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Electrolux Professional Interim / Quarterly Report 2020
2909_10-q_2020-10-30_4a7b25d9-9fc5-4c81-9ee6-dd32a1bd514e.pdf
Interim / Quarterly Report
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Electrolux Professional - Interim report, Q3 2020
Interim report
Third quarter, July–September 2020
> The COVID-19 pandemic continued to impact the business. Net sales amounted to SEK 1,748m (2,190). Sales decreased by 20.2%. Organically sales decreased by 16.1%.
> EBITA amounted to SEK 96m (144), corresponding to a margin of 5.5% (6.6). EBITA excluding items affecting comparability of SEK -77m (-122), amounted to SEK 173m (266), corresponding to a margin of 9.9% (12.1).
> Operating income amounted to SEK 81m (126), corresponding to a margin of 4.6% (5.7).
> Operating cash flow after investments amounted to SEK 63m (134).
> Income for the period amounted to SEK 77m (128), and earnings per share was SEK 0.27 (0.45).
> Cost reduction actions have compensated for half of the drop in sales due to the pandemic. The actions partially include the recently launched structural cost savings of SEK 130m.
Key ratios
| SEKm | Third quarter | Nine months | ||||
|---|---|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Change, % | Jan-Sep 2020 | Jan-Sep 2019 | Change, % | |
| Net sales | 1,748 | 2,190 | -20.2 | 5,328 | 6,946 | -23.3 |
| EBITA | 96 | 144 | -33.2 | 313 | 877 | -64.3 |
| EBITA margin, % | 5.5 | 6.6 | 5.9 | 12.6 | ||
| Operating income | 81 | 126 | -35.6 | 268 | 828 | -67.6 |
| Operating margin, % | 4.6 | 5.7 | 5.0 | 11.9 | ||
| Income after financial items | 73 | 122 | -40.5 | 250 | 820 | -69.6 |
| Income for the period | 77 | 128 | -40.2 | 208 | 495 | -58.0 |
| Earnings per share, SEK¹ | 0.27 | 0.45 | 0.72 | 1.72 | ||
| Operating cash flow after investments | 63 | 134 | 110 | 783 | ||
| Operating working capital | ||||||
| % of net sales | - | - | 20.2 | 17.1 |
1) Basic number of outstanding shares.
First page
Message from the CEO
Financial overview
Financial reports
Definitions
Shareholders information
Message from the CEO:
Sales recovery and continued cost actions improved profit compared to Q2
Alberto Zanata, President and CEO
"As digitalization, online sales and working from home change our everyday work, we have started to adapt our organization to this new reality in an effort to become leaner and more flexible."
During the third quarter we have seen a recovery after the significant negative impact the pandemic had on commercial restaurants, hotels, pubs and staff canteens during the second quarter. The Laundry market has shown more resilience, driven by the increased need for cleaning and disinfection.
Sales in the quarter declined organically by 16.1%. The decline in sales in July and August were in line with the levels reached in June, when the recovery began. In September, as well as in October, we have seen an improvement compared to the previous months.
After a challenging second quarter with its break-even results, I am pleased that the sales recovery and continued cost actions improved the profit in the quarter compared to the second quarter. EBITA for the quarter, excluding items affecting comparability, was SEK 173m with a corresponding margin of 9.9% (12.1%). Sales of Food & Beverage declined organically by 19.6% in the quarter, reporting an EBITA-margin, excluding items affecting comparability, of 9.1%. Laundry continued to be more resilient with an organic sales decline of 9.8% and an improved EBITA-margin, excluding items affecting comparability, of 14.9%.
Short-term savings and improvements from the 2019 and 2020 structural restructuring programs contributed positively. With sales gradually improving, temporary cost actions have, however, started to phase down versus the previous quarter. In total, cost-saving
measures amounted to approximately SEK 75m in the quarter.
Several customer segments, in particular within the hospitality industry, will likely continue to be strongly affected by the pandemic. As digitalization, online sales and working from home change our everyday work, we have started to adapt our organization to this new reality in an effort to become leaner and more flexible. In support of these changes, structural measures generating yearly cost savings of SEK 130m have been launched. These savings are in addition to the SEK 100m saving measures announced in 2019, which have now been fully implemented.
Product innovation plays a crucial role in our business and as a result, several new products have been released, such as the NitroChrome3 High Productivity fry top, the new Espresso Coffee Machine range and the new line of ironers for Laundry.
Virtually every employee at Electrolux Professional has been affected by the pandemic. At the same time, our employees have continued to show commitment and flexibility in front of the challenges that this new reality brings forth. Combined with our measures, this brings confidence that we have a stronger organization that is well equipped to handle the continued uncertainty in the market going forward.
Alberto Zanata, President and CEO
Electrolux Professional - Interim report, Q3 2020
Financial overview
Third quarter development
Net sales
Net sales for the third quarter amounted to SEK 1,748m (2,190), a decline by 20.2% compared to the same period last year. Organically, sales decreased by 16.1%, acquisitions contributed negatively by 0.6% and currency contributed negatively by 3.5%. The sales decline was driven by lower sales volumes due to the impact from the pandemic. Sales of Food & Beverage declined organically by 20% while Laundry was more resilient with an organic decline of 10%. Organically, sales in Europe declined approximately 10% while sales in Asia-Pacific, Middle East and Africa as well as Americas declined between 25 and 30%.
| Changes in net sales, % | Jul-Sep 2020 | Jul-Sep 2019 |
|---|---|---|
| Organic growth | -16.1 | -5.1 |
| Acquisitions* | -0.6 | 3.2 |
| Changes in exchange rates | -3.5 | 4.5 |
| Total | -20.2 | 2.6 |
*In the third quarter of 2019, four months of the acquisition of Unic were reported in order to align with Electrolux Professional reporting.
Share of sales by segment, July-September 2020
Share of sales by region, July-September 2020
Operating income and EBITA
Operating income amounted to SEK 81m (126), corresponding to a margin of 4.6% (5.7). The decline in operating income is mainly due to lower sales volumes. Operating income also includes items affecting comparability from restructuring measures of SEK -77m (-122). Operating income excluding items affecting comparability amounted to SEK 158m (248).
Short-term cost activities to mitigate the sales decline contributed positively. They have included reduced worktime, reduction of consultants, use of vacation days, government subsidies and reduced discretionary spend. These actions, together with already implemented structural cost saving activities, have reduced cost in the quarter by approximately SEK 75m compared to previous year. Operating income excluding amortization of intangible assets (EBITA) amounted to SEK 96m (144) corresponding to a margin of 5.5% (6,6). EBITA, excluding items affecting comparability, amounted to SEK 173m (266), corresponding to a margin of 9.9% (12.1).
Sales and EBITA margin
1) The second quarter 2019 includes items affecting comparability of SEK -90m, the third quarter 2019 includes items affecting comparability of SEK -122m and the third quarter 2020 includes items affecting comparability of SEK -77m.
Financial net
Net financial items amounted to SEK -8m (-4). The finance net is not comparable between the years as the capital structure for Electrolux Professional is different from when being a part of Electrolux Group.
Income for the period
Income for the period amounted to SEK 77m (128), corresponding to SEK 0.27 (0.45) in earnings per share. Income tax for the period amounted to SEK 4m (6).
Group common cost
Group common cost was SEK -26m (10). The increase is driven by the new corporate functions needed as a stand-alone stock listed company.
Electrolux Professional - Interim report, Q3 2020
Segment Food & Beverage
In the third quarter, sales for Food & Beverage was SEK 1,070m (1,415), a decline by 24.4% compared to the same period last year. Organically sales decreased by 19.6%, acquisitions was -0.9% and currency had a negative effect of 3.9%.
Sales continued to be heavily impacted by the pandemic and decreased by approximately 15% in Europe and by 30% in Americas and Asia-Pacific. Sales in Northern Europe grew somewhat but declined between 15 and 20% in the other parts of Europe. In the US, sales declined by 10% whilst sales declined substantially in South America due to a large decline in Beverage. Sales declined substantially in South East Asia and Oceania but increased in Middle East and Africa.
