 49.0 | – | 10.6 | 2.2 | 0.4 |
| Operating profit | 95 | -10 | 91 | 19 | 5 |
| Items affecting comparability | -87 | - | -57 | - | - |
| Adjusted operating profit | 8 | -10 | 34 | 19 | 5 |
| Net sales | 194 | 258 | 858 | 868 | 1 150 |
| Adjusted operating margin, % | 4.1 | – | 4.0 | 2.2 | 0.4 |
SPECIFICATION OF ITEMS AFFECTING COMPARABILITY
Discontinued operations
| Amounts in SEK m | 2020 Q3 | 2020 Q2 | 2020 Q1 | 2019 Q4 | 2019 Q3 | 2019 Q2 | 2019 Q1 |
|---|---|---|---|---|---|---|---|
| Earnings from sale of sawmills | 87 | - | - | - | - | - | - |
| Closure of sawmill | - | - | -13 | - | - | - | - |
| Impact on EBITDA | 87 | - | -13 | - | - | - | - |
| Depreciation of non-current assets | - | - | -17 | - | - | - | - |
| Impact on operating profit | 87 | - | -30 | - | - | - | - |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
NOTES
9. QUARTERLY OUTCOME BY SEGMENT
Segments are monitored and reported including operating profit.
Statement of income
| Amounts in SEK m | 2020
Q3 | 2020
Q2 | 2020
Q1 | 2019
Q4 | 2019
Q3 | 2019
Q2 | 2019
Q1 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Net sales | 518 | 545 | 528 | 405 | 463 | 619 | 569 |
| Sawmills | 175 | 202 | 202 | 182 | 171 | 267 | 256 |
| Further Processed | 339 | 342 | 302 | 207 | 265 | 333 | 269 |
| Other | 80 | 46 | 59 | 46 | 52 | 56 | 54 |
| Intra-Group deliveries | -76 | -45 | -35 | -30 | -25 | -37 | -10 |
| EBITDA | 53 | 52 | 29 | 7 | 31 | 51 | 44 |
| Sawmills | 18 | 26 | 14 | 7 | 2 | 13 | 28 |
| Further Processed | 31 | 32 | 16 | 10 | 21 | 27 | 17 |
| Other | 4 | -6 | -1 | -10 | 8 | 11 | -1 |
| Adjusted EBITDA | 53 | 52 | 29 | 10 | 21 | 40 | 44 |
| Sawmills | 18 | 26 | 14 | 10 | 2 | 13 | 28 |
| Further Processed | 31 | 32 | 16 | 10 | 21 | 27 | 17 |
| Other | 4 | -6 | -1 | -10 | -2 | 0 | -1 |
| Adjusted EBITDA margin, % | 10.2 | 9.5 | 5.5 | 2.5 | 4.5 | 6.5 | 7.7 |
| Sawmills | 10.3 | 12.9 | 6.9 | 5.5 | 1.2 | 4.9 | 10.9 |
| Further Processed | 9.1 | 9.4 | 5.3 | 4.8 | 7.9 | 8.1 | 6.3 |
| Operating profit | 31 | 35 | 13 | -7 | 12 | 36 | 32 |
| Sawmills | 12 | 16 | 7 | -2 | -8 | 5 | 21 |
| Further Processed | 18 | 23 | 8 | 4 | 12 | 23 | 13 |
| Other | 1 | -4 | -2 | -9 | 8 | 8 | -2 |
| | | | | | | | |
| Adjusted operating profit | 31 | 35 | 13 | -4 | 2 | 25 | 32 |
| Sawmills | 12 | 16 | 7 | 1 | -8 | 5 | 21 |
| Further Processed | 18 | 23 | 8 | 4 | 12 | 23 | 13 |
| Other | 1 | -4 | -2 | -9 | -2 | -3 | -2 |
| Adjusted operating margin, % | 6.0 | 6.4 | 2.5 | - | 0.4 | 4.0 | 5.6 |
| Sawmills | 6.9 | 7.9 | 3.5 | 0.5 | - | 1.9 | 8.2 |
| Further Processed | 5.3 | 6.7 | 2.6 | 1.9 | 4.5 | 6.9 | 4.8 |
BERGS TIMBER AB
Interim Report January–September 2020
BERGS
ABOUT BERGS
22
This is Bergs
– an international wood products Group
Bergs Timber processes raw materials from sustainable forests in Sweden, Estonia and Latvia.
The entire business process creates value for a large number of stakeholders.
| RAW FORESTRY MATERIALS
0.8m m²fub | SAWMILLS
0.4 m m² | FURTHER PROCESSED | OTHER DISTRIBUTION |
| --- | --- | --- | --- |
| Purchase of saw timber from private and state forest owners in Estonia and Latvia. | Planks and boards in various dimensions, lengths and qualities. | Planned products for construction and renovation.
Windows, doors, wooden buildings and house modules
Garden products Outdoor furniture, fences, windbreaks, privacy screens
Wood preservatives Impregnated and fire-retardant wood
Pellets and fire loes | Harbour and logistics centre in the UK
Logistics services |
| Cellulose chips, sawdust and bark to external customers. | | | |
Our operations – conducted through wholly owned subsidiaries in Sweden, Estonia, Latvia and the UK – encompass sawmills and processing as well as distribution and logistics. Bergs is listed on Nasdaq Stockholm,
SEK 2 billion
Sales
~850
Employees
Business concept
Bergs owns and develops companies that produce and sell processed timber products to discerning customers in selected markets.
This means that:
- We own and develop companies in the timber industry
- Our subsidiaries develop and produce processed wood products, with the customer’s needs in focus
- We have a decentralised business model
- We work sustainably throughout the value chain – with raw materials from responsibly cultivated forests – all the way to
Financial targets
- EBITDA margin: >7% over a business cycle
- Return on capital employed: >10% over a business cycle
- Growth: 2% organic and 5–10% including acquisitions over a business cycle
- Dividends normally 25–40% of net profit
- Net debt/equity ratio: <1.0
www.bergstimber.com
BERGS TIMBER AB
Interim Report January–September 2020
BERGS