Interim Report January – March 2020
First quarter 2020
Despite Covid-19, Accessibility and Vehicle Accessibility returned marginal organic sales growth, while progress remained weak in Patient Handling North America. Improvement program launched
First quarter 2020
· Revenue amounted to MEUR 61.0 (67.2)
· Organic growth was -2.0%
· The gross margin was 42.9% (41.7)
· Adjusted EBITA amounted to MEUR 3.8 (5.2), corresponding to a margin of 6.2% (7.7)
· EBIT was MEUR -24.4 (3.6), including goodwill impairment of MEUR 25 relating to the Patient Handling operations in North America
· Net profit (including discontinued operations) amounted to MEUR -21.0 (3.5)
· Earnings per share (including discontinued operations) before and after dilution amounted to EUR -0.36 (0.06)
· Strong adjusted operating cash flow of MEUR 6.4 (1.6) and leverage improved to 2.4x
· EBITA includes other specified items of MEUR -1.5, mainly attributable to costs relating to the strategic review and restructuring costs
Events after the end of the reporting period
· As a result of the strategic review and the increased focus on Accessibility, an agreement was signed to divest Patient Handling Europe in April against a purchase price of approximately MEUR 30 (Enterprise Value). The transaction is expected to close in May
· Staffan Ternström left his position as President and CEO. Johan Ek has been appointed interim President and CEO
Covid-19: effects and financial impacts
· On Group level there was a decline in sales from mid-March, mainly for Accessibility but also for Patient Handling North America, which also had a negative impact on the profits
· Over the second quarter, we anticipate lower sales and profitability compared to the corresponding period in the previous year
· Although Handicare has a strong financial position and liquidity, given the uncertainty relating to the future economic impact, the Board of Directors has decided to withdraw the previously communicated proposal to the Annual General Meeting 2020 of 0.07 EUR dividend per share
The Covid-19 pandemic spreading across the globe is affecting us all and the first priority for Handicare during the quarter was to ensure the health of our customers and employees. The second priority was to adapt our operations to the changing economic environment and to take actions to protect our financial position and liquidity. The Covid-19 situation also increases the need for further improvements and an acceleration of mitigation measures.
The pandemic has affected Handicare during the quarter. At group level, there was a decline in demand from mid-March mainly attributable to Accessibility Europe and Patient Handling North America. Group net sales declined organically by 2.0% and amounted to MEUR 61.0 (67.2). Lower sales resulted in a negative impact on the operating profit and EBITA amounting to MEUR 3.8 (5.2) million, down by 28%.
Introducing the Lift Up Program
Even if we historically have seen relatively good growth within the Stairlift business, Handicare in its entirety has not performed according to its potential. Particularly the performance in Patient Handling North America has been unsatisfactory both with regards to growth and profitability. With this in mind, the recent strategic review and the subsequent divestments will have a positive impact on Handicare creating a more focused Accessibility company.
Accessibility accounts for more than 90% of the group’s EBITA. Within Accessibility we enjoy strong market positions in key European markets as well as a promising growth platform in the large US market. The historical track record in Accessibility is also solid – with an organic CAGR of approximately 6% for the last eight years. With this as the starting point, we are in a position of strength to enter the next phase of improvements. This, we call the Lift Up Program.
The Lift Up Program seeks to establish a more focused and agile organization. The ambition is to optimize group-wide processes and to avoid duplication of efforts as well as to simplify structures and streamline the group cost base. In parallel, we will take the necessary actions to bring the Patient Handling North America business to profitable growth.
The goal of the Lift Up Program is to make Handicare a stronger, more focused company. We want to continue to grow faster than the market in Accessibility and with higