NCAB Group Interim Report Q3 2020

Today NCAB Group presented their Interim report for January – September.

July – September 2020

  • Net sales increased by 22% to SEK 536.7 million (439.8). The increase is a result of the acquisitions of Flatfield and Bare Board Group. In USD, net sales increased 34%. Growth excluding acquisitions was -9%, but in line with the previous year when measured in USD.
  • Order intake increased 15% to SEK 512.3 million (446.6). In USD, order intake increased 24%. Order intake has gradually improved during the quarter.
  • EBITA increased to SEK 50.1 million (46.3), representing an EBITA margin of 9.3% (10.5).
  • Operating profit was SEK 47.2 million (45.9). Operating margin was 8.8% (10.4).
  • Profit after tax was SEK 31.5 million (38.5).
  • Earnings per share was SEK 1.68 (2.29).

January – September 2020

  • Net sales increased by 18% to SEK 1,600.3 million (1,358.8). This increase is from acquisitions. Growth in USD was also 18%. Excluding the acquisitions, sales decreased 3%, both in SEK and USD.
  • Order intake increased 17% to SEK 1,562.0 million (1,338.6). In USD, order intake increased 16%.
  • EBITA increased to SEK 138.5 million (124.2), representing an EBITA margin of 8.7% (9.1). SEK 14.9 million was charged to EBITA relating to transaction costs for Flatfield and Bare Board Group. Excluding transaction costs, EBITA amounted to SEK 153.5 million, corresponding to an EBITA margin of 9.6%.
  • Operating profit was SEK 132.2 million (121.0). Operating margin was 8.3% (8.9).
  • Profit after tax was SEK 92.3 million (96.7).
  • Earnings per share was SEK 5.14 (5.74).

Significant events during and after the quarter

  • On 1 October, Peter Kruk assumed the role of President and CEO.
  • The coronavirus pandemic negatively impacted order intake and net sales during the quarter and for the whole of 2020.

A word from the CEO

It has now been just over one month since I assumed the role of CEO of NCAB. It is somewhat of a special situation to take over as CEO of a company at a time when there are limited possibilities to travel and meet with employees, customers and suppliers. Despite these difficulties, I already have a very positive image of NCAB. We have a strong corporate culture and take great responsibility locally, which is an effective approach in a situation such as this. A well-established way of collaborating digitally – both internally and with customers and suppliers – makes up for the difficulties of not being able to meet physically.

A return to normalisation for NCAB commenced during the third quarter after the very unique first half of the year. We reported an unusually large order intake during the first quarter due to customers wishing to secure deliveries when parts of China were closed down as a result of the pandemic. Subsequently, Chinese factories resumed operations during the second quarter, while many countries in which our customers are operational experienced various kinds of lockdowns or restrictions that resulted in reduced order intake for NCAB.

“NCAB has a strong organisation, is well positioned and has great future potential”

Peter Kruk.

During the first part of the third quarter, order intake remained weak. At the end of the quarter, however, we noted a general positive return towards more normal levels for the inflow of orders. Nordic, which was relatively strong during the first half of the year, reported a somewhat weaker order intake during the quarter, while Europe rebounded. This is particularly true in the UK, where we have seen improvements in the transport sector. In Germany, our market remained strong during the quarter. We also saw a recovery in southern Europe, which emerged from lockdown during the quarter. Our newly acquired company in the Netherlands is doing very well, and its integration into NCAB has proceeded positively despite being largely conducted digitally.

In North America, it is positive to see that the growth is continuing and profitability is on the rise. The acquisition in the USA that was carried out in April is now in the process of being integrated into NCAB. The fact that we now have manufacturers in Taiwan is appreciated by many customers, and we are working to make them available for all of NCAB’s customers.

In our East region, Russia had a somewhat weaker quarter, while China reported relatively healthy sales. Order intake in China has declined, however, in part due to a shortage of components at our customers and the impact of US trade tariffs.

The gross margin remained unchanged at a high level in comparable units, though the consolidated gross margin is affected in a negative way by newly acquired units which are at a lower level. Expenses remained low due to cancelled travel and fewer recruitments and were on a par with the second quarter. However, we have conducted many webinars with positive effects and have a high level of participation among customers. We received government grants of approximately SEK 1 million in Italy, France and Spain during the quarter.

Overall, our sales increased by 22 per cent and we delivered a strong EBITA, with an EBITA margin of 9.3 per cent.

The order intake increased month-on-month during the quarter and has normalised in terms of delivery times, which means that the order intake for a given quarter indicates the sales in the following quarter. There is uncertainty due to increased spread of infection and new restrictions in several countries. We will follow the developments continuously in order to be able to quickly adapt our activities and costs.

All in all, my perception is that NCAB has handled the coronavirus pandemic well during the first three quarters of the year and that NCAB has a strong organisation, is well positioned not the least with our strong balance sheet and has great future potential.

This is a translation of the original Swedish interim report. In the event of difference between the English translation and the Swedish original, the Swedish interim report shall prevail.

NCAB will hold a web-cast telephone conference on 10 November 2020 at 10:00 a.m. CET, when CEO Peter Kruk and CFO Anders Forsén will present the report. The presentation will be followed by a Q&A session. The presentation will be held in English and can be followed on the web or over the phone. To participate in the conference call, call the following numbers: from Sweden: +46856642705, the UK: +443333009030 and the USA: +18335268384. The presentation and conference can also be followed from the following link: