Profilgruppen — Interim / Quarterly Report 2016

Oct 26, 2016

Interim report January 1 – September 30, 2016 Åseda, October 26, 2016

Best third quarter in the history of the Group

Third quarter

• Turnover MSEK 260.7 (219.6), up 19 percent compared to previous year
• Operating profit MSEK 18.9 (-3.2, after one-time costs related to raw material of MSEK 13.4)
• Net income MSEK 14.0 (-3.6)
• Cash flow from ongoing operations MSEK 20.9 (-13.8)
• Earnings per share SEK 1.74 (-0.49)

First nine months

• Turnover MSEK 825.2 (745.5), up 11 percent compared to previous year
• Operating profit MSEK 45.3 (18.0), up 152 percent compared to previous year
• Net income MSEK 33.0 (10.6)
• Cash flow from current operations MSEK 67.6 (-9.7)
• Earnings per share SEK 4.36 (1.43)

Per Thorsell, CEO of ProfilGruppen, comments:

"A historically strong third quarter is behind us and it´s satisfying for the whole organization to see that our work to improve our business and strengthen our competiveness is proceeding as planned and is rewarded. Our new big order of 350 million SEK, evenly spread over six years, which we communicated last week, is also a proof of that.

We will not rest here but instead strive to strengthen our competiveness in the market further."

ProfilGruppen is a supplier of customised aluminium extrusions and components. For income, financial position, key figures and other facts about the Group, see pages 6-14. Current information and photographs for free publication are available at www.profilgruppen.se.

For more information, please contact: Per Thorsell, CEO Ulrika Bergmo Sköld, CFO Mobile +46 (0)70-240 78 40 Mobile +46 (0)70-230 05 98 E-mail: per.thorsell@profilgruppen.se E-mail: ulrika.bergmo.skold@profilgruppen.se

This information is of the type that ProfilGruppen AB (publ) is obligated to disclose in accordance with the Swedish Securities Exchange and Clearing Operations Act and/or the Financial Instruments Trading Act. The information was issued for publication on October 26, 2016 at 08:00 a.m. CET

ProfilGruppen AB (publ), Box 36, SE-36421 Åseda, Sweden Phone +46 474-550 00, Corporate ID no. 556277-8943, www.profilgruppen.se

Interim report from ProfilGruppen AB (publ), January 1 – September 30, 2016

Market

In the latest report from the European Aluminium Association (EAA), the market for aluminium extrusions in both Scandinavia and Europe is assessed to increase by approximately two percent in 2016 compared to 2015.

Turnover

During the first nine months the turnover for the Group amounted to MSEK 825.2 (745.5), an increase by 11 percent compared to the previous year. The increase in turnover can mainly be explained by the increase in delivery volumes of about 17 percent to 19,150 tonnes (16,350) of aluminium extrusions. Meanwhile, the price of aluminium has fallen compared to the same period last year, which have reduced the increase in turnover.

The increased deliveries are mainly related to the Nordic market, other markets are at the same level as the last year. This means that ProfilGruppen continues to increase its market share of the domestic market.

The share of exports amounted to 38 percent (44) of delivered volume, and 37 percent (44) of the turnover.

The first nine months the Group manufactured 18,925 tonnes (16,075) of aluminium extrusions.

Comments on the result

The operating profit for the first nine months amounted to MSEK 45.3 (18.0), which is equivalent to an operating margin of 5.5 percent (2.4). The improved operating income is a result of a combination of higher delivery volumes, margin improvements, a higher level of added value, and increased efficiency in the operations.

The profit after financial items amounted to MSEK 42.3 (13.7). The profit after tax amounted to MSEK 33.0 (10.6).

Earnings per share totalled SEK 4.36 (1.43). The average number of shares in thousands during the period was 7,399 (7,399).

The return on capital employed amounted to 17.3 percent (7.6).

The third quarter

Turnover amounted to MSEK 260.7 (219.6). The delivery volume in the quarter was 5,925 tonnes (4,875) of aluminium extrusions, an increase by 22 percent compared to the same period last year. The production volume was 5,800 tonnes (4,725). The share of exports amounted to 32 percent (45) of volume, and 34 percent (45) of turnover.

The operating profit for the second quarter amounted to MSEK 18.9 (-3.2 after one-time costs related to raw material of MSEK 13.4), which is equivalent to an operating margin of 7.2 percent (-1.5). The increase is an effect of high delivery and production volumes in combination with a higher level of added value, margin improvements, increased efficiency in the operations and some currency effects. The subsidiary PG&WIP AB has, as planned, continued its positive development during the third quarter.

The profit after financial items amounted to MSEK 17.9 (-4.5). Earnings per share totalled SEK 1.74 (-0.49).

Investments in the period and forward

Investments during the first nine months amounted to MSEK 20.8 (54.9), of which about one third are related to the set-up of a new production facility in the subsidiary PG&WIP AB.

The positive volume trend in our main operations and potential customer project have called for strategic actions to secure future capacity. A pilot study has therefore been started up with the purpose to clarify the alternative course of actions in terms of upgrading the existing equipment or installation or acquisition of new capacity.

Financing and liquidity

Cash flow from current operations amounted to MSEK 67.6 (-9.7) and after investments to MSEK 47.7 (-62.9). The improvement of the cash flow from current operations is explained by an increased operating income and that the operating capital has remained at the same level.

The liquidity reserve as of 30 September 2016 amounted to MSEK 114.9 (99.4).

The balance sheet total as of 30 September 2016 was MSEK 584.5 (561.7). Net debt amounted to MSEK 86.8 (143.9) as of 30 September 2016 and the net debt ratio was 0.36 (0.66).

During the period no related transactions of significance for the income or financial position of the Group have been made.

Personnel

The average number of Group employees during the year was 373 (331). The number of Group employees as of 30 September 2016 totalled 402 (343), whereof 26 is related to the new subsidiary PG&WIP.

Events after the reporting period

ProfilGruppen communicated on October 20, 2016 the news that the Group has signed a new major contract through the subsidiary PG&WIP AB. The agreement regards the supply of interior details based on customized aluminum profiles pre-packed for IKEA. The new contract runs over six years, starting 2017, with an estimated turnover of 350 million SEK in total, evenly spread over the period. Following the agreement an investment of about 50 million SEK in an automated production line will be made by PG&WIP AB.

Significant risks and uncertain factors

The company's risks and risk management have not significantly changed since the publishing of the 2015 annual report.

Outlook for 2016

Fourth quarter of the year has in terms of sales had a stable start. The market situation for our products is assessed to be satisfying during the coming quarters.

Outlooks published on July 21, 2016:

Third quarter of the year has in terms of sales had a stable start. Increasing volumes in the new subsidiary PG&WIP AB, will contribute positively to the Groups results. The market situation for our products is assessed to be satisfying during the coming quarters.

Year-end report and Annual General Meeting

The Year-end report for 2016 will be published 10 February 2017 at 08:00 CET.

The AGM 2017 will take place 25 April 2017 at 16:00 CET. All shareholders are then welcome to Folkets Hus in Åseda.

The Nomination Committee for the AGM 2017 consists of Lars Johansson (shareholder), Bengt Stillström (Ringvägen Venture AB), Mats Egeholm (shareholder) and Kåre Wetterberg (Chairman of ProfilGruppen).

Shareholders who wish to submit proposals to the Nomination Committee shall present their proposal by January 13, 2017 at the latest. Proposals to the Nomination Committee can be sent by email to valberedningen@profilgruppen.se, or by post: ProfilGruppen AB, att: Valberedningen, Box 36, SE-364 21 Åseda, Sweden.

Shareholders who wish to have a case raised at the Annual General Meeting may either send the proposal to the Chairman of ProfilGruppen by email to: styrelsen@profilgruppen.se, or by post to: ProfilGruppen AB, att: Årsstämmoärenden, Box 36, SE-364 21 Åseda, Sweden. The proposals must be received by the company by January 13, 2017 at the latest in order to ensure inclusion in the notice and the AGM agenda.

Åseda, October 26, 2016

The Board of Directors, ProfilGruppen AB (publ) Org no 556277-8943

Review report ProfilGruppen AB (publ) corporate identity number 556277-8943

Introduction

We have reviewed the condensed interim report for ProfilGruppen AB (publ) as at September 30, 2016 and for the nine months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden.

The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, the conclusion based on this review are not comparable with the same accuracy as an audit opinion

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.

Åseda, October 26, 2016 Ernst & Young AB

Franz Lindström Authorized Public Accountant

Accounting Principles

The Group accounting in this interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) as they have been approved by the EU. The parent company accounting has been prepared in accordance with the Swedish Annual Accounts Act (ÅRL) and the Swedish Financial Reporting Standards Council´s RFR 2 Accounting for Legal Entities. The interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The accounting principles applied are identical to the ones used for the latest annual report with exception for the new or revised standards, amendments and interpretations issued by the International Accounting Standards Board (IASB) as approved by the European Commission for application within the EU and shall be applied from 1 January 2016. None of these have had an effect on the income statement, balance sheet or cash flow of the Group. The accounting principles are described in the annual report 2015.

Statement of comprehensive income in short

The Group, MSEK	Q 3 2016	Q 3 2015	Q 1-3 2016	Q 1-3 2015	12 months ongoing	Q 1-4 2015
Net turnover	260.7	219.6	825.2	745.5	1 059.9	980.2
Cost of goods sold	-224.0	-207.2	-721.2	-675.3	-931.7	-885.8
Gross margin	36.7	12.4	104.0	70.2	128.2	94.4
Other operating revenues	0.0	0.0	0.0	0.1	0.0	0.1
Selling expenses	-10.1	-9.6	-34.4	-31.7	-46.5	-43.8
Administrative expenses	-7.6	-5.6	-24.2	-20.0	-31.3	-27.1
Other operating expenses	-0.1	-0.4	-0.1	-0.6	-0.2	-0.7
Operating profit/loss	18.9	-3.2	45.3	18.0	50.2	22.9
Financial income	0.1	0.3	0.6	0.9	0.9	1.2
Financial expenses	-1.1	-1.6	-3.6	-5.2	-4.7	-6.3
Net financial income/expense	-1.0	-1.3	-3.0	-4.3	-3.8	-5.1
Income after financial items	17.9	-4.5	42.3	13.7	46.4	17.8
Tax	-3.9	0.9	-9.3	-3.1	-11.0	-4.8
Net income for the period	14.0	-3.6	33.0	10.6	35.4	13.0
Other comprehensive income (net after tax) Items that will subsequently be reclassified to net income:
Changes in hedging reserve	-1.9	-0.2	-4.0	1.1	-3.3	1.8
Translation differences Items that will subsequently not be reclassified to net income:	0.2	0.0	0.2	0.0	0.1	-0.1
Revaluation of defined benefit obligation	-1.6	0.0	-1.6	0.0	-0.9	0.7
Comprehensive income for the period	10.7	-3.8	27.6	11.7	31.3	15.4
Net income for the period attributable to:
Owners of the parent	12.9	-3.5	32.3	10.7	35.4	13.8
Non-controlling interests Total comprehensive income for the period attributable to:	1.1	-0.1	0.7	-0.1	0.0	-0.8
Owners of the parent	9.6	-3.7	26.9	11.8	31.3	16.2
Non-controlling interests	1.1	-0.1	0.7	-0.1	0.0	-0.8
Earnings per share (before and after dilution), SEK	1.74	-0.49	4.36	1.43	4.79	1.88
Average number of shares, thousands	7 399	7 399	7 399	7 399	7 399	7 399
Depreciation and write-down of fixed assets
Intangible fixed assets	0.0	0.0	0.0	0.0	0.0	0.0
Land and buildings	0.7	0.7	2.7	2.7	3.7	3.7
Machinery and equipment	6.9	3.4	22.6	13.0	27.8	18.2
Total	7.6	4.1	25.3	15.7	31.5	21.9
of which write-down	0.0	0.0	0.0	0.0	0.0	0.0

Statement of financial position in short

The Group, MSEK	30 September 2016	30 September 2015	31 December 2015
Assets
Intangible fixed assets	10.0	10.0	10.0
Tangible fixed assets	248.4	245.8	252.9
Financial fixed assets	1.2	1.4	1.3
Total fixed assets	259.6	257.2	264.2
Inventories	132.7	124.2	130.3
Current receivables	184.3	169.9	135.9
Liquid assets	7.9	10.4	9.3
Total current assets	324.9	304.5	275.5
Total assets	584.5	561.7	539.7
Shareholders' equity
Total equity attributable to the parent Company´s shareholders	243.4	212.1	216.5
Non-controlling interests	4.4	4.4	3.7
Total equity	247.8	216.5	220.2
Liabilities
Interest-bearing liabilities	68.1	87.8	75.0
Interest-free liabilities	34.0	26.9	26.4
Total long-term liabilities	102.1	114.7	101.4
Interest-bearing liabilities and provisions	28.6	66.6	68.0
Interest-free liabilities	206.0	163.9	150.1
Total short-term liabilities	234.6	230.5	218.1
Total shareholders' equity and liabilities	584.5	561.7	539.7
Pledged assets and contingent liabilities
Property mortgages
Floating charges	84.8	84.8	84.8
Shares in subsidiaries	241.5	170.0	221.5
Trade receivables pledged as collateral	147.1	117.9	118.8
Guarantees for other companies	0.0	0.5	0.0
Guarantee commitments FPG/PRI	0.7	0.7	0.7
	0.2	0.2	0.2

Statement of changes in equity in short

The Group, MSEK	Q 3 2016	Q 3 2015	Q 1-3 2016	Q 1-3 2015	Q 1-4 2015
Opening balance, total equity	237.1	220.3	220.2	200.3	200.3
Changes attributable to owners of the parent:
Comprehensive income for the period	9.6	-3.7	26.9	11.8	16.2
New share issue	0.0	0.0	0.0	0.0	0.0
Changes attributable to non-controlling interests:
Comprehensive income for the period	1.1	-0.1	0.7	-0.1	-0.8
New share issue	0.0	0.0	0.0	4.5	4.5
Closing balance, total equity	247.8	216.5	247.8	216.5	220.2

Financial instruments, valued at fair value

in statement of financial position

The Group, MSEK	30 September 2016	30 September 2015	31 December 2015
Short-term receivables
Currency derivatives	0.3	0.2	0.6
Short-term non interest-bearing liabilities
Interest rate derivatives	3.7	3.4	3.0
Currency derivatives	4.1	0.2	0.1

Both interest rate- and currency derivatives are primarily used for hedge and are valued on level 2 according to IFRS 13.

Statement of cash flows in short

The Group, MSEK	Q 3 2016	Q 3 2015	Q 1-3 2016	Q 1-3 2015	12 months ongoing	Q 1-4 2015
Operating activities
Operating profit/loss	18.9	-3.2	45.3	18.0	50.2	22.9
Depreciation and write-down	7.6	4.1	25.3	15.7	31.5	21.9
Adjustment for other non-cash items	1.0	0.3	1.1	-2.7	0.9	-2.9
Interest received/paid	-0.8	-1.5	-2.5	-4.4	-2.9	-4.8
Paid income tax	-1.0	-0.7	-0.3	0.2	-0.7	-0.2
Cash flow prior to change in working capital	25.7	-1.0	68.9	26.8	79.0	36.9
Change in working capital	-4.8	-12.8	-1.3	-36.5	11.5	-23.7
Cash flow from operating activities	20.9	-13.8	67.6	-9.7	90.5	13.2
Acquisition of property. plant and equipment	-8.1	-32.4	-19.9	-55.3	-33.0	-68.4
Sale of property, plant and equipment	0.0	0.2	0.0	2.1	0.0	2.1
Cash flow from investing activities	-8.1	-32.2	-19.9	-53.2	-33.0	-66.3
Rights issue/Shareholders' contributions1)	0.0	0.0	0.0	4.5	0.0	4.5
Loans raised	0.0	38.4	5.7	38.4	13.1	45.8
Change in bank overdraft facility utilized	0.9	15.8	-39.8	32.1	-55.6	16.3
Repayment of loans	-6.9	-1.4	-15.0	-3.1	-16.1	-4.2
Cash flow from financing activities	-6.0	52.8	-49.1	71.9	-58.6	62.4
Cash flow for the period	6.8	6.8	-1.4	9.0	-1.1	9.3
Liquid assets. opening balance	1.1	3.1	9.3	1.1	10.4	1.1
Translation differences in liquid assets	0.0	0.5	0.0	0.3	-1.4	-1.1
Liquid assets. closing balance	7.9	10.4	7.9	10.4	7.9	9.3
Liquidity reserve			114.9	99.4		108.2

1) During the second quarter 2015 a rights issue related to non-controlling interests has increased the cash with MSEK 4.5.

Key ratios

The Group	Q 3 2016	Q 3 2015	Q 1-3 2016	Q 1-3 2015	12 months ongoing	Q 1-4 2015
Net turnover, MSEK	260.7	219.6	825.2	745.5	1 059.9	980.2
Income before depreciation, MSEK	26.5	0.9	70.6	33.7	81.7	44.8
Operating income/loss, MSEK	18.9	-3.2	45.3	18.0	50.2	22.9
Operating margin, %	7.2	-1.5	5.5	2.4	4.7	2.3
Income after financial items, MSEK	17.9	-4.5	42.3	13.7	46.4	17.8
Profit margin, %	6.9	-2.0	5.1	1.8	4.4	1.8
Return on equity, %	23.1	-6.6	18.8	6.8	15.3	6.2
Return on capital employed, %	22.2	-3.4	17.3	7.6	14.3	7.4
Cash flow from operating activities, MSEK	20.9	-13.8	67.6	-9.7	90.5	13.2
Investments, MSEK	8.2	32.2	20.8	54.9	34.3	68.4
Liquidity reserve, MSEK
	-	-	114.9	99.4	-	108.2
Net debt, MSEK	-	-	88,9	143.9	-	133.8
Interest-bearing liabilities and interest-bearing provisions, MSEK	-	-	96.7	154.3	-	143.1
Net debt/equity ratio	-	-	0.36	0.66	-	0.61
Total assets, MSEK	-	-	584.5	561.7	-	539.7
Equity ratio, %	-	-	42.4	38.5	-	40.8
Capital turnover	3.1	2.5	3.1	3.0	3.0	3.0
Proportion of risk-bearing capital, %	-	-	48.2	43.3	-	45.7
Interest coverage ratio	17.7	-1.9	12.8	3.6	10.8	3.8
Average number of employees	390	339	373	331	369	339
Net turnover per employee (average), TSEK	667	953	2206	2 252	2 872	2 892
Income after fin, per employee (average), TSEK	46	-13	113	41	126	52
Average number of shares, thousands (No dilution,)	7 399	7 399	7 399	7 399	7 399	7 399
Number of shares, end of period, thousands	7 399	7 399	7 399	7 399	7 399	7 399
Earnings per share, SEK	1.74	-0.49	4.36	1.43	4.79	1.88
Equity per share, SEK	-	-	33.12	28.66	-	29.26

The key ratios above are a summary of the financial report in order to give an overview of ProfilGruppen´s financial position. Definitions are given in ProfilGruppen's Annual Report 2015. Operating income refers to Income before tax excluding financial income and expenses. Investments consist of fixed assets acquired during the period. Rounding differences may occur. When calculating key ratios: return on equity, return on capital employed and capital turnover the result and turnover for the period have been adjusted upward to 12 months. The key ratios presented are for the total Group and based on the group consolidated figures including non-controlling interest, except Earnings per share and Equity per share.

