COMMENTS FROM CEO PER SAMUELSSON
"The progress of beijer group's orders in the first quarter underscores the economic recovery, with increased demand. Order intake in the first quarter 2021 increased on the previous quarter, and the first quarter of the previous year. We also note that order intake of 417 MSEK is one of the Group's best quarters to date, driven by the Beijer Electronics business entity's excellent progress.
As CEO, I'm obviously not satisfied with our earnings level in the first quarter, but we're heading in the right direction now. Sales were unchanged on the fourth quarter, while earnings were faintly positive. At the same time, I think we incurred a sales loss of 8-10% in the first quarter due to a global shortage of some components, which restricted delivery capacity. In turn, this impacted earnings in the period, which otherwise, would have been higher.
So the previous poor demand caused by Covid-19 has transformed into a capacity shortage. We're focusing on dealing with this situation by working on improving our delivery capacity, while making sales and growth our top priorities. And the trend is clear-after passing the bottom during the third quarter of 2020, we've secured a gradual demand recovery, a trend that has accentuated month by month.
We're delighted by a marked upturn in order intake for the Beijer Electronics and Korenix business entities, whose sales were in line with the fourth quarter 2020, but down on the corresponding quarter 2020. But despite lower sales volumes compared to the first quarter 2020, both business entities were able to improve earnings thanks to good cost control and savings programs implemented last year. This means they are now close to break-even level. With increasing volumes and a better product mix for Beijer Electronics, there is good potential to improve earnings. This improves the prospects of these business entities to deliver consistent with our strategy-achieving yearly growth of 10%, and the potential to generate an EBIT margin of 15%. The partnership between the Beijer Electronics and Korenix business entities has also progressed well, with notably, the combined product offering both in-demand and appreciated by customers.
The Westermo business entity is later cyclical than Beijer Electronics and Korenix. Its financial results were lower than the first quarter of 2020, which actually, was a record quarter for Westermo. Results were consistent with the fourth quarter 2020 apart from order intake, which can fluctuate fairly widely between individual quarters depending on when large orders are placed in the period. Covid-19 also still had an impact through some customers deferring orders, and transactions are taking a little longer to execute. Westermo's products and solutions are often specific to, and part of, customers' complete solutions, with lifecycles up towards ten years. This enables good planning on current business accounts, even if order placings do vary. At the beginning of the year, the business entity also signed a supply agreement with Alstom worth at least 250 MSEK. Overall, Westermo has a strong list of prospects for new and current business customers, which we expect to produce future growth.
Westermo also advanced its positioning in the train segment through the acquisition of ELTEC of Germany in March. ELTEC complements Westermo with its focus on smart connectivity via onboard wireless communications on trains and subways. This acquisition is also fully consistent with our strategy for growth and EBIT margin goals. ELTEC will be consolidated into the Group's accounts effective the second quarter. With annualized sales of 65 MSEK, ELTEC is a good contributor to Westermo's and the Group's growth. In earnings terms, we expect ELTEC to contribute consistent with Westermo's profitability level from 2022 onwards.
Overall, there is cause for more optimism. Short-term uncertainty regarding demand has diminished. By the end of the first quarter, BEIJER GROUP's order book was at an all-time high. The focus is on continued growth, and our challenge is dealing with the component shortage, as well as increasing and ensuring our delivery capacity.
We are maintaining our view for the full year 2021. BEIJER GROUP has good potential to achieve better financial performance in 2021 than in 2020."
INVITATION TO PRESENTATION OF THE REPORT
Today a conference call will be held for press and analysts, where President and CEO Per Samuelsson and EVP and CFO Joakim Laurén present the company and comment on the report.
Time: Wednesday April 21, 13:30 CEST
To participate in the conference please dial:
From SE: +46856642706
From UK: +443333009263
To access the presentation please use this link:
The report and the presentation will be available at the company's website www.beijergroup.com. A recording of the conference call will also be available here after the event.
Welcome to join!