NIBE Industrier — Earnings Release 2021

Feb 17, 2022

Year-end report, 2021

• § SALES totalled SEK 30,832 million (SEK 27,146 million)
• § PROFIT AFTER NET FINANCIAL ITEMS amounted to SEK 4,318 million (SEK 3,658 million)
• § PROFIT AFTER TAX was SEK 3,378 million (SEK 2,923 million)
• § EARNINGS per share before and after dilution, based on average number of shares outstanding during the period, were SEK 1.65 (SEK 1.42)
• § ACQUISITION OF
• 100% of the shares in the UK heating cable company Heat Trace Holdings Ltd
• 50% of the shares in the UK heat pump company Go Geothermal Ltd
• § THE BOARD OF DIRECTORS proposes a dividend of SEK 0.50/share (SEK 0.3875/share)

World-class solutions in sustainable energy

Stable 2021 – interim goal of SEK 40 billion getting closer

Strong demand across the board but deliveries hampered by material and component shortages

Group sales during the year exceeded SEK 30 billion, which means that in three years we have come halfway towards the interim goal of reaching sales of SEK 40 billion by 2025. Consolidated sales growth for the year was 13.6% (7,1%), of which 11.8% (-0.9%) was organic. The stronger Swedish krona had a considerably negative effect on sales growth.

Overall demand in the year was unusually strong. In comparisons with demand in the previous year, it is important to remember that demand in the first half of the previous year was relatively weak due to the pandemic, which dramatically suppressed demand. In the second half of 2020, there was an unexpected surge in demand.

We believe the good development in demand was due to two key factors. First, products associated with sustainability continued to perform strongly, which is the natural consequence of our society transitioning towards reduced dependence on fossil fuels. Second, the pandemic has significantly restricted people's traditional freedom of movement, which has resulted in increased demand for products for home refurbishment projects.

The rapid recovery in the global economy, which began in the second half of 2020, continued throughout 2021. This development was both pleasing and unexpected, but has meant that our sub-suppliers have not had time to adjust to demand and as a result, we have been hit both by direct component shortages as well as uncertain delivery notifications and sharply extended delivery times. Unfortunately, this affected our own delivery capacity, especially in the last few months of the year, which are normally our strongest months.

The increasingly pronounced component shortages, combined with strong demand in the first half of the year, made it difficult to build up inventory levels as planned in the spring and early summer, which further impacted our delivery capacity during our peak season. At the end of the year, the Group's orders received were at an unprecedented level. Unfortunately, the percentage of delayed orders was also at a high level, which is extremely problematic. The continued shortages of material and components also meant that we were unable to meet our productivity targets.

Calendar

17 February 2022

08:00 (CET) Year-end report 2021

11:00 (CET) Telephone conference (in English)

Presentation of Year-end report 2021 and opportunity to ask questions. Registration on our website www.nibe.com is required in order to access the presentation images during the conference. To listen by phone, call +46 8 566 427 04.

April 2022

Publication of Annual Report 2021 Notice of Annual General Meeting

17 May 2022

Interim Report 1, January – March 2022 Annual General Meeting

Of course, the obvious question is when the supply of materials and components can be expected to return to a more normal level. Unfortunately, there is no simple answer to this question but the most common forecast is that there will be probably be a gradual improvement from the second quarter until the end of 2022. Meanwhile, we are working tirelessly to adapt to the current circumstances by implementing restructurings, increasing flexibility in production, increasing component inventories where possible, and by conducting new supplier evaluations.

As if supply disruption alone has not been difficult enough to manage, we have also had sharp and often unannounced price increases foisted upon us. Consequently, we too have been forced to adjust our own prices. However, the effects of these price increases lag slightly behind the price increases introduced by our sub-suppliers.

The NIBE Climate Solutions business area recorded strong growth in demand throughout the year, thanks to its prominent sustainability profile. The development in Europe was very positive and here end-consumers' strong interest in sustainability issues dovetails with the action taken by most European countries to encourage reduced dependence on fossil fuels by means of subsidies and tax relief. The development in North America is also going in the right direction. The USA rejoining the Paris Agreement was an important marker in this context, as was the ambitious "Clean Energy for America Act".

It is also very encouraging to see the reception received by the brand new generations of heat pumps that were launched, which focus on optimal refrigerants and even better performance.

In order to meet the expected sharp market growth, we have also launched an ambitious investment programme. The purpose of this is to safeguard both continued, world-class product development and rational and sustainable production capacity, with the aim of further increasing our market share.

Both the operating profit and operating margin improved further, primarily due to the strong real organic growth and continued good control over fixed costs.

The NIBE Element business area also reported strong growth throughout the year in virtually all its market segments and sales in 2021 were at a significantly higher level than before the pandemic.

Market segments with a clear sustainability profile saw the strongest performance, together with consumer-market segments. In addition, the sharp increase in investment levels in the semiconductor industry has resulted in very strong growth for the business areas' heating and control equipment. The generally strong trend towards electrification will also be positive for us in the long term, not least in respect of the automotive industry and rail-based industry.

The strong real organic growth, combined with continued good control over the fixed costs, resulted in an improvement in both operating profit and operating margin.

The NIBE Stoves business area also reported good growth in sales for the year. In this business area, too, sales are now at a significantly higher level than before the pandemic. The renovation trend seen in the last two years was a key factor in this growth.

There is a question mark over whether demand will decline now that the pandemic is starting to fade away, but our assessment is that consumer demand for products with a better carbon footprint may actually rise. In addition, more and more countries are encouraging the replacement of old products with new stoves that have lower emissions levels and higher efficiency.

Our strategy is that our large investments in product development will allow us to stay at the forefront of technology and a step ahead in respect of future customer and statutory requirements.

Very strong real organic sales growth, combined with continued good control over the fixed costs, resulted in a very sharp increase in both operating profit and operating margin.

Investments in our existing businesses amounted to SEK 1,242 million in the period, compared with SEK 1,109 million in the previous year, and the depreciation rate, including leases, was SEK 1,297 million, compared with SEK 1,236 million in the previous year. Excluding leases, the depreciation rate was SEK 970 million, compared with SEK 938 million last year. The investment rate will vary slightly over time but against a background of continued expected growth, going forward investments in continued capacity increases, in further automation and rationalisation and also in direct sustainability development, will be slightly above the depreciation rate, excluding leases.

Operating profit in the period improved by 25.8% compared with the previous year and the operating margin increased from 13.0% to 14.4%. It is especially gratifying to note that positive growth in all three business areas has facilitated this strong improvement.

Profit after net financial items improved by 29.7% in the period compared with the corresponding period in the previous year. The main reason for the improvement in net financial items is exchange gains.

Gerteric Lindquist Managing Director and CEO

Outlook for 2022

• Our corporate philosophy and our strong range of products, with their focus on sustainability and energy efficiency, are in tune with the times in which we are living.
• We are well prepared to continue to be proactive on acquisitions.
• Our internal efforts to enhance efficiency, combined with our rigorous cost control measures, will ensure consistently healthy margins.
• All three business areas have a good geographical spread, which makes us less vulnerable to local downturns in demand.
• Our decentralised organisation, based on independent units, is well proven, and creates the conditions for greater motivation and flexibility.
• The fact that, after a fourth wave, the pandemic appears to be fading out and the virus is on the way to being classified as an ordinary flu virus gives us confidence.
• The effects of political unrest, interest rate developments and rising energy prices are, as always, difficult to predict.
• Uncertainty relating to sub-suppliers will most probably be a cause for concern for the remainder of the year.
• As is our habit, and based on experience, we nevertheless remain cautiously optimistic about our performance this year.

Markaryd, 17 February 2022

Gerteric Lindquist Managing Director and CEO

NIBE Group

Group sales by geographical region

23% Nordic countries Europe (excl. Nordics) North America Other markets

Key ratios		2021	2020	2019	2018	2017
Net sales	SEK m	30,832	27,146	25,342	22,516	19,009
Growth	%	13.6	7.1	12.5	18.5	23.9
of which acquired	%	1.8	8.0	4.6	6.0	19.5
Operating profit	SEK m	4,468	3,880	3,038	2,829	2,344
Operating profit, excluding re valuation of additional consid erations	SEK m	4,438	3,527	3,038	2,794	2,357
Operating margin	%	14.5	14.3	12.0	12.6	12.3
Operating margin, excluding revaluation of additional consid erations	%	14.4	13.0	12.0	12.4	12.4
Profit after net financial items	SEK m	4,318	3,658	2,836	2,667	2,182
Profit after net financial items, excluding revaluation of addition al considerations	SEK m	4,288	3,305	2,836	2,632	2,195
Profit margin	%	14.0	13.5	11.2	11.7	11.5
Profit margin, excluding revalua tion of additional considerations	%	13.9	12.2	11.2	11.7	11.5
Equity/assets ratio	%	49.9	46.3	47.3	47.8	45.8
Return on equity	%	17.3	16.1	13.5	14.8	13.7
Return on equity, excluding revaluation of additional consid erations	%	17.2	14.5	13.5	14.6	13.7

Sales

Consolidated net sales totalled SEK 30,832 million (SEK 27,146 million). This corresponds to growth of 13.6%. Of the increase in sales of SEK 3,686 million, acquired sales were SEK 486 million, which means that organic sales increased by 11.8%.

Profit

Profit for the year after net financial items was SEK 4,318 million. This equates to an 18.0% increase in earnings compared with 2020. In 2020, profit after net financial items amounted to SEK 3,658 million. Profit for the year includes revaluation of additional considerations of SEK 30 million. Profit for the year was lowered by acquisition expenses of SEK 13 million (SEK 30 million). Return on equity, excluding revaluation of additional considerations, was 17.2% (14.5%).

Acquisitions

A contract was signed on 7 May to acquire 100% of the shares in the UK company Heat Trace Holdings Ltd, which has sales of approximately GBP 10 million. The company develops, manufactures and markets electric heating cables to a large number of sectors worldwide. The company was consolidated into the NIBE Element business area as from 1 May 2021. The acquisition value is still provisional.

At the end of August the company concluded an agreement on the acquisition of 50% of the shares in the British company Go Geothermal Ltd, including an agreement to acquire the remaining shares within a five-year period. The company is a significant distributor of heat pumps in the British market with sales of around GBP 8.3 million. It was consolidated with the NIBE Climate Solution business area r with effect from September 2021. The acquisition value is still provisional.

Investments

During the year, the Group made investments totalling SEK 1,790 million (SEK 3,692 million). A total of SEK 548 million (SEK 2,583 million) of the investments relates to acquisitions of business operations. The remaining SEK 1,242 million (SEK 1,109 million) mainly comprise investments in machinery and equipment in existing operations. The investment amount relating to acquisitions is based on both initial considerations and an estimate of additional considerations to be paid.

Cash flow and financial position

Cash flow from operating activities before changes in working capital amounted to SEK 4,749 million (SEK 4,123 million). Cash flow after changes in working capital amounted to SEK 3,263 million (SEK 5,023 million).

Interest-bearing liabilities at year-end amounted to SEK 10,320 million compared with SEK 10,660 million at the start of the year. At yearend the Group had cash and cash equivalents of SEK 5,208 million, compared with SEK 5,240 million at the start of the year. The equity/assets ratio at year-end was 49.9%, compared with 46.3% at the start of the year.

Parent

Parent activities comprise Group executive management functions, certain shared Group functions and financing. Sales for the year totalled SEK 28 million (SEK 23 million) and profit after financial items was SEK 268 million (SEK 868 million). Net financial items for the year were reduced by impairment losses on shares in subsidiaries of SEK 257 million.

Business area trends

Quarterly data

Consolidated income statement		2021			2020							2019
(SEK m)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q4
Net sales	6,831	7,790	7,823	8,388	6,345	6,227	6,889	7,685	7,137
Operating expenses	– 5,966	– 6,568	– 6,621	– 7,209	– 5,707	– 5,545	– 5,853	– 6,161	– 6,184
Operating profit	865	1,222**	1,202	1,179 ***	638	682	1,036	1,524*	953
Net financial items	– 32	– 51	– 31	– 36	– 64	– 34	– 76	– 48	– 67
Profit after net financial items	833	1,171**	1,171	1,143 ***	574	648	960	1,476*	886
Tax	– 188	– 259	– 260	– 233	– 140	– 156	– 192	– 247	– 201
Net profit	645	912**	911	910 ***	434	492	768	1,229*	685
Net sales, business areas
NIBE Climate Solutions	4,310	5,199	5,142	5,476	4,035	4,310	4,591	5,008	4,590
NIBE Element	2,001	2,082	2,125	2.214	1,895	1,664	1,781	1,938	1,855
NIBE Stoves	705	696	746	904	573	406	676	924	832
Elimination of Group transactions	– 185	– 187	– 190	– 206	– 158	– 153	– 159	– 185	– 140
Group total	6,831	7,790	7,823	8,388	6,345	6,227	6,889	7,685	7,137
Operating profit, business areas
NIBE Climate Solutions	579	900	907	852	449	585	807	849	691
NIBE Element	216	223	213	224	179	117	173	190	157
NIBE Stoves	85	82	103	143	32	1	78	160	142
Elimination of Group transactions	– 15	17**	– 21	– 40 ***	– 22	– 21	– 22	325*	– 37
Group total	865	1,222**	1,202	1,179	638	682	1,036	1,524*	953

* Includes income of SEK 353 million from revaluation of additional considerations

** ** Includes income of SEK 37 million from revaluation of additional considerations

*** ** Includes losses of SEK - 7 million from revaluation of additional considerations

Sales per business area, last nine quarters (SEK million)

Operating profit by Business Area Operating profit per business area, last nine quarters (SEK million)

Each business area's share of sales (Q1-Q4, 2021)

Each business area's share of total profit (Q1-Q4, 2021)

NIBE Climate Solutions business area

Key ratios		2021	2020	2019	2018	2017
Net sales	SEK m	20,127	17,944	16,430	14,255	12,020
Growth	%	12.2	9.2	15.3	18.6	25.4
of which acquired	%	1.9	8.2	5.7	2.7	21.9
Operating profit	SEK m	3,238	2,690	2,277	1,962	1,595
Operating margin	%	16.1	15.0	13.9	13.8	13.3
Assets	SEK m	27,972	24,981	23,191	20,637	18,707
Liabilities	SEK m	4,437	4,312	2,987	2,463	2,603
Investments in non-current assets	SEK m	746	685	639	404	322
Amortisation/ Depreciation	SEK m	808	756	626	448	425

Sales and profit

Sales totalled SEK 20,127 million, compared with SEK 17,944 million in the corresponding period in the previous year. Of the increase in sales of SEK 2,183 million, acquired sales accounted for SEK 345 million, which means that organic growth was 10.3%.

Operating profit for the year totalled SEK 3,238 million, compared with SEK 2,690 million the previous year. This equates to an operating margin of 16.1% compared with 15.0% for the previous year.

The year in brief

2021 was characterised by the climate debate and the transition towards a fossil-free society, which has created strong demand for our products, particularly in Europe. In North America, too, a similar debate is gaining ground. We have focused heavily on increasing the capacity of our production units both in the short term and long term, but the current global component shortage in several sub-supplier segments has gradually been getting worse. This has resulted in a very difficult situation with insufficient delivery capacity, particularly toward the end of the year, which is very frustrating both for us and our customers.

End-consumer demand for products that both save energy and use renewable energy has continued to increase. In addition ,political decisions have been made in an increasing number of countries in Europe to accelerate the transformation and ultimately phase out products that use fossil fuels such as oil and gas. In the USA, too, intensive work is underway to pave the way for continued tax reliefs for the installation of, for example, heat pumps. All this is good for both the environment and our industry in the short and long terms and is one of the principal reasons for the market growth.

In order to safeguard further expansion, for many years, we have invested in building up a strong international platform of companies, products and skills to become a full-service supplier of sustainable, efficient, intelligent energy solutions with the focus on indoor climate comfort for all types of property. Now that the market is showing strong growth, we are focusing on further strengthening our market position.

Growth through business acquisitions forms an important part of our strategy but for obvious reasons the rate of expansion has not been as high during the pandemic, which is why organic growth dominated in 2021. The acquisition of Go Geothermal of the UK was an important step strategically and shows that it is possible to carry out acquisitions even during a pandemic. Our strategy to through acquisitions continue to enhance our position in the commercial segment worldwide and to expand into markets that have great growth potential in Europe remains in place.

We are continuing to focus major resources on product development and the introduction of new high-performance products. The focus is on environmentally-friendly refrigerants for reduced climate impact, intelligent controls and connection opportunities that improve the efficiency of installation and service and further reduce the end-customer's energy consumption. Product development is essential to continued expansion and to strengthen our profile as a market leader in sustainable energy solutions for indoor climate comfort based on renewable energy. In a growing market, in which interest from other operators is continuing to increase, it is vital to be at the forefront of cutting-edge technologies.

To prepare for the future we are also implementing an extensive investment programme involving investments in capacity at several of our European businesses. In Markaryd, the hub of our business activities, we are building a completely new heat pump factory as well as a completely new innovation centre equipped with high-tech-laboratories and very advanced equipment in order to safeguard the level of future product development and be able to attract new development engineers. In addition, we are investing in both new offices and a completely new Market Centre for top-level international training and conference activities. Major investments in capacity expansion are also underway in Poland and the Czech Republic, and in Germany we are planning to double production capacity.

Our new air/water heat pump S2125 is powerful, compact and quiet. With a high supply temperature, low noise level, environmentally-friendly refrigerant and many functions provided by the new, connected platform, it offers year-round indoor climate comfort and high energy efficiency, with reduced environmental impact on top.

First new offices in Markaryd completed

After several years in temporary premises, many units within NIBE AB have now moved into their new premises. The two new office buildings contain around 90 individual offices and represent the first step in the extensive investment programme currently being implemented in Markaryd.

Concentrating all IT functions in one building will provide many synergy benefits. All of the NIBE Group's IT support and systems development functions now work side by side in this building. They are complemented by the NIBE Group's Webteam, which provides administrative services and support to companies in the group that work with web development and intranet.

The other building houses NIBE AB's Finance, Quality and Sustainability departments. These departments adjoin the HR department's and NIBE Industrier's group offices. The office buildings have been built according to the highest building standards with the aim of being awarded Gold level certification under the Swedish Green Building Council (SGBC) Miljöbyggnad certification system. Our own climate control products are of course used for both heating, cooling and ventilation.

Despite everything, it was possible to conduct marketing activities during parts of the year. For example, via mobile units we have carried out a successful launch campaign in our prioritised markets in Europe, where, among other things, we presented our completely new product series featuring the environmentally-friendly refrigerant R290, an even better seasonal performance factor (SPF) and an even lower noise level. Marketing campaigns have also been conducted in both Europe and North America to further raise consumer awareness of heat pumps as an economical and sustainable solution for climate control of both single-family homes and commercial properties.

NIBE Climate Solutions also actively contributes both knowledge and products in the ongoing transition to energy-efficient climate control solutions that is being implemented in the Group's operations worldwide. The goal is to reduce our own climate impact and achieve our sustainability targets in respect of both good working conditions and reduced energy consumption and lower CO2 emissions.

All of our companies led by example as they adapted their operations to the increased work load during the year, while also complying with the restrictions in place in the respective countries due to the pandemic. Despite very good flexibility in production capacity, we were unable to meet the sharp increase in demand in the latter part of the year due to the component shortage. The uncertain and uneven inflow of components also had an adverse impact on productivity in our manufacturing units.

Because we have been hit by drastic increases in the cost of input materials, components and freight, we too have been forced to successively raise our own prices to a corresponding degree.

Our targeted markets in Western Europe, in particular, continue to grow strongly. In the Netherlands, where politicians decided a while ago to phase out fossil fuels, market development remained strong. The German market, which is very important for us, has also been growing well since the introduction of very favourable government grants for replacing heating systems using fossil fuels with low-energy, sustainable heat pumps. The British market is also growing as the government is introducing subsidies for the transition to fossil-free heating. All the Nordic markets also had good growth in the year.

End-consumer interest in energy-efficiency and sustainability is also growing in Eastern Europe, while a number of countries have introduced subsidies for installing more energy-efficient climate control solutions, and our units are experiencing good expansion in terms of product concepts for indoor climate comfort, primarily heat pumps but also energy-efficient water heaters. For example, the Polish market has shown very rapid growth and we are represented there through or own production of water heaters as well as a dynamic sales organisation for heat pumps.

Growth in the Swedish domestic heat pump market has continued. Above all, the increase is due to a growing replacement market, but the market for new construction has also been rising. We have a strong market position in both these segments.

The North American heat pump market for single family homes has grown, but not so far at the same rate as in Europe. Significant tax reductions for private individuals who install ground source heat pumps benefit this sector. The current state subsidies remain valid until the end of 2023 but proposals to extend these were put forward at the end of 2021. A final decision is expected in 2022 and if the extension is implemented, this would contribute to further stability in the market, which is desirable.

Both the US and Canadian markets for climate control products for commercial properties has started to recover after a fall in demand for new construction and renovation projects in the external environment that has prevailed for more than a year. The proposed sustainable development incentives in the USA under the "Clean Energy for America Act" would also include commercial property, which would benefit this segment.

Demand for energy-efficient product solutions for commercial properties is also increasing in Europe. We are well established in North America and have created a stable platform in Europe. However, we are continuing to intensify our efforts with dedicated new resources to enable expansion and further consolidation of our position in both the European and North American markets. This consolidation will involve both aggressive product development and marketing as well as continued acquisitions.

The profit margin was boosted by strong demand and also by good cost control throughout the organisation in order to offset the effects of the difficult delivery situation due to component shortages and sharp price increases in the supply chain. This was done without lowering our ambitions for future product development, market expansion and growth.

NIBE Element business area

Key ratios		2021	2020	2019	2018	2017
Net sales	SEK m	8,422	7,278	6,971	6,349	5,102
Growth	%	15.7	4.4	9.8	24.4	20.0
of which acquired	%	1.6	9.6	4.0	15.3	10.5
Operating profit	SEK m	876	659	622	650	563
Operating margin	%	10.4	9.1	8.9	10.2	11.0
Assets	SEK m	11,043	9,443	9,314	7,655	5,916
Liabilities	SEK m	1,889	1,758	1,406	1,177	943
Investments in non-current assets	SEK m	368	354	303	214	164
Amortisation/ Depreciation	SEK m	356	352	285	166	139

Sales and profit

Sales totalled SEK 8,422 million, compared with SEK 7,278 million in the corresponding period in the previous year. Of the increase in sales of SEK 1,144 million, acquired sales accounted for SEK 118 million, which means that organic sales increased by 14.1%.

Operating profit for the year totalled SEK 876 million, compared with SEK 659 million the previous year. This equates to an operating margin of 10.4% compared with 9.1% for the previous year.

The year in brief

The global radiator market continued to grow strongly in all segments in 2021. Products linked to sustainability, renewable energy and energy storage, such as components for heat pumps and resistors, performed extremely well throughout the year. This applies both to products for private and commercial use. Products for commercial use, such as commercial coffee machines and catering equipment, which is the segment hit hardest by the pandemic, also recovered during the year. The shortage in components that has gradually spread in the global market has, however, affected and restricted both our own and our customers' operations, resulting in disruptions in several segments, for instance, the automotive industry.

In recent years, we have built up substantial operations for heating and control equipment for the semiconductor industry through a combination of acquisitions and organic growth. This segment saw very strong growth also throughout 2021, and demand is driven by the rollout of 5G, the move in the automotive industry towards increased electrification and greater demand for data storage. The global shortage of semi-conductor components and our ambition to rebuild capacity in Europe and North America is further increasing demand for equipment in this sector. During the year we therefore decided to expand our business operations, particularly in North America.

There has been a sharp increase in activities relating to the electrification of the automotive industry, both in respect of commercial vehicles and passenger cars. This applies both to development projects and deliveries. During the year we carried out a number of strategic projects in this sector and we have also expanded our production capacity for both heating applications and resistors to meet growing demand.

The majority of our production units were able to maintain full production capacity during the year. At times, we were forced to shut down production in some countries also in 2021. Our operations have gradually been adapted to developments in each country and our focus has been on ensuring the health and safety of our employees.

We continued to realise our strategy and objective of being a global complete solutions supplier, with a local presence, of components and solutions for heating and control. We did this by means of acquisitions and a number of structural measures to create competitive units within each market segment.

We are continuously carrying out business acquisitions in order to complement our product range or market presence. In the year we acquired the UK heating cable company Heat Trace. Heat Trace is a technology leader in semi-conductor based, self-regulating heating cables and further complements our product portfolio in components and solutions for intelligent heating. Towards the end of the year we acquired Electro-Therm of France, which is a distributor of electric heading elements in the French market. This is a good example of a typical complementary acquisition.

To enable us to maintain our operating margin target of 10% over time, we have continued our intensive work to improve the competitiveness of our units through production technology action plans and other initiatives involving robotisation and automation. These measures are also being implemented in our low-cost units to cope with higher employee benefit expenses and staff shortages and to attract more qualified workers to our type of industry.

To increase energy efficiency and improve the indoor environment, we have continued to make property investments based on heat pump solutions in several of our businesses, which is a natural part of our sustainability work. During the year we completed and opened the business area's new Market Center in Sösdala This is the first building in the group built to comply with the Gold level certification level under the Swedish Green Building Council (SGBC) Miljöbyggnad certification system, which is yet another step in our transition to reduced environmental impact. The building's climate control is primarily based on our own heat pumps and PV panels.

Exchange rates and trade policy have remained volatile, which had a considerable effect on pricing and competitiveness. In this situation, having production units in both different currency zones and different geographical regions gives us a clear advantage. To compensate for the sharp increases in materials and freight costs, particularly in the second half of the year, we have been forced to gradually raise prices over the year.

Our operating margin improved a little and is on target thanks to strict cost control in all business operations and rapid adjustment to current demand in each business area. Our ambition was also to maintain the pace of ongoing investment and development projects to ensure future growth.

The new Market Center in Sösdala opened on 29 November 2021. It is a completely new building and meets the highest building standards under the Swedish Green Building Council (SGBC) Miljöbyggnad certification system. This is the first building in the group to be awarded Gold certification. Here Backer welcomes customers and other visitors to a completely new exhibition that shows the business area's extensive product range.

NIBE Stoves business area

Key ratios		2021	2020	2019	2018	2017
Net sales	SEK m	3,051	2,579	2,503	2,379	2,236
Growth	%	18.3	3.0	5.2	6.4	26.6
of which acquired	%	0.9	0.9	1.6	1.9	25.0
Operating profit	SEK m	413	271	252	265	275
Operating margin	%	13.5	10.5	10.1	11.2	12.3
Assets	SEK m	3,938	3,391	3,614	3,304	2,958
Liabilities	SEK m	617	515	442	407	364
Investments in non-current assets	SEK m	101	99	73	80	48
Amortisation/ Depreciation	SEK m	132	128	124	77	77

Sales and profit

Sales totalled SEK 3,051 million, compared with SEK 2,579 million in the corresponding period in the previous year. Of the increase in sales of SEK 472 million, acquired sales accounted for SEK 24 million, which means that organic growth was 17.4%.

Operating profit for the year totalled SEK 413 million, compared with SEK 271 million the previous year. This equates to an operating margin of 13.5% compared with 10.5% for the previous year.

The year in brief

Demand for stove products was high throughout the year in all markets and in virtually all product types, both in Europe and North America. The upturn that began in autumn 2020 continued undiminished throughout 2021, which meant that the natural low season in spring and summer did not occur. The sharp rise in demand, in combination with supply chain disruption, resulted in unusually long delivery times, particularly towards the end of the year. This resulted in lower growth in the second half of the year, compared with the first half. However, order backlogs remain at a high level throughout this industry sector since more or less all companies have been hit by the current international shortage of raw materials and components.

The high demand is primarily driven by increased investments in the home in the wake of the pandemic and a strong economic climate. There is also growing interest in replacing old, less environmentally-friendly products with new ones featuring modern combustion technology and lower emissions. Authorities in multiple countries are encouraging this trend further.

Very high demand in the first half of the year, combined with a backlog carried over from the previous year, meant that we were unable to build up inventory levels of finished products like we usually do in the spring. There was therefore no buffer in place to help us manage deliveries in the peak season. In addition, the large challenges in our supply chains had a clearly negative impact on both capacity and productivity in our production units throughout the autumn. Because the situation was similar for more or less all companies in the industry we consider that we were able to maintain our strong market position.

At the beginning of the year, 10% of the shares in Canadian company Pacific Energy were acquired with an option to acquire the remaining shares. The company, which has a wide range of mainly wood-fired products, but also gas-fired products that are sold under a number of brand names in North America and Australia, will further consolidate our position in the North American market. Annual sales amount to around CAD 40 million and the operating margin is over 10%. The intention is to acquire a further 40% of the shares in 2022 in order to be able to consolidate the business.

In the second quarter we also acquired the assets of the Danish stove manufacturer Westfire A/S, one of the smaller players in the industry, with a good history of profitability. Westfire has a complete range of wood-burning stoves and inserts for the Scandinavian and British markets. Following the acquisition, the company has been integrated into our Danish company, Varde Ovne A/S, strengthening the latter's market position.

In the Nordic region, a prominent market for wood-burning products, demand for stove products increased sharply in all countries. There is also considerable interest in replacing old, less environmentally-friendly products with new ones featuring modern combustion technology and lower emissions. Denmark is also offering incentives for replacing old fireplaces through various types of subsidies. In Sweden, demand has by some distance the Nordic region's largest stove market,, reported sharp growth in the year and and is now back to a pre-pandemic level. In Germany, demand for stove products continued to increase also in 2021. Demand is driven not only by the general trend of growing inter-

been boosted by increased production of single-family homes. Norway,

est in home improvement, but also by the fact that the authorities have decided that old and outdated products which do not meet Ecodesign requirements must be phased out.

Demand for stove products in the UK increased in all the three major product segments: wood, gas and electricity. The rate of growth in demand for electric stoves fell slightly, however, following several years of sharp growth. Aside from the strong general home improvement trend driving demand, there is also growing interest in wood-burning products which offer better performance and meet Ecodesign requirements, which is positive for the industry as a whole.

France is no exception when it comes to the strong rise in demand, and sales of both wood-burning products and pellet-fired products have increased sharply. Both these product types completely dominate the French market and have roughly equal sales.

North American demand for all types of stove products has grown sharply for the same reasons as in other markets. Sales of wood-burning products grew faster than sales of gas-fired products, partly as a result of bigger supply chain disruptions for gas-fired products, which contain more critical components. The subsidy programme introduced in the USA for purchases of wood-burning stoves with an efficiency rating of over 75%, has also had a positive impact on demand.

The operating margin improved in the year, primarily as a result of higher sales volumes combined with continued good cost control. We are continuing our aggressive and long-term investments in product development in order to improve the products' performance and combustion to meet the requirements of future consumers. In marketing, too, the goal is to develop together with our customers to create profitable growth in a market that remains challenging. We have compensated for and will continue to compensate for the sharp and rapid increases in the cost of materials and freight that we were hit by, primarily in the second half of the year. However, the full effect of our own price increases will be slightly delayed.

A new model from Nordpeis named Davos. Works perfectly as a room divider, enabling you to enjoy the fire from both the kitchen and living room at the same time.

Condensed income statement

				Parent
	Fourth quarter	Fourth quarter
(SEK m)	2021	2020	2021	2020	2021	2020
Net sales	8,388	7,685	30,832	27,146	28	23
Cost of goods sold	– 5,661	– 5,083	– 20,628	– 18,171	0	0
Gross profit	2,727	2,602	10,204	8,975	28	23
Selling expenses	– 1,244	– 1,021	– 4,210	– 3,917	0	0
Administrative expenses	– 517	– 514	– 2,018	– 1,895	– 100	– 85
Revaluation of additional considerations	– 7	353	30	353	0	0
Other operating income	220	104	462	364	0	0
Operating profit	1,179 ***	– 1,524*	4,468**	3,880*	– 72	– 62
Net financial items	– 36	– 48	– 150	– 222	340	930
Profit after net financial items	1,143 ***	– 1,476*	4,318**	3,658*	268	868
Appropriations					210	133
Tax	– 233	– 247	– 940	– 735	– 35	– 14
Net profit	910 ***	1,229*	3,378**	2,923*	443	987
Net profit attributable to Parent shareholders	892 ***	1,212*	3,320**	2,866*	443	987
Net profit attributable to non-controlling interest	18	17	58	57	0	0
Net profit	910 ***	1,229*	3,378**	2,923*	443	987
Includes amortisation/depreciation according to plan as follows:	297	304	1,297	1,236	0	0
Net profit per share before and after dilution, SEK	0.44	0.60	1.65	1.42	0	0

Statement of comprehensive income

Net profit	910 ***	1,229*	3,378**	2,923*	443	987
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gains and losses in retirement benefit plans	– 21	33	129	21	0	0
Tax	4	– 6	– 26	– 4	0	0
	– 17	– 27	103	17	0	0
Items that may be reclassified to profit or loss
Cash flow hedges	3	8	– 12	4	0	0
Hedging of net investment	– 5	33	– 14	45	0	0
Exchange differences on translation of foreign operations	412	– 1,484	1,360	– 2,310	0	0
Tax	– 28	108	– 111	157	0	0
	382	– 1,335	1,223	– 2,104	0	0
Total other comprehensive income	365	– 1,308	1,326	– 2,087	0	0
Total comprehensive income	1,275 ***	– 79*	4,704**	836*	443	987
Comprehensive income attributable to Parent shareholders	1,246	– 89*	4,631**	785*	443	987
Comprehensive income attributable to non-controlling interest	29	10	73	51	0	0
Total comprehensive income	1,275 ***	– 79*	4,704**	836*	443	987
*Including revaluation of additional considerations of SEK 353 million.
** Including revaluation of additional considerations of SEK 30 million.
*** Including revaluation of additional considerations of SEK – 7 million

Condensed balance sheet

	Group		Parent
(SEK m)	2021-12-31	31 Dec 2020	2021-12-31	31 Dec 2020
Intangible assets	20,363	18,958	0	0
Property, plant and equipment	6,131	5,350	0	0
Financial assets	629	655	16,428	15,499
Total non-current assets	27,123	24,963	16,428	15,499
Inventories	6,584	4,431	0	0
Current receivables	4,941	4,149	264	182
Investments in securities, etc.	224	201	0	0
Cash and bank balances	4,522	4,593	99	35
Total current assets	16,271	13,374	363	217
Total assets	43,394	38,337	16,791	15,716
Equity	21,657	17,737	9,076	9,414
Non-current liabilities and provisions, non-interest-bearing	5,252	4,859	542	523
Non-current liabilities and provisions, interest-bearing	7,505	6,298	5,500	4,100
Current liabilities and provisions, non-interest-bearing	6,165	5,081	73	179
Current liabilities and provisions, interest-bearing	2,815	4,362	1,600	1,500
Total equity and liabilities	43,394	38,337	16,791	15,716

Key ratios

		2021	2020	2019	2018	2017
Growth	%	13.6	7.1	12.5	18.5	23.9
Operating profit	SEK m	4,468	3,880	3,038	2,829	2,344
Operating profit, excluding revaluation of additional considerations	SEK m	4,438	3,527	3,038	2,794	2,357
Operating margin	%	14.5	14.3	12.0	12.6	12.3
Operating margin, excluding revaluation of additional considerations	%	14.4	13.0	12.0	12.4	12.4
Profit margin	%	14.0	13.5	11.2	11.8	11.5
Profit margin, excluding revaluation of additional considerations	%	13.9	12.2	11.2	11.7	11.5
Investments in non-current assets, including acquisitions	SEK m	1,790	3,692	2,059	2,479	2,026
Available cash and equivalents	SEK m	5,208	5,240	4,703	3,562	3,803
Working capital, incl. cash and bank balances as share of net sales	SEK m %	10,106 32.8	8,293 30.5	8,762 34.6	7,604 33.8	6,524 34.3
Working capital, excl. cash and bank balances as share of net sales	SEK m %	5,360 17.4	3,499 12.9	4,591 18.1	4,416 19.6	3,102 16.3
Interest-bearing liabilities/Equity	%	47.7	60.1	60.8	60.0	70.1
Equity/assets ratio	%	49.9	46.3	47.3	47.8	45.8
Return on capital employed	%	15.2	14.6	12.3	13.0	11.5
Return on capital employed, excluding revaluation of additional considerations	%	15.1	13.4	12.3	12.8	11.5
Return on equity	%	17.3	16.1	13.5	14.8	13.7
Return on equity, excluding revaluation of additional considerations	%	17.2	14.5	13.5	14.6	13.7
Net debt/EBITDA	times	1.0	1.1	1.6	1.7	1.9
Net debt/EBITDA, excluding revaluation of additional considerations	multiple	1.0	1.2	1.6	1.7	1.9
Interest coverage ratio	multiple	16.6	8.7	7.6	8.8	9.6
Interest coverage ratio, excluding revaluation of additional considerations	multiple	16.5	7.9	7.6	8.7	9.6

Data per share

		2021	2020	2019	2018	2017
Net earnings per share (total 2,016,066,488 shares)	SEK	1.65	1.42	1.08	1.03	0.84
Net earnings per share excluding revaluation of additional considerations	SEK	1.63	1.25	1.08	– 1.01	0.85
Equity per share	SEK	10.63	8.73	– 8.68	– 7.64	6.35
Closing day share price	SEK	136.75	67.43	40.6	22.73	19.65

Sales by geographical region

(SEK m)	NIBE Climate Solutions	NIBE Element	NIBE Stoves	Eliminations	Total
Nordic region	5,550	1,355	783	– 508	7,180
Europe (excl. Nordic region)	10,267	2,751	1,500	– 237	14,281
North America	3,696	3,243	681	– 23	7,597
Other countries	614	1,073	87	0	1,774
Total	20,127	8,422	3,051	– 768	30,832

Time of accounting for sales

(SEK m)	NIBE Climate Solutions	NIBE Element	NIBE Stoves	Eliminations	Total
Deliverables taken up as revenue once	19,624	8,422	3,051	– 768	30,329
Deliverables taken up as revenue gradually	503	0	0	0	503
Total	20,127	8,422	3,051	– 768	30,832

SERVICE CONTRACTS

For certain products in Climate Solutions, NIBE offers customers the opportunity to sign one-year service contracts, under which NIBE undertakes to perform maintenance service and remedy certain defects that are not covered by the warranty provided. The scope of defects cannot be reliably predicted, so pricing is based on experience. Payment is received from customers annually in advance, so deferred income will be taken up as revenue gradually over the coming 12-month period.

EXTENDED WARRANTY PERIOD CONTRACTS

For certain products in Climate Solutions, NIBE offers customers the opportunity to sign contracts for warranty periods that exceed those provided as standard. Standard warranty periods depend both on the type of product and the market in question. The longest contracts expire within six years. The scope of defects cannot be reliably predicted, so pricing is based on experience. Payment is received from customers on delivery of goods. Deferred income will be taken up as revenue gradually over the coming six-year period.

(SEK m)	31 Dec	31 Dec
	2021	2020
Current receivables
Currency futures	0	12
Commodity futures	2	2
Total	2	14
Current liabilities
Currency futures	0	0
Commodity futures	0	0
Total	0	0

Financial instruments measured at fair value

No instruments have been offset in the statement of financial position, so all instruments are recognised at their gross value. For a detailed account of the measurement process, see Note 29 in the Annual Report for 2020. For other consolidated financial assets and liabilities, the carrying amounts represent a reasonable approximation of their fair value. A specification of the financial assets and liabilities involved is given in Note 29 in the Annual Report for 2020.

Condensed cash flow statement

(SEK m)	2021	2020
Cash flow from operating activities	4,749	4,123
Change in working capital	– 1,486	900
Investing activities	– 2,011	– 2,901
Financing activities	– 1,502	– 1,192
Exchange difference in cash and equivalents	202	– 307
Change in cash and equivalents	- 48	623

Change in equity – summaries

(SEK m)	2021	2020
Opening equity	17,737	17,604
Shareholders' dividend	– 781	– 706
Dividend to non-controlling interest	– 3	– 1
Change in non-controlling interest	0	4
Comprehensive income for the period	4,704	836
Closing equity	21,657	17,737

Alternative performance measures

Alternative performance measures are financial measures that are used by the company's management and by investors to evaluate the Group's profit and financial position using calculations that cannot be directly derived from the financial statements. The alternative performance measures provided in this report may be calculated using methods that differ from those used to produce similar measures that are used by other companies.

Operating margin, excluding revaluation of additional considerations

(SEK million)	2021	2020
Operating profit	4,468	3,880
Revaluation of additional con siderations	– 30	– 353
Operating profit, excluding revaluation of additional considerations	4,438	3,527
Net sales	30,832	27,146
Operating margin, excluding revaluation of additional considerations, %	14.4	13.0

Profit margin, excluding revaluation of additional considerations

(SEK million)	2021	2020
Profit after net financial items	4,318	3,658
Revaluation of additional considerations	– 30	– 353
Profit, excluding revaluation of additional considerations	4,288	3,305
Net sales	30,832	27,146
Profit margin, excluding revaluation of additional considerations, %	13.9	12.2

Net investments in non-current assets

(SEK million)	2021	2020
Acquisition of non-current assets	1,825	3,716
Disposal of non-current assets	– 35	– 24
Net investments in non-current assets, including acquisitions	1,790	3,692

Available cash and equivalents

(SEK million)	2021	2020
Cash and bank balances	4,522	4,593
Investments in securities, etc.	224	201
Unutilised overdraft facilities	462	446
Available cash and equivalents	5,208	5,240

Working capital, including cash and bank balances

(SEK million)	2021	2020
Total current assets	16,271	13,374
Current liabilities and provisions, non-interest-bearing	– 6,165	– 5,081
Working capital, including cash and bank balances	10,106	8,293
Net sales, past 12 months	30,832	27,146
Working capital, including cash and bank balances, in relation to net sales, %	32.8	30.5

Working capital, excluding cash and bank balances

(SEK million)	2021	2020
Inventories	6,584	4,431
Current receivables	4,941	4,149
Current liabilities and provisions, non-interest-bearing	– 6,165	– 5,081
Working capital, excluding cash and bank balances	5,360	3,499
Net sales, past 12 months	30,832	27,146
Working capital excluding cash and bank balances relative to net sales, %	17,4	12.9

Return on capital employed

(SEK million)	2021	2020
Profit after net financial items,
past 12 months	4,318	3,658
Financial expenses, past 12 months	276	477
Profit before financial expenses	4,594	4,135
Revaluation of additional considerations	– 30	– 353
Profit, excluding revaluation of additional considerations	4,564	3,782
Capital employed at start of period	28,396	28,258
Capital employed at end of period	31,977	28,396
Average capital employed	30,187	28,327
Return on capital employed, %	15.2	14.6
Operating profit, excluding revaluation of additional considerations, %	15.1	13.4

Return on equity

(SEK million)	2021	2020
Profit after net financial items, past 12 months	4,318	3,658
Standard tax rate, %	20.6	21.4
Profit after net financial items, after tax	3,428	2,875
Of which attributable to Parent shareholders	3,370	2,818
Equity at start of period	17,588	17,509
Equity at end of period	21,438	17,588
Average equity	19,513	17,549
Return on equity, %	17.3	16.1