The parent company

The turnover of the parent company amounted to MSEK 16.8 (16.8) and comprised by 98 percent of payments for rents and services from companies in the Group. Profit after financial items amounted to MSEK 11.7 (12.5).

Investments in buildings amounted to MSEK 0.2 (0.4) in the parent company during the year.

The parent company's interest-bearing liabilities amounted to MSEK 1.0 (1.2) as of 30 September 2016. The change in the parent company's liquidity during the period has been MSEK 0 (0).

The parent company employs none (none).

The parent company's risks and uncertain factors do not significantly differ from the Group.

No significant related transactions apart from above mentioned transactions with subsidiaries have been implemented during the period.

Income Statement in short – the parent company

Parent Company, MSEK	Q 3 2016	Q 3 2015	Q 1-3 2016	Q 1-3 2015	Q 1-4 2015
Turnover	5.7	5.7	16.8	16.8	22.3
Cost of goods sold	-0.6	-0.7	-2.6	-2.6	-3.5
Gross Margin	5.1	5.0	14.2	14.2	18.8
Other operating revenues	0.0	0.0	0.0	0.1	0.1
Administrative expenses	-0.8	-0.5	-2.7	-2.1	-2.8
Operating income	4.3	4.5	11.5	12.2	16.1
Result from shares in group companies	0.0	0.0	0.0	0.4	0.4
Interest income	0.1	0.0	0.2	0.3	0.4
Impairment of shares in group companies	0.0	0.0	0.0	0.0	0.0
Interest expenses	0.0	0.0	0.0	-0.4	-0.4
Income after financial items	4.4	4.5	11.7	12.5	16.5
Appropriations	0.0	0.0	0.0	0.0	-3.0
Income before tax	4.4	4.5	11.7	12.5	13.5
Tax	-1.0	-1.0	-2.7	-2.8	-2.9
Net income for the period	3.4	3.5	9.0	9.7	10.6

Balance sheet in short – the parent company

Parent company, MSEK	30 September 2016	30 September 2015	31 December 2015
Assets
Tangible assets
Tangible fixed assets	78.0	80.9	80.1
Financial assets	84.5	84.5	84.5
Total fixed assets	162.5	165.4	164.6
Current assets
Current receivables	30.0	11.7	16.1
Cash and bank balances	0.4	0.4	0.4
Total current assets	30.4	12.1	16.5
Total assets	192.9	177.5	181.1
Equity and liabilities
Equity	163.6	153.6	154.5
Untaxed reserves	17.8	14.8	17.8
Provisions for taxes	4.2	3.3	4.1
Long-term liabilities	0.7	1.3	0.7
Current liabilities	6.6	4.5	4.0
Total equity and liabilities	192.9	177.5	181.1

The Group

The Group

Brief facts about the Group

• ProfilGruppen AB in Åseda. Småland in Sweden develops. manufactures and delivers customised extrusions and components in aluminium.
• The company has customers in several European countries and during 2015 the share of export was 45 percent.
• Aluminium extrusions are used within many industries. for example construction. automotive industry. telecommunications/electronics and furnishings.
• The manufacture of extrusions takes place on three press lines at the company's facilities at ProfilGruppen Extrusions AB. Processing like cutting processing. surface treatment. friction stir welding. bending and assembly also takes place at the company´s own facilities.
• The company cooperates with around ten regional suppliers who process products on behalf of ProfilGruppen.
• The company is certified in accordance with ISO/TS 16949 and ISO 14001.
• ProfilGruppen AB was listed on the Stockholm Stock Exchange in June 1997 and is listed as Small Cap.