Operating income excluding amortization of intangible assets (EBITA) amounted to SEK 42m (58). EBITA declined due to lower volumes. EBITA, excluding items affecting comparability, amounted to SEK 97m (156), corresponding to a margin of 9.1% (11.0). Operating income amounted to SEK 31m (45), corresponding to a margin of 2.9% (3.1). Operating income also include items affecting comparability from restructuring measures of SEK -55m (-98). Operating income, excluding items affecting comparability, amounted to SEK 86m (143).
Sales and EBITA margin
1) The second quarter 2019 includes items affecting comparability of SEK +31m, the third quarter 2019 includes items affecting comparability of SEK -98m and the third quarter 2020 includes items affecting comparability of SEK -55m.
| SEKm | Third quarter | Nine months | Full year | ||||
|---|---|---|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Change, % | Jan-Sep 2020 | Jan-Sep 2019 | Change, % | 2019 | |
| Net sales | 1,070 | 1,415 | -24.4 | 3,151 | 4,490 | -29.8 | 5,895 |
| Organic growth, % | -19.6 | -7.4 | -30.1 | 2.2 | -1.1 | ||
| Acquisitions, %* | -0.9 | 8.3 | 0.7 | 7.4 | 6.4 | ||
| Changes in exchange rates, % | -3.9 | 5.3 | -0.4 | 4.2 | 3.9 | ||
| EBITA | 42 | 58 | -26.6 | 77 | 486 | -84.2 | 568 |
| EBITA margin, % | 4.0 | 4.1 | 2.4 | 10.8 | 9.6 | ||
| Operating income | 31 | 45 | -29.4 | 43 | 450 | -90.5 | 522 |
| Operating margin, % | 2.9 | 3.1 | 1.4 | 10.0 | 8.9 |
*In the third quarter of 2019, four months of the acquisition of Unic were reported in order to align with Electrolux Professional reporting.
Electrolux Professional - Interim report, Q3 2020
Segment Laundry
In the third quarter, sales for Laundry was SEK 678m (774), a decline by 12.4% compared to the same period last year. Organically sales decreased by 9.8% and currency had a negative effect of 2.6%.
Sales in Europe was unchanged where Northern and Eastern Europe grew, but Southern Europe and UK declined. Sales of Laundry solutions with a combined rental and service agreement continued to show good growth. In Asia-Pacific, Middle East and Africa, sales declined by approximately 15%, while sales in the US declined by approximately 35%, primarily driven by continued de-stocking in the beginning of the quarter.
Operating income excluding amortization of intangible assets (EBITA) amounted to SEK 79m (76). EBITA, excluding items affecting comparability, amounted to SEK 101m (100), corresponding to a margin of 14.9% (12.9). Cost efficiency measures improved EBITA despite lower sales. Operating income amounted to SEK 75m (71), corresponding to a margin of 11.1% (9.2). Operating income also include items affecting comparability from restructuring measures of SEK -22m (-24). Operating income, excluding items affecting comparability, amounted to SEK 97m (95).
Sales and EBITA margin
1) The second quarter 2019 includes items affecting comparability of SEK +59m, the third quarter 2019 includes items affecting comparability of SEK -24m and the third quarter 2020 includes items affecting comparability of SEK -22m.
| SEKm | Third quarter | Nine months | Full year | ||||
|---|---|---|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Change, % | Jan-Sep 2020 | Jan-Sep 2019 | Change, % | 2019 | |
| Net sales | 678 | 774 | -12.4 | 2,177 | 2,457 | -11.4 | 3,386 |
| Organic growth, % | -9.8 | -1.1 | -11.2 | 1.4 | 1.0 | ||
| Acquisitions, % | - | -5.4 | - | 1.9 | - | ||
| Changes in exchange rates, % | -2.6 | 3.2 | -0.2 | 2.7 | 2.6 | ||
| EBITA | 79 | 76 | 4.3 | 317 | 387 | -18.1 | 507 |
| EBITA margin, % | 11.6 | 9.8 | 14.6 | 15.8 | 15.0 | ||
| Operating income | 75 | 71 | 5.2 | 306 | 374 | -18.2 | 488 |
| Operating margin, % | 11.1 | 9.2 | 14.0 | 15.2 | 14.4 |
Electrolux Professional - Interim report, Q3 2020
Net sales, EBITA and operating income by segment
| SEKm | Third quarter | Nine months | Full year | ||
|---|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 | 2019 | |
| Food & Beverage | |||||
| Net sales | 1,070 | 1,415 | 3,151 | 4,490 | 5,895 |
| EBITA | 42 | 58 | 77 | 486 | 568 |
| Amortization | -11 | -13 | -34 | -35 | -45 |
| Operating income | 31 | 45 | 43 | 450 | 522 |
| Laundry | |||||
| Net sales | 678 | 774 | 2,177 | 2,457 | 3,386 |
| EBITA | 79 | 76 | 317 | 387 | 507 |
| Amortization | -4 | -4 | -12 | -14 | -20 |
| Operating income | 75 | 71 | 306 | 374 | 488 |
| Group common costs | |||||
| EBITA | -26 | 10 | -81 | 4 | -18 |
| Amortization | -0 | -0 | -0 | -1 | 0 |
| Operating income | -26 | 10 | -81 | 3 | -18 |
| Total Group | |||||
| Net sales | 1,748 | 2,190 | 5,328 | 6,946 | 9,281 |
| EBITA | 96 | 144 | 313 | 877 | 1,058 |
| Amortization | -15 | -18 | -46 | -49 | -66 |
| Operating income | 81 | 126 | 268 | 828 | 992 |
| Financial items, net | -8 | -4 | -18 | -7 | -15 |
| Income after financial items | 73 | 122 | 250 | 820 | 978 |
| Taxes | 4 | 6 | -42 | -325 | -314 |
| Income for the period | 77 | 128 | 208 | 495 | 663 |
First page
Message from the CEO
Financial overview
Financial reports
Definitions
Shareholders information
Electrolux Professional - Interim report, Q3 2020
Electrolux Professional – Interim report, Q3 2020
Cash flow
Operating cash flow after investments amounted to SEK 63m (134) in the quarter. The decline is mainly due to lower operating income.
Operating cash flow after investments
| SEKm | Third quarter | Nine months | Full year | ||
|---|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 | 2019 | |
| Operating income | 81 | 126 | 268 | 828 | 992 |
| Depreciation | 54 | 49 | 171 | 144 | 222 |
| Amortization | 15 | 18 | 46 | 49 | 66 |
| Other non-cash items | 79 | 124 | 87 | 45 | 7 |
| Operating income adjusted for non-cash items | 229 | 317 | 571 | 1,066 | 1,287 |
| Change in inventories | 110 | 28 | -35 | 52 | 139 |
| Change in trade receivables | -109 | 71 | 253 | -22 | 43 |
| Change in accounts payable | -63 | -178 | -313 | -141 | -23 |
| Change in other operating assets, liabilities and provisions | -54 | -37 | -178 | -60 | -47 |
| Operating cash flow | 112 | 200 | 299 | 896 | 1,399 |
| Investments in tangible and intangible assets | -57 | -78 | -205 | -125 | -257 |
| Changes in other investments | 8 | 12 | 15 | 12 | -4 |
| Operating cash flow after investments | 63 | 134 | 110 | 783 | 1,138 |
Operating working capital
Average working capital as a percent of annualized net sales increased to 20.2% (17.1). Average accounts receivables and inventory decreased at a lower rate than the decrease of net sales.
Operating working capital of annualized net sales, %
First page
Message from the CEO
Financial overview
Financial reports
Definitions
Shareholders information
P. 7
Financial position
Net debt
As of September 30, 2020, Electrolux Professional had a financial net debt position (excluding lease liabilities and post-employment provisions) of SEK 627m compared to SEK 588m as of December 31, 2019. Lease liabilities decreased somewhat to SEK 226m and net provisions for post-employments benefits decreased to SEK 151m.
In total, net debt amounted to SEK 1,004m as of September 30, 2020, compared to SEK 1,025m per December 31, 2019.
Long-term borrowings amounted to SEK 601m and short-term borrowings amounted to SEK 675m. Total borrowings amounted to SEK 1,276m. During the first quarter of 2020, loans to Electrolux Group was repaid and new external credit facilities were put in place.
Liquid funds as of September 30, 2020, amounted to SEK 648m compared to SEK 656m as of December 31, 2019.
Credit facilities and loans
On February 21, 2020, Electrolux Professional AB entered into a EUR 250m multicurrency revolving credit facilities agreement with its core banking-group and on March 6, 2020 a bilateral term loan of SEK 600m was entered into with AB Svensk Exportkredit. The revolving credit facilities has a tenure of five years (with extension options) and the term loan has a tenure of seven years. EUR 20m was repaid on the revolving credit facility during the third quarter. As of September 30, EUR 62m of the revolving credit facility was utilized.
Net debt
| SEKm | Sep 30, 2020 | Sep 30, 2019 | Dec 31, 2019 |
|---|---|---|---|
| Short-term loans | 664 | 7 | 4 |
| Short-term loans, Electrolux Group | - | 6,050 | 990 |
| Short-term borrowings | 664 | 6,057 | 994 |
| Financial derivative liabilities | 9 | - | 4 |
| Accrued interest expenses and prepaid interest income | 2 | 1 | 8 |
| Other financial liabilities, Electrolux Group | - | 30 | 234 |
| Total short-term borrowings | 675 | 6,088 | 1,241 |
| Long-term loans | 601 | 34 | 3 |
| Long-term loans, Electrolux Group | - | 121 | - |
| Long-term borrowings | 601 | 155 | 3 |
| Total borrowings^{1} | 1,276 | 6,243 | 1,244 |
| Cash and cash equivalents | 640 | 418 | 651 |
| Financial derivative assets | 7 | - | 4 |
| Prepaid interest expenses and accrued interest income | 1 | 2 | 2 |
| Liquid funds | 648 | 420 | 656 |
| Financial net debt | 627 | 5,823 | 588 |
| Lease liabilities | 226 | 185 | 243 |
| Net provisions for post-employment benefits | 151 | 259 | 195 |
| Net debt | 1,004 | 6,267 | 1,025 |
| Net debt/EBITDA ratio | 1.4 | 4.5 | 0.8 |
| EBITDA | 744 | 1,384 | 1,280 |
1) Whereof interest-bearing liabilities amounting to SEK 1,264m as of September 30, 2020, SEK 6,212m as of September 30, 2019 and SEK 997m as of December 31, 2019.
Electrolux Professional - Interim report, Q3 2020
Electrolux Professional – Interim report, Q3 2020
Other disclosures
Separation and stock listing of Electrolux Professional
At an Extraordinary General Meeting in AB Electrolux held on February 21, 2020, it was resolved to distribute all shares in the wholly owned subsidiary Electrolux Professional AB to the shareholders of Electrolux. Consequently, Electrolux Professional was on March 23, 2020 listed on Nasdaq Stockholm and is since then a stand-alone company.
Delisting of A-shares
Due to an insufficient liquidity resulting in a dysfunctional pricing in the series A shares, Electrolux Professional applied for delisting of the series A shares from Nasdaq Stockholm. Consequently, the series A shares were delisted from Nasdaq Stockholm on September 4, 2020. The delisting did not affect the company's series B shares.
Conversion of shares
According to Electrolux Professional’s articles of association, owners of A-shares have the right to have such shares converted to B-shares. Conversion reduces the total number of votes in the Company. 3,014 shares were converted in the third quarter. The total number of registered shares in the company at September 30, 2020 amounted to 287,397,450 of which 8,189,525 were A-shares and 279,207,925 were B-shares. The total number of votes amounted to 36,110,317.5.
Management change
Pia Hovland has been appointed Chief Human Resources Officer in Electrolux Professional. She succeeds Marie-Thérèse Chaabane who will retire. Pia Hovland took up her new position on October 1, 2020.
Related party transactions
Buying and selling services and products between Electrolux Professional and AB Electrolux and its subsidiaries were regarded as related party transactions up until March 23, 2020, see table on page 16. Transactions with related parties were on market-based terms.
Employees
The number of employees at the end of the quarter was 3,441 (3,710).
Events after the balance sheet date
After the end of the reporting period, no significant events have taken place that could affect the company's operations.
Parent Company
The Parent Company's activities include head office as well as production and sales in and from Sweden.
Net sales for the Parent Company, Electrolux Professional AB, for the period from January 1 to September 30 2020 amounted to SEK 1,613m (1,669) of which SEK 673 (666) referred to sales to Group Companies and SEK 653m (671) to external customers.
Income after financial items was SEK 133m (155). Income for the period amounted to SEK 89m (165).
Capital expenditure in tangible and intangible assets was SEK 14m (8). Liquid funds at the end of the period amounted to SEK 241m, as against SEK 204m at the start of the year.
Undistributed earnings in the Parent Company at the end of the period amounted to SEK 7,768m, as against SEK 7,681m at the start of the year.
The income statement and balance sheet for the Parent Company are presented on page 19.
Risk and uncertainty factors
Electrolux Professional is an international group with a wide geographic spread and is thus exposed to a number of business and financial risks. Risk management in Electrolux Professional aims to identify, control and reduce risks. The risk factors are described in the Prospectus ahead of the listing of the shares in Electrolux Professional and consist of operational risk, industry risks, legal risks and financial risks. Compared to the Prospectus, which was issued on March 11, 2020, and the prospectus supplement that was published on March 20, 2020 no new material risks have been identified. Electrolux Professional expects that its financial performance during the rest of 2020 will continue to be affected by the pandemic related to the coronavirus.
Stockholm, October 30, 2020
Electrolux Professional AB (publ)
Alberto Zanata
President and CEO
This report has not been audited or reviewed by external auditors.
P. 9
Advanced technology enables the most sustainable solutions
Food & Beverage
Espresso coffee machine range
- 1-3 groups in the range. Always Excellent Coffee quality.
- Unlimited steam production for uninterrupted performance.
- Exceptionally durable design
- Easy to service and low cost of ownership.
High capacity soft serve ice cream range
- Soft Ice Cream Dispensers, available in up to 650 cones/h model.
- Two-flavor, floor standing unit to maximize soft serve potential.
High productivity fry top
- Nitrochrome3 - an incomparable solution in modular cooking.
- Non-scratch surface.
- High productivity - perfect for restaurant chains.
Laundry
Line 6000 hot cylinder ironers
- Certified Ergonomics - Reducing workload, easing stress, intuitive and user friendly.
- Full Flexibility - 30 solutions designed for specific needs.
- Optimum Productivity - Brilliant results with optimised staffing costs maintaining strict standards of hygiene.
Protecting the protectors
- Firefighters are continuously and massively exposed to contaminants that are known to cause cancer due to improper cleaning and decontamination of their clothing.
- Shaping the "effortless Laundry", Electrolux Professional, together with Decontex, developed a process to properly clean and decontaminate the firefighters' uniforms.
- With a full decontamination circle, thanks to the Barrier Washers + LCO2 Washers process, we help Professionals get to the heart of clean.
First page
Message from the CEO
Financial overview
Financial reports
Definitions
Shareholders information
Electrolux Professional - Interim report, Q3 2020
Financial reports
Consolidated statement of total comprehensive income
| SEKm | Third quarter | Nine months | Full year | ||
|---|---|---|---|---|---|
| Jul–Sep 2020 | Jul–Sep 2019 | Jan–Sep 2020 | Jan–Sep 2019 | 2019 | |
| Net sales | 1,748 | 2,190 | 5,328 | 6,946 | 9,281 |
| Cost of goods sold | -1,180 | -1,457 | -3,562 | -4,476 | -6,040 |
| Gross operating income | 568 | 733 | 1,766 | 2,470 | 3,241 |
| Selling expenses | -339 | -445 | -1,029 | -1,307 | -1,699 |
| Administrative expenses | -148 | -170 | -470 | -340 | -582 |
| Other operating income/expenses | 0 | 8 | 2 | 4 | 32 |
| Operating income | 81 | 126 | 268 | 828 | 992 |
| Financial items, net | -8 | -4 | -18 | -7 | -15 |
| Income after financial items | 73 | 122 | 250 | 820 | 978 |
| Taxes | 4 | 6 | -42 | -325 | -314 |
| Income for the period | 77 | 128 | 208 | 495 | 663 |
| Items that will not be reclassified to income for the period: | |||||
| Remeasurement of provisions for post-employment benefits | 31 | -49 | 69 | -91 | -33 |
| Income tax relating to items that will not be reclassified | -4 | 10 | -8 | 20 | 6 |
| 27 | -39 | 61 | -71 | -27 | |
| Items that may be reclassified subsequently to income for the period: | |||||
| Exchange-rate differences on translation of foreign operations | -41 | 52 | -62 | 177 | 101 |
| Other comprehensive income, net of tax | -14 | 12 | -2 | 106 | 74 |
| Total comprehensive income for the period | 62 | 140 | 206 | 601 | 737 |
| Income for the period attributable to: | |||||
| Equity holders of the Parent Company | 77 | 128 | 208 | 495 | 663 |
| Total | 77 | 128 | 208 | 495 | 663 |
| Total comprehensive income for the period attributable to: | |||||
| Equity holders of the Parent Company | 62 | 140 | 206 | 601 | 737 |
| Total | 62 | 140 | 206 | 601 | 737 |
| Earnings per share, SEK | |||||
| Basic, SEK | 0.27 | 0.45 | 0.72 | 1.72 | 2.31 |
| Diluted, SEK | 0.27 | 0.45 | 0.72 | 1.72 | 2.31 |
| Average number of shares | |||||
| Basic, million | 287.4 | 287.4 | 287.4 | 287.4 | 287.4 |
| Diluted, million | 287.4 | 287.4 | 287.4 | 287.4 | 287.4 |
Electrolux Professional - Interim report, Q3 2020
Consolidated balance sheet
| SEKm | Sep 30, 2020 | Sep 30, 2019* | Dec 31, 2019* |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment, owned | 1,290 | 1,147 | 1,214 |
| Property, plant and equipment, right-of-use | 222 | 182 | 238 |
| Goodwill | 1,810 | 1,884 | 1,821 |
| Other intangible assets | 345 | 416 | 388 |
| Deferred tax assets | 398 | 361 | 350 |
| Pension plan assets | 7 | 20 | 13 |
| Other non-current assets | 29 | 34 | 34 |
| Total non-current assets | 4,101 | 4,044 | 4,057 |
| Current assets | |||
| Inventories | 1,288 | 1,387 | 1,265 |
| Trade receivables | 1,429 | 1,796 | 1,687 |
| Tax assets | 82 | 29 | 102 |
| Other current assets | 272 | 237 | 273 |
| Cash and cash equivalents | 640 | 418 | 651 |
| Total current assets | 3,710 | 3,867 | 3,978 |
| Total assets | 7,811 | 7,911 | 8,035 |
| Equity and liabilities | |||
| Equity attributable to equity holders of the Parent Company | |||
| Share capital | 29 | 25 | 25 |
| Other paid-in capital | 5 | 5 | 5 |
| Other reserves | 203 | 342 | 266 |
| Retained earnings | 2,680 | -2,744 | 2,415 |
| Equity attributable to equity holders of the Parent Company | 2,917 | -2,373 | 2,711 |
| Total equity | 2,917 | -2,373 | 2,711 |
| Non-current liabilities | |||
| Long-term borrowings | 601 | 155 | 3 |
| Long-term lease liabilities | 157 | 133 | 172 |
| Deferred tax liabilities | 143 | 148 | 144 |
| Provisions for post-employment benefits | 158 | 279 | 208 |
| Other provisions | 473 | 490 | 494 |
| Total non-current liabilities | 1,532 | 1,206 | 1,021 |
| Current liabilities | |||
| Trade payables | 1,171 | 1,395 | 1,606 |
| Tax liabilities | 104 | 98 | 73 |
| Other liabilities | 1,138 | 1,217 | 1,361 |
| Short-term borrowings | 664 | 6,057 | 994 |
| Short-term lease liabilities | 69 | 52 | 72 |
| Other provisions | 217 | 259 | 198 |
| Total current liabilities | 3,362 | 9,078 | 4,303 |
| Total equity and liabilities | 7,811 | 7,911 | 8,035 |
*Year 2019 includes related party balances, see page 17.
Electrolux Professional - Interim report, Q3 2020
Changes in condensed consolidated equity
| Nine months | Full year | ||
|---|---|---|---|
| SEKm | Jan–Sep 2020 | Jan–Sep 2019 | 2019 |
| Opening balance | 2,711 | 3,527 | 3,527 |
| Total comprehensive income for the period | 206 | 601 | 737 |
| Dividend to equity holders of the Parent Company | - | -364 | -428 |
| Other transactions with equity holders of the Parent Company^{1} | - | -6,138 | -1,125 |
| Total transactions with equity holders | - | -6,501 | -1,553 |
| Closing balance | 2,917 | -2,373 | 2,711 |
1) Transactions related to transfer of assets and liabilities as part of the formation of the Electrolux Professional Group between Electrolux Group and Electrolux Professional Group have been classified as transactions with shareholders. During 2017, 2018 and 2019, asset and liabilities were transferred to Electrolux Professional without any consideration paid. During the latter half of 2019, a major legal restructuring was executed to form the legal Electrolux Professional group and a number of transactions took place where Electrolux Professional paid consideration for the asset and liabilities legally transferred, which, Electrolux Professional already had recognized in its combined financial statements.
Electrolux Professional - Interim report, Q3 2020
Consolidated cash flow statement
| SEKm | Third quarter | Nine months | Full year | ||
|---|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 | 2019 | |
| Operations | |||||
| Operating income | 81 | 126 | 268 | 828 | 992 |
| Depreciation and amortization | 69 | 67 | 217 | 193 | 287 |
| Other non-cash items | 79 | 124 | 87 | 45 | 7 |
| Financial items paid, net¹ | -8 | -2 | -16 | -6 | -6 |
| Taxes paid | -33 | -108 | -50 | -199 | -275 |
| Cash flow from operations, excluding change in operating assets and liabilities | 187 | 206 | 506 | 861 | 1,006 |
| Change in operating assets and liabilities | |||||
| Change in inventories | 110 | 28 | -35 | 52 | 139 |
| Change in trade receivables | -109 | 71 | 253 | -22 | 43 |
| Change in accounts payable | -63 | -178 | -313 | -141 | -23 |
| Change in other operating assets, liabilities and provisions | -54 | -37 | -178 | -60 | -47 |
| Cash flow from change in operating assets and liabilities | -117 | -117 | -272 | -171 | 112 |
| Cash flow from operations | 71 | 89 | 234 | 690 | 1,118 |
| Investments | |||||
| Acquisition of operations | - | - | - | -441 | -441 |
| Capital expenditure in property, plant and equipment | -56 | -75 | -201 | -117 | -243 |
| Capital expenditure in product development | 0 | -1 | -1 | -7 | -9 |
| Capital expenditure in other intangibles | -1 | -1 | -3 | -1 | -5 |
| Other | 8 | 12 | 15 | 12 | -4 |
| Cash flow from investments | -50 | -65 | -190 | -554 | -702 |
| Cash flow from operations and investments | 21 | 24 | 45 | 136 | 417 |
| Financing | |||||
| Change in short-term borrowings, net | -198 | -20 | 657 | -47 | -32 |
| New long-term borrowings | - | - | 600 | - | - |
| Amortization of long-term borrowings | -0 | -0 | -1 | -4 | -36 |
| Payment of lease liabilities | -18 | -10 | -64 | -47 | -83 |
| Dividend to Electrolux Group | - | -19 | - | -364 | -428 |
| Shareholders contribution | - | - | - | - | 5,702 |
| Change in financial liabilities, Electrolux Group | - | 6,134 | -1,224 | 6,649 | 1,672 |
| Cash flow from financing | -217 | 6,084 | -32 | 6,187 | 6,795 |
| Total cash flow | -196 | 6,108 | 12 | 6,323 | 7,211 |
| Cash and cash equivalents at beginning of period | 848 | 280 | 651 | 230 | 230 |
| Exchange-rate differences referring to cash and cash equivalents | -12 | 5 | -23 | 19 | 14 |
| Other cash flow from transactions with shareholders, Electrolux Group² | - | -5,975 | - | -6,154 | -6,804 |
| Cash and cash equivalents at end of period | 640 | 418 | 640 | 418 | 651 |
¹) For the period January 1 to September 30: interest and similar items received SEK 4.2m (7.4), interest and similar items paid SEK -9.9m (-11.9) and other financial items received/paid SEK -5.4 (2.2). Interest paid for lease liabilities SEK -4.5m (-3.9).
²) "Other cash flow from transactions with shareholders, Electrolux group" consists of effects on cash from cash flows presented in Electrolux Professional's combined financial statements belonging to legal entities remaining in the Electrolux Group following the separation. In 2019, it also includes cash paid by Electrolux Professional to the Electrolux Group, to acquire its group companies.
Electrolux Professional - Interim report, Q3 2020
Alternative performance measures key figures
| SEKm, if not otherwise stated | Third quarter | Nine months | Full year | ||
|---|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 | 2019 | |
| Net sales | 1,748 | 2,190 | 5,328 | 6,946 | 9,281 |
| Organic growth, % | -16.1 | -5.1 | -23.5 | 1.9 | -0.3 |
| EBITA | 96 | 144 | 313 | 877 | 1,058 |
| EBITA excl. items affecting comparability¹ | 173 | 266 | 390 | 909 | 1 090 |
| EBITA margin, % | 5.5 | 6.6 | 5.9 | 12.6 | 11.4 |
| EBITA margin excl. items affecting comparability, %¹ | 9.9 | 12.1 | 7.3 | 13.1 | 11.7 |
| Operating income | 81 | 126 | 268 | 828 | 992 |
| Operating margin, % | 4.6 | 5.7 | 5.0 | 11.9 | 10.7 |
| Operating margin excl. items affecting comparability, %¹ | 9.0 | 11.3 | 6.5 | 12.4 | 11.0 |
| Income after financial items | 73 | 122 | 250 | 820 | 978 |
| Income for the period | 77 | 128 | 208 | 495 | 663 |
| Capital expenditure | -57 | -78 | -205 | -125 | -257 |
| Operating cash flow after investments | 63 | 134 | 110 | 783 | 1,138 |
| Earnings per share, SEK² | 0.27 | 0.45 | 0.72 | 1.72 | 2.31 |
| Net debt | - | - | 1,004 | 6,267 | 1,025 |
| EBITDA³ | - | - | 744 | 1,384 | 1,280 |
| Net debt/EBITDA ratio | - | - | 1.4 | 4.5 | 0.8 |
| Operating working capital % of net sales⁴ | - | - | 20.2 | 17.1 | 17.7 |
| Average number of shares, million | 287.4 | 287.4 | 287.4 | 287.4 | 287.4 |
| Number of employees, end of period | 3,441 | 3,710 | 3,441 | 3,710 | 3,624 |
1) For information on items affecting comparability, see page 18.
2) Basic number of outstanding shares.
3) Rolling four quarters
4) Last twelve months currency adjusted
For definitions, see page 24-25.
Electrolux Professional - Interim report, Q3 2020
Related party transactions, Electrolux Group
| SEKm | Third quarter | Nine months | Full year | ||
|---|---|---|---|---|---|
| Jul–Sep 2020 | Jul–Sep 2019 | Jan–Sep 2020 | Jan–Sep 2019 | 2019 | |
| Income for the period | |||||
| Purchase of goods | - | -11 | -15 | -37 | -50 |
| Interest income | - | 2 | - | 6 | 9 |
| Interest expense | - | -6 | -1 | -10 | -17 |
| Assets | |||||
| Trade receivables | |||||
| Other current assets | - | 3 | - | 3 | - |
| Other short-term operational receivables | - | - | - | - | - |
| Derivatives | - | - | - | - | - |
| Short-term financial assets | |||||
| Cashpool account | - | - | - | - | - |
| Liabilities | |||||
| Long-term borrowings | - | 121 | - | 121 | - |
| Trade payables | - | - | - | - | 121 |
| Other liabilities | |||||
| Other financial liabilities | - | 30 | - | 30 | 234 |
| Other short-term operating liabilities | - | - | - | - | 4 |
| Accrued expenses and prepaid income | - | 86 | - | 86 | 23 |
| Derivatives | - | 1 | - | 1 | 1 |
| Short-term borrowings | |||||
| Short-term loans | 6,050 | 6,050 | 990 | ||
| Equity | - | - | |||
| Dividend to shareholders | - | -19 | - | -364 | -428 |
| Shareholders contributions received | - | - | - | - | 7,697 |
| Other transactions with shareholders | - | -6,138 | - | -6,138 | -8,822 |
Electrolux Professional - Interim report, Q3 2020
Quarterly data
| SEKm | Q3 2020 | Q2 2020 | Q1 2020 | Full year 2019 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
|---|---|---|---|---|---|---|---|---|
| Food & Beverage | ||||||||
| Net sales | 1,070 | 838 | 1,243 | 5,895 | 1,405 | 1,415 | 1,619 | 1,456 |
| EBITA | 42 | -64 | 99 | 568 | 82 | 58 | 245 | 183 |
| EBITA margin. % | 4.0 | -7.7 | 7.9 | 9.6 | 5.8 | 4.1 | 15.1 | 12.5 |
| Amortization | -11 | -11 | -12 | -45 | -10 | -13 | -12 | -10 |
| Operating income | 31 | -75 | 87 | 522 | 72 | 45 | 233 | 173 |
| Operating margin. % | 2.9 | -9.0 | 7.0 | 8.9 | 5.1 | 3.1 | 14.4 | 11.9 |
| Laundry | ||||||||
| Net sales | 678 | 651 | 848 | 3,386 | 930 | 774 | 836 | 846 |
| EBITA | 79 | 88 | 150 | 507 | 120 | 76 | 173 | 138 |
| EBITA margin. % | 11.6 | 13.5 | 17.7 | 15.0 | 12.9 | 9.8 | 20.7 | 16.4 |
| Amortization | -4 | -4 | -4 | -20 | -6 | -4 | -5 | -4 |
| Operating income | 75 | 84 | 146 | 488 | 114 | 71 | 169 | 134 |
| Operating margin. % | 11.1 | 13.0 | 17.3 | 14.4 | 12.3 | 9.2 | 20.2 | 15.8 |
| Group common costs | -26 | -27 | -28 | -18 | -21 | 10 | -1 | -5 |
| Total Group | ||||||||
| Net sales | 1,748 | 1,489 | 2,091 | 9,281 | 2,334 | 2,190 | 2,455 | 2,302 |
| EBITA | 96 | -4 | 221 | 1,058 | 181 | 144 | 418 | 316 |
| EBITA margin. % | 5.5 | -0.2 | 10.6 | 11.4 | 7.8 | 6.6 | 17.0 | 13.7 |
| Amortization | -15 | -15 | -16 | -66 | -16 | -18 | -17 | -15 |
| Operating income | 81 | -18 | 205 | 992 | 165 | 126 | 401 | 301 |
| Operating margin. % | 4.6 | -1.2 | 9.8 | 10.7 | 7.1 | 5.7 | 16.3 | 13.1 |
| Financial items. net | -8 | -8 | -2 | -15 | -7 | -4 | -1 | -3 |
| Income after financial items | 73 | -26 | 203 | 978 | 157 | 122 | 400 | 298 |
| Income for the period | 77 | -28 | 159 | 663 | 168 | 128 | 126 | 241 |
| Earnings per share. SEK¹ | 0.27 | -0.10 | 0.55 | 2.31 | 0.59 | 0.45 | 0.44 | 0.84 |
1) Basic number of outstanding shares.
Electrolux Professional - Interim report, Q3 2020
Items affecting comparability
| SEKm | Q3, 2020¹ | Q2, 2020 | Q1, 2020 | Full year 2019 | Q4, 2019 | Q3, 2019² | Q2, 2019³ | Q1, 2019 |
|---|---|---|---|---|---|---|---|---|
| Food & Beverage | -55 | - | - | -67 | - | -98 | 31 | - |
| Laundry | -22 | - | - | 35 | - | -24 | 59 | - |
| Total Group | -77 | - | - | -32 | - | -122 | 90 | - |
1) The SEK -77m relates to restructuring charges for efficiency measures and are included in the line item cost of goods sold, marketing and administration.
2) The SEK -122m relates to restructuring charges for efficiency measures and are included in the line item cost of goods sold, marketing and administration.
3) The non-recurring item of SEK 90m relates to a pension plan settlement in Sweden and is included in the line item administration.
| SEKm | Q3, 2020 | Q2, 2020 | Q1, 2020 | Full year 2019 | Q4, 2019 | Q3, 2019 | Q2, 2019 | Q1, 2019 |
|---|---|---|---|---|---|---|---|---|
| Total Group | ||||||||
| Operating income excl. items affecting comparability | 158 | -18 | 205 | 1,024 | 165 | 248 | 311 | 301 |
| Operating margin excl.items affecting comparability, % | 9.0 | -1.2 | 9.8 | 11,0 | 7.1 | 11.3 | 12.7 | 13.1 |
| EBITA excl. items affecting comparability | 173 | -4 | 221 | 1,090 | 181 | 266 | 328 | 316 |
| EBITA margin excl. items affecting comparability, % | 9.9 | -0.2 | 10.6 | 11.7 | 7.8 | 12.1 | 13.3 | 13.7 |
Shares
| Number of shares | A-shares | B-shares | Shares total | Shares held by other shareholders |
|---|---|---|---|---|
| Number of shares as of January 1, 2020 | 8,192,539 | 279,204,911 | 287,397,450 | 287,397,450 |
| Conversion of shares | -3,014 | 3,014 | ||
| Number of shares as of September 30, 2020 | 8,189,525 | 279,207,925 | 287,397,450 | 287,397,450 |
Exchange rates
| Sep 30, 2020 | Sep 30, 2019 | Dec 31, 2019 | ||||
|---|---|---|---|---|---|---|
| Average | End of period | Average | End of period | Average | End of period | |
| CNY | 1.34 | 1.33 | 1.37 | 1.38 | 1.37 | 1.34 |
| CZK | 0.4008 | 0.3882 | 0.4104 | 0.4143 | 0.4113 | 0.4100 |
| DKK | 1.42 | 1.42 | 1.41 | 1.43 | 1.41 | 1.40 |
| EUR | 10.56 | 10.57 | 10.56 | 10.70 | 10.56 | 10.44 |
| GBP | 11.98 | 11.59 | 11.94 | 12.08 | 12.03 | 12.25 |
| JPY | 0.0873 | 0.0854 | 0.0861 | 0.0910 | 0.0864 | 0.0854 |
| NOK | 0.99 | 0.95 | 1.08 | 1.08 | 1.07 | 1.06 |
| RUB | 0.1324 | 0.1152 | 0.1441 | 0.1512 | 0.1455 | 0.1507 |
| THB | 0.2981 | 0.2851 | 0.3003 | 0.3211 | 0.3039 | 0.3119 |
| TRY | 1.40 | 1.16 | 1.68 | 1.74 | 1.67 | 1.57 |
| USD | 9.37 | 9.03 | 9.40 | 9.82 | 9.43 | 9.33 |
Electrolux Professional - Interim report, Q3 2020
Condensed Parent company income statement
| SEKm | Third quarter | Nine months | Full year | ||
|---|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 | 2019 | |
| Net sales | 476 | 560 | 1,613 | 1,669 | 2,361 |
| Cost of goods sold | -343 | -426 | -1,118 | -1,244 | -1,757 |
| Gross operating income | 133 | 134 | 495 | 425 | 604 |
| Selling expenses | -84 | -65 | -253 | -236 | -323 |
| Administrative expenses | -32 | -14 | -106 | -17 | -94 |
| Other operating income | 1 | - | 3 | - | 0 |
| Other operating expenses | - | -1 | - | -13 | -17 |
| Operating income | 18 | 54 | 139 | 159 | 170 |
| Financial income | 21 | - | 10 | - | 74 |
| Financial expenses | -24 | -4 | -16 | -4 | -9 |
| Financial items, net | -3 | -4 | -6 | -4 | 65 |
| Income after financial items | 15 | 50 | 133 | 155 | 235 |
| Appropriations | - | - | - | - | -252 |
| Income before taxes | 15 | 50 | 133 | 155 | -17 |
| Taxes | 8 | 10 | -44 | 10 | 16 |
| Income for the period | 23 | 60 | 89 | 165 | -1 |
Condensed Parent company balance sheet
| SEKm | Sep 30, 2020 | Sep 30, 2019 | Dec 31, 2019 |
|---|---|---|---|
| Assets | |||
| Non-current assets | 8,498 | 213 | 8,527 |
| Current assets | 1,841 | 973 | 1,543 |
| Total assets | 10,339 | 1,186 | 10,070 |
| Equity and liabilities | |||
| Restricted equity | 48 | 47 | 46 |
| Non-restricted equity | 7,768 | 149 | 7,681 |
| Total equity | 7,816 | 196 | 7,727 |
| Untaxed reserves | 109 | 78 | 109 |
| Provisions | 101 | 99 | 96 |
| Non-current liabilities | 600 | 121 | - |
| Current liabilities | 1,713 | 692 | 2,138 |
| Total equity and liabilities | 10,339 | 1,186 | 10,070 |
Electrolux Professional - Interim report, Q3 2020
Notes
Note 1 Accounting principles
Electrolux Professional applies International Financial Reporting Standards (IFRS) as adopted by the European Union. This report has been prepared in accordance with IAS 34, Interim Financial Reporting.
Electrolux Professional interim reports contain a condensed set of financial statements. For the Group this chiefly means that the disclosures are limited compared to the combined financial statements presented in the prospectus. Enumerated amounts presented in tables and statements may not always agree with the calculated sum of the related line items due to rounding differences. The aim is for each line item to agree with its source and therefore there may be rounding differences affecting the total when adding up the presented line items.
The accounting principles adopted in the preparation of this interim report apply to all periods and comply with the accounting principles presented in the prospectus "Admission to trading of Shares in Electrolux Professional AB on Nasdaq Stockholm" in Note 1.
Government grants and government assistance are recognized in the financial statements when there is reasonable assurance that the entity will comply with the conditions attached to them and the grants will be received. Grants which are dedicated to a specific and clearly identified expense item, is reported as a deduction of the specific expense. Grants of a more general character are reported as other operating income. Grants related to assets are reported as prepaid income in the balance sheet. The grant is amortized over the useful life of the asset for which it has been received.
For the Parent Company financial statements in general are presented in condensed versions and with limited disclosures compared to the annual report. The interim financial statements of Electrolux Professional AB have been prepared in accordance with the Swedish Annual Accounts Act and the accounting standard RFR 2, accounting for legal entities. The most recent annual financial statements of Electrolux Professional AB have been prepared in accordance with the Annual Accounts Act and the standard from the Swedish Accounting Standards Board BFNAR 2012:1 Annual report and consolidated accounts (K3).
Reportable segments
Food & Beverage and Laundry represent the Group's reportable segments.
Note 2 Disaggregation of revenue
Sales of products are revenue recognized at a point in time, when control of the products has transferred. Revenue from services related to installation of products, repairs or maintenance service is recognized when control is transferred being over the time the service is provided. Sales of these services are not material in relation to Electrolux Professional total net sales.
