A NEW GROUP TAKES SHAPE WITH TWO STRONG BUSINESS AREAS
As we at Momentum Group put another financial year behind us - our third as an independent company - it is as an entirely different group than the one we started the year as. I would therefore like to start by welcoming all of our new Swedol colleagues to the Momentum Group. At the same time, I would also like to extend my deep thanks to all of our dedicated employees across the entire Group for your hard work during the 2019/20 financial year - and to our customers and business partners for your continued confidence. We look forward to continuing our development and improvement journey together with all of you!
We are confident that the combination of TOOLS and Swedol's complementary customer focus and sales channels will contribute to an even stronger and more attractive business partner for our customers, suppliers and employees in the business area Tools, Consumables, Workwear & Protective Equipment. At the same time, we are continuing to develop and strengthen the Group's operations in the business area Components & Services and are continuously evaluating attractive acquisition opportunities in this area in order to further strengthen our position.
CONTINUED POSITIVE EARNINGS PERFORMANCE DURING 2019/20
The performance in our main markets in Sweden, Norway and Finland was relatively stable during the year as a whole, but the COVID-19 pandemic had a negative impact on customer demand during the last weeks of March 2020. The Group's ability to deliver on our customer commitments has remained strong, as all units continued to operate and with a high delivery capacity. EBITA (adjusted for items affecting comparability we had during the year pertaining to costs arising from the acquisition of Swedol of approximately MSEK 14) increased by 6 percent to MSEK 338 for the year, corresponding to an EBITA margin of 5.5 percent. Our profitability measured as return on equity was 16 percent.
In summary, 2019/20 was another financial year that was "better than yesterday," while we also completed the largest acquisition in the Group's history. The continued healthy performance of Momentum Industrial, resulting in its best year ever in terms of revenue and earnings, is especially gratifying. Thanks to our focused initiatives, our cash flow from operating activities gradually strengthened during the year, even when adjusted for IFRS 16 effects.
2020/21 - A NEW YEAR WITH CHALLENGES AND OPPORTUNITIES
The Momentum Group now has total annual revenue of approximately SEK 9.5 billion and some 2,700 committed colleagues around the Nordic region. Momentum Group's financial position, cash flows and liquidity remain strong and we have a high level of financial preparedness for managing challenges as well as opportunities.
The COVID-19 pandemic continues to impact the global economy and will inevitably affect Momentum Group during the current year 2020/21. Our first priority is to continuously implement relevant preventative health measures to offer our employees, customers and other business partners a safe and sound work environment. During April and the beginning of May, the pandemic continued to negatively impact many customers, with lower activity and periodic closures of operations in certain customer segments, such as the automotive industry. At the same time, trends for a number of other customer segments were stable and demand in certain product areas, such as personal protective equipment, rose dramatically. We believe that the Group's decentralised business model is a major advantage in this volatile market situation. Adaptive measures are being urgently taken in the Group's operations, such as "short time working" and terminations in accordance with the supportive measures introduced in several countries, where such measures are deemed necessary and possible depending on developments in the level of activity, market conditions and the general situation. The total effect due to prevailing market conditions will likely have a negative impact on demand for the Group's products in the next few months. The cumulative effect on our earnings is currently difficult to predict and depends entirely on the depth and length of the decline in demand and the effects of the cost-reducing measures that are being taken.
Turbulent times call for a warm heart and a cool head, and we intend to continue along the path we have established, with a focus on earnings growth, reduced funds tied up in working capital and corporate acquisitions in order to increase profitability. Momentum Group will take the necessary steps to responsibly safeguard earnings, liquidity and cash flows, even in the event of a protracted period of low demand due to the COVID-19 pandemic - to thereby strengthen conditions for the Group and its employees over the long term. Efforts to realise synergies and strengthen the customer offering through the coordination between TOOLS and Swedol are continuing unabated. Our decentralised profit responsibility, proximity to customers and our ability to adapt to changes in our operating environment have never been more important than right now.
Stockholm, May 2020
President & CEO
Presentation of the Financial Report - 12 months 2019/20
Investors, analysts and media are welcome to participate in a webcast conference call in which CEO & President Ulf Lilius and CFO Niklas Enmark will present the Financial Report and answer any subsequent questions. The presentation will be held in English.
Time: Wednesday, 13 May 2020 at 11:00 a.m. CET.
Web link: https://financialhearings.com/event/12130.
Telephone no: SE +46 8 505 583 53 / UK +44 33 330 092 72 / US +1 83 352 683 80
Ulf Lilius, President & CEO, Tel: +46 10 454 54 70
Mats Karlqvist, Head of Investor Relations, Tel: +46 70 660 31 32
The information in this report is such that Momentum Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 8:00 a.m. CET on 13 May 2020.
This document is in all respects a translation of the Swedish original Interim Report. In the event of any differences between this translation and the Swedish original, the latter shall prevail.
Momentum Group is a leading reseller of industrial consumables and components, service and maintenance to professional end users in the industrial and construction sectors in the Nordic region. The Group has annual revenue of approximately SEK 9,5 billion and approximately 2,700 employees. Momentum Group AB (publ) has been listed on Nasdaq Stockholm since June 2017. Read more at www.momentum.group.