Return on equity, excluding revaluation of additional considerations

(SEK million)	2021	2020
Profit after net financial items, past 12 months	4,318	3,658
Revaluation of additional considerations	– 30	– 353
Profit, excluding revaluation of additional considerations	4,288	3,305
Standard tax rate, %	20.6	21.4
Profit after net financial items, after tax	3,405	2,598
Of which attributable to Parent shareholders	3,347	2,541
Equity at start of period	17,588	17,509
Equity at end of period	21,438	17,588
Average equity	19,513	17,549
Return on equity, excluding revaluation of additional considerations, %	17.2	14.5

Net debt/EBITDA

(SEK million)	2021	2020
Non-current liabilities and provisions, interest-bearing	7,505	6,298
Current liabilities and provisions, interest-bearing	2,815	4,362
Cash and bank balances	– 4,522	– 4,593
Investments in securities, etc.	– 224	– 201
Net debt	5,574	5,866
Operating profit, past 12 months	4,468	3,880
Depreciation/amortisation and impairment, past 12 months	1,297	1,237
EBITDA	5,765	5,117
Revaluation of additional considerations	– 30	– 353
EBITDA, excluding revaluation of additional considerations	5,735	4,764
Net debt/EBITDA, times	1.0	1.1
Net debt/EBITDA, excluding revaluation of additional considerations, multiple	1.0	1.2

Interest coverage ratio

(SEK million)	2021	2020
Profit after net financial items	4,318	3,658
Financial expenses	276	477
Profit before financial expenses	4,594	4,135
Revaluation of additional considerations	– 30	– 353
Profit, excluding revaluation of additional considerations	4,564	3,782
Interest coverage ratio, multiple	16.6	8.7
Interest coverage ratio, excluding revaluation of additional considerations, multiple	16.5	7.9

Net profit per share excluding revaluation of additional considerations

(SEK million)	2021	2020
Net profit attributable to Parent shareholders	3,320	2,866
Revaluation of additional considerations	– 30	– 353
Net profit, excluding revaluation of additional considerations	3,290	2,513
Net profit per share excluding reval uation of additional considerations	1,63	1.25

Accounting policies

NIBE Industrier's consolidated accounts are prepared in accordance with the International Financial Reporting Standards (IFRS). NIBE Industrier's year-end report for 2021 has been drawn up in accordance with IAS 34 "Interim Financial Reporting". Disclosures in accordance with IAS 34 16A are presented in the financial statements and related note information as well as in other parts of the year-end report.

For the Group, the same accounting policies as those adopted for this report are described on pages 102-139 of the company's Annual Report for 2020.

Reporting for the Parent follows the Swedish Annual Accounts Act and recommendation RFR 2 of the Swedish Financial Accounting Standards Council ('Reporting for Legal Entities').

Transactions with associates have taken place to the same ex-

tent as in the previous year and the same accounting policies apply as those described on page 103 of the company's Annual Report for 2020.

Risks and uncertainties

NIBE Industrier is an international industrial group that is represented in around 40 countries. As such, it is exposed to several business and financial risks. Risk management is, therefore, an important process relative to the goals that the company has set up. Throughout the NIBE Group, efficient risk management routines are an ongoing process within the framework of the Group's operational management and a natural part of the continual follow-up of activities. It is our opinion that no significant risks or uncertainties have arisen in addition to those described in NIBE Industrier's Annual Report for 2020.

This year-end report provides an accurate picture of the business activities, financial position and earnings of the Parent and the Group, and describes any significant risks and uncertainties faced by the Parent and the companies that comprise the Group.

Markaryd, 17 February 2022

Hans Linnarson Chairman of the Board Georg Brunstam Director

Jenny Larsson Director

Anders Pålsson Director

Jenny Sjödahl Director

Gerteric Lindquist Managing Director and CEO

NIBE shares

NIBE's class B shares are listed on the NASDAQ Nordic Large Cap list in Stockholm, with a secondary listing on the SIX Swiss Exchange in Zurich. The NIBE share's closing price on 31 December 2021 was SEK 136.75. In 2021, NIBE's share price rose by 102.8%, from SEK 67.43 to SEK 136.75. In the same period, the OMX Stockholm PI (OMXSPI) increased by 35%. This means that, at the end of December 2021, the market capitalisation of NIBE, based on the latest price paid, amounted to SEK 275,697 million. In 2021 a total of 599,328,962 NIBE shares were traded, corresponding to a share turnover of 29.7% over the year. All figures were recalculated following the 4:1 splits implemented in 2003, 2006, 2016 and May 2021, and the dilution effect of the preferential rights issue in October 2016.

NIBE Industrier AB is obliged by Swedish law (the Securities Market Act and/or the Financial Instruments Trading Act) to publish the information in this interim report. This information was made available to the media for publication at 08.00 (C.E.T.) on 17 February 2022.

Please email any questions to: Gerteric Lindquist, MD and Group CEO, gerteric.lindquist@nibe.se Hans Backman, CFO, hans.backman@nibe.se

The information in this report has not been subjected to scrutiny by the company's auditors.

For other information on definitions, please refer to the company's Annual Report for 2020.

NIBE Group – a global Group with companies and a pres-

ence worldwide

NIBE Group is a global organisation that contributes to a lower carbon footprint and better utilisation of energy. In our three business areas – Climate Solutions, Element and Stoves – we develop, manufacture and market a wide range of environmentally-friendly, energy-efficient solutions for indoor climate comfort in all types of properties, plus components and solutions for intelligent heating and control in industry and infrastructure.

Since its beginnings in the town of Markaryd in the province of Småland 70 years ago, NIBE has grown into an international company with an average of 20,400 (18,700) employees and a global presence. From the very start, the company has been driven by a strong culture of entrepreneurship and a passion for corporate social responsibility. Its success factors are long-term investments in sustainable product development and strategic acquisitions. Combined, these factors have brought about strong, targeted growth, which generated sales of just over SEK 30 billion (SEK 27 billion) in 2021.

NIBE has been listed under the name NIBE Industrier AB on the Nasdaq Nordic Large Cap list since 1997, with a secondary listing on the SIX Swiss Exchange since 2011.

NIBE Industrier AB (publ) P.O. Box 14, SE-285 21 MARKARYD, Sweden Tel. +46 433 - 27 30 00 www.nibe.com Corporate ID no.: 55 63 74-8309