Geography is an important attribute when disaggregating Electrolux Professional revenue. Therefore, the table below presents net sales per geographical region based on the location of the end customer.
| SEK | Third quarter | Nine months | ||
|---|---|---|---|---|
| Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 | |
| Geographical region | ||||
| Europe | 1,232 | 1,442 | 3,738 | 4,571 |
| Asia-Pacific, Middle East and Africa | 279 | 392 | 849 | 1,125 |
| Americas | 237 | 356 | 740 | 1,250 |
| Total | 1,748 | 2,190 | 5,328 | 6,946 |
Electrolux Professional - Interim report, Q3 2020
Note 3 Fair values and carrying amounts of financial assets and liabilities
| SEK | Sep 30, 2020 | Sep 30, 2019 | Dec 31, 2019 | |||
|---|---|---|---|---|---|---|
| Fair value | Carrying amount | Fair value | Carrying amount | Fair value | Carrying amount | |
| Per category | ||||||
| Financial assets at fair value through profit and loss | 0 | 0 | 1 | 1 | 0 | 0 |
| Financial assets measured at amortized cost | 2,069 | 2,069 | 2,214 | 2,214 | 2,339 | 2,339 |
| Derivatives, financial assets at fair value through profit and loss | 7 | 7 | 0 | 0 | 4 | 4 |
| Total financial assets | 2,077 | 2,077 | 2,215 | 2,215 | 2,344 | 2,344 |
| Financial liabilities measured at amortized cost | 2,435 | 2,435 | 7,637 | 7,637 | 2,837 | 2,837 |
| Derivatives, financial liabilities at fair value through profit and loss | 9 | 9 | 1 | 1 | 5 | 5 |
| Total financial liabilities | 2,444 | 2,444 | 7,638 | 7,638 | 2,843 | 2,843 |
The Group strives for arranging master-netting agreements (ISDA) with the counterparts for derivative transactions and has established such agreements with the majority of the counterparties, i.e., if a counterparty will default, assets and liabilities will be netted. Derivatives are presented gross in the balance sheet.
Fair value estimation
Valuation of financial instruments at fair value is done at the most accurate market prices available. Instruments which are quoted on the market, e.g., the major bond and interest-rate future markets, are all mark-to-market with the current price. The foreign-exchange spot rate is used to convert the value into SEK. For instruments where no reliable price is available on the market, cash-flows are discounted using the deposit/swap curve of the cash flow currency. If no proper cash-flow schedule is available, e.g., as in the case with forward-rate agreements, the underlying schedule is used for valuation purposes.
To the extent option instruments are used, the valuation is based on the Black & Scholes' formula. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market-interest rate for similar financial instruments. The Group's financial assets and liabilities are measured according to the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities. At September 30, 2020, the fair value for Level 1 financial assets was SEK 0m (0) and for financial liabilities SEK 0m (0).
Level 2: Inputs other than quoted prices included in Level 2 that are observable for assets or liabilities either directly or indirectly. At September 30, 2020, the fair value of Level 2 financial assets was SEK 7m (0) and financial liabilities SEK 9m (1).
Level 3: Inputs for the assets or liabilities that are not entirely based on observable market data. At September 30, 2020, the fair value of Level 3 financial assets was SEK 0m (1) and financial liabilities SEK 0m (0).
Note 4 Contingent liabilities
| SEKm | Sep 30, 2020 | Sep 30, 2019 | Dec 31, 2019 |
|---|---|---|---|
| Group | |||
| Guarantees and other commitments | 135 | 8 | 125 |
On January 21, 2020, a supplier filed a lawsuit in Italy against Electrolux Professional. The claimed amount was EUR 11.3m but was during the quarter increased to EUR 12.1m, approximately SEK 128m, and covers alleged damages related to products and prices during the contractual period and compensation for costs and damages resulting from the allegedly wrongful termination of the supply agreement. Electrolux Professional rejects the claim but it cannot be ruled out that the final outcome could have a significant impact on Electrolux Professional's operating income and cash flow.
Electrolux Professional - Interim report, Q3 2020
Note 5 COVID-19
As a consequence of the COVID-19 outbreak, Electrolux Professional has assessed any potential impact on the carrying value of asset and liabilities.
Trade receivables
No material increase in actual credit losses has been experienced. Collection of trade receivables is carefully monitored. Some customers have asked for extended payment terms, each of these requests are evaluated on a case-by-case basis. Management have stressed the need for even more focus on forward looking evaluation of the risk of not being able to collect payments and therefore the expected credit loss provision has increased to SEK 92m compared to year-end SEK 66m.
Credit insurance and other forms of collaterals, for example letter of credit and bank guarantees are used as a protection against credit risk. In addition, some sales are also made to governmental institutions which are deemed as secure.
Inventories
During the first nine months, no material write-down of finished goods inventories or supplies have been recognized as a consequence of the COVID-19 situation.
Impairment of assets
No extraordinary impairment of assets has been recognized.
Leases
The Group has received some minor office rent reductions.
Government grants and government assistance
Companies within the Group have received or assume that they fulfil the requirements of monetary help from governments. As of September 30, the amount recognized in profit or loss is SEK 21m in the quarter and SEK 77m year to date and refers mainly to short-term furlough of personnel.
The Group has also utilized the possibility to postpone tax payments in Sweden resulting in positive operating cash flow effect of SEK 48m in the second quarter. In the third quarter SEK 30m has been paid and the remaining SEK 18m will be paid during quarter four 2020.
First page
Message from the CEO
Financial overview
Financial reports
Definitions
Shareholders information
Electrolux Professional - Interim report, Q3 2020
Operations by segment yearly
| SEKm | 2019 | 2018 | 2017 |
|---|---|---|---|
| Food & Beverage | |||
| Net sales | 5,895 | 5,399 | 4,922 |
| EBITA | 568 | 629 | 607 |
| EBITA, % | 9.6 | 11.7 | 12.3 |
| Operating income | 522 | 599 | 572 |
| Operating margin, % | 8.9 | 11.1 | 11.6 |
| Laundry | |||
| Net sales | 3,386 | 3,267 | 2,801 |
| EBITA | 507 | 573 | 502 |
| EBITA, % | 15.0 | 17.6 | 17.9 |
| Operating income | 488 | 558 | 499 |
| Operating margin, % | 14.4 | 17.1 | 17.8 |
| Group common cost | |||
| Operating income | -18 | -14 | -11 |
| Total Group | |||
| Net sales | 9,281 | 8,666 | 7,723 |
| EBITA | 1,058 | 1,188 | 1,098 |
| EBITA, % | 11.4 | 13.7 | 14.2 |
| Operating income | 992 | 1,143 | 1,060 |
| Operating margin, % | 10.7 | 13.2 | 13.7 |
Three year overview
| SEKm, if not otherwise stated | 2019 | 2018 | 2017 |
|---|---|---|---|
| Net sales | 9,281 | 8,666 | 7,723 |
| Organic growth, % | -0.3 | 4.1 | 5.6 |
| EBITA | 1,058 | 1,188 | 1,098 |
| EBITA, % | 11.4 | 13.7 | 14.2 |
| Operating income | 992 | 1,143 | 1,060 |
| Operating margin, % | 10.7 | 13.2 | 13.7 |
| Income after financial items | 978 | 1,134 | 1,052 |
| Income for the period | 663 | 952 | 786 |
| Items affecting comparability | -32 | - | - |
| Capital expenditure | -257 | -169 | -167 |
| Operating cash flow after investments | 1,138 | 1,131 | 1,167 |
| Earnings per share, SEK¹ | 2.31 | 3.31 | 2.74 |
| Equity per share, SEK | 9.43 | 31.91 | 8.43 |
| Dividend per share, SEK | - | - | - |
| Net debt | 1,025 | -226 | -481 |
| EBITDA | 1,280 | 1,363 | 1,253 |
| Net debt/EBITDA ratio | 0.8 | -0.2 | -0.4 |
| Average number of shares, million | 287.4 | 287.4 | 287.4 |
| Number of employees, end of period | 3,624 | 3,555 | 3,183 |
1) Basic number of outstanding shares.
Electrolux Professional - Interim report, Q3 2020
Definitions
Definitions and reconciliation of alternative performance measures
Electrolux Professional presents certain measures that are not defined under IFRS (alternative performance measures – "APMs"). These are used by management to assess the financial and operational performance of the Group. Management believes that these APMs provide useful information regarding the Group's financial and operating performance. Such measures may not be comparable to similar measures presented by other companies. Consequently, APMs have limitations as analytical tools and should not be considered in isolation or as a substitute for related financial measures prepared in accordance with IFRS. The APMs have been derived from the Electrolux Professional's internal reporting and are not audited. The APM reconciliations can be found on Electrolux Professional website www.electroluxprofessional.com/corporate/interim-reports/
| APM | Definition | Reason for use |
|---|---|---|
| Organic growth % | Change in sales growth excluding net FX impact and acquisitions. | The Group's presentation currency is SEK while the net sales are mainly in other currencies. Organic growth is dependent on fluctuations in SEK versus other currencies and in addition acquired business can have an impact on reported net sales. Organic growth adjusted for acquisitions and currency shows the underlying sales development without these parameters. |
| Acquisitions % | Change in net sales during the current period attributable to acquired operation in relation to prior period's sales, following a period of 12 months commencing on the acquisition date. | See "Organic growth" above. |
| Operating income (EBIT) | Earnings before interest and tax. | Used as an indicator that shows the Group's ability to make a profit, regardless of the method of financing (then determines the optimal use of debt versus equity). |
| Operating margin (EBIT margin) | Operating income as a percentage of net sales. | Operating margin shows the operating income in percentage of net sales. Operating margin is a key internal measure as the Group believes that it provides users of the financial statements with a better understanding of the Group's financial performance both short and long term. |
| Items affecting comparability | Material profit or loss items such as capital gains and losses from divestments of product groups or major units, close down or significant down-sizing of major units or activities, restructuring activities, significant impairment, and other major non-recurring costs or income. | Summarizes events and transactions with significant effects, which are relevant for understanding the financial performance when comparing income for the current period with previous periods. |
| Operating margin excluding items affecting comparability | Operating income excluding items affecting comparability as a percentage of net sales. | Operating margin excluding items affecting comparability shows the operating income in percentage of net sales adjusted for items affecting comparability. This is a key internal measure, as the Group believes that it provides users of the financial statements with a better understanding of the Group's financial performance both short and long term. |
| Capital expenditure | Investments in property, plant and equipment, product development and other intangible assets. | Used to ensure that cash spending is in line with Group's overall strategy for the use of cash. |
Electrolux Professional – Interim report, Q3 2020
| APM | Definition | Reason for use |
|---|---|---|
| EBITA | Operating income less amortization and write-down related to intangibles assets (excluding right of use assets). | EBITA gives an indication of the operating income less amortization and write-down related to intangibles assets (excluding right of use assets) and is mainly used to follow up operating income without the distortion of amortization of surplus values related to acquisitions. |
| EBITA margin | EBITA expressed as a percentage of net sales. | Used to evaluate business performance in relation to net sales in order to measure the efficiency of the Company. |
| EBITDA | EBITA less depreciation of tangible assets (including right of use assets). | EBITDA is an indicator for business' cash generating capacity in relation to sales. |
| EBITA excluding items affecting comparability | Operating income less amortization and write-down related to intangibles assets (excluding right of use assets) and less items affecting comparability. | Items affecting comparability vary between years and periods and in order to analyze trends items affecting comparability are excluded from EBITA. |
| EBITA margin excluding items affecting comparability | EBITA excluding items affecting comparability, expressed as a percentage of net sales. | Items affecting comparability vary between years and periods and in order to analyse trends, items affecting comparability are excluded from EBITA margin. |
| Operating cash flow after investments | Cash flow from operations and investments adjusted for financial items paid, net, taxes paid and acquisitions/divestments of operations. | Used to monetarize the cash from core operation. |
| Net debt | Short-term borrowings (short-term loans and trade receivables with recourse), accrued interest expenses and prepaid interest income and long-term borrowings, lease liabilities, net provisions for post-employment benefits, less liquid funds (cash and cash equivalents, prepaid interest expenses and accrued interest income and cashpool accounts Electrolux Group). | Net debt describes the Group's total debt financing and is monitored by management. |
| Net debt/EBITDA | Net debt in relation to EBITDA (Net debt is based on the end of period balance and EBITDA is calculated based on last four rolling quarters). | A measurement of financial risk, showing net debt in relation to cash generation. |
| Operating working capital, % of net sales | Sum of currency adjusted last twelve months' average of inventories, non-related party trade receivables and trade payables (Operating working capital) as percentage of currency adjusted last twelve months' average net sales. All months of the period are currency adjusted by applying the end of period average currency rate. | Used to evaluate how efficient the Group is generating cash in relation to net sales. |
Electrolux Professional – Interim report, Q3 2020
Shareholders information
President and CEO Alberto Zanata's comments on the third quarter results 2020
Today's press release is available on the Electrolux Professional website www.electroluxprofessional.com/corporate
Telephone conference 09.00 CET
A telephone conference is held at 09.00 today, October 30. Alberto Zanata, President and CEO and Fabio Zarpellon, CFO will comment on the report.
Details for participation by telephone are as follows:
Participants in Sweden: +46 8 505 583 74
Participants in UK/Europe: +44 333 300 9035
Participants in US: +1 833 526 8397
Slide presentations for download:
www.electroluxprofessional.com/corporate
Link to webcast:
https://electroluxprofessional.creo.se/201030
For further information, please contact:
Jacob Broberg, Senior Vice President Investor Relations and Communications + 46 70 190 00 33
Financial calendar
| Financial calendar | Date |
|---|---|
| Interim report Q3 2020 | October 30, 2020 |
| Interim report Q4 2020 | February, 3 2021 |
| Interim report Q1 2021 | April 27, 2021 |
| Annual General Meeting | April 28, 2021 |
This information is information that Electrolux Professional AB (pubi) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person detailed in the column to the left, at 8:00 a.m. CET on October 30, 2020.
Mission
Making Electrolux Professional's customers' work-life easier, more profitable – and truly sustainable every day.
Strategy
Electrolux Professional's strategy focuses on four pillars, built on a foundation of operational excellence to improve sales productivity and cost efficiency within the supply chain.
GROW the business by developing sustainable, innovative low-running cost solutions: Set the pace of industry innovation in sustainability and energy efficiency, complemented with a connected and digital platform meeting customers' needs.
EXPAND in food service chains, especially in North America, grow in beverage and expand in emerging markets: Increase the global footprint and market position in selected industry verticals organically and through selective M&A as a further accelerator.
BOOST Customer Care (aftermarket sales) by further developing the global service network and competence as a full-service provider while increasing sales of accessories and consumables to enhance product performance and ownership experience.
LEVERAGE the OnE approach: Strengthen the position as a full-solution provider within food, beverage and laundry to cater for all customers' needs under one global brand and make customers' lives easier in a world of connected appliances.
Financial targets
Organic sales growth
Organic annual growth of more than 4 percent over time, complemented by value accretive acquisitions.
EBITA margin
EBITA margin of 15 percent.
Operating
working capital
Operating working capital below 15 percent of net sales.
Net debt/EBITDA
Leverage ratio below 2.5x Net debt/EBITDA. Higher levels may be temporarily acceptable in case of acquisitions, provided a clear path to deleveraging.
Dividend policy
30% of net income
Electrolux Professional - Interim report, Q3 2020
About Electrolux Professional
Electrolux Professional is one of the leading global providers of food service, beverage and laundry for professional users.
Our innovative products and worldwide service network make our customers' work-life easier, more profitable and truly sustainable every day.
Our solutions and products are manufactured in 12 plants in seven countries and sold in over 110 countries. In 2019, Electrolux Professional had global sales of SEK 9,3bn and approximately 3,600 employees.
For more information, visit www.electroluxprofessional.com/corporate
This report contains 'forward-looking' statements that reflect the company's current expectations. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations prove to have been correct as they are subject to risks and uncertainties that could cause actual results to differ materially due to a variety of factors. These factors include, but are not limited to, changes in consumer demand, changes in economic, market and competitive conditions, currency fluctuations, developments in product liability litigation, changes in the regulatory environment and other government actions.
Forward-looking statements speak only as of the date they were made, and, other than as required by applicable law, the company undertakes no obligation to update any of them in light of new information or future events.
Electrolux
PROFESSIONAL
Electrolux Professional AB (publ), 556003-0354
Postal and visiting address: S:t Göransgatan 143,
SE-112 17 Stockholm
Telephone: +46 8 41056450
Website: www.electroluxprofessional.com/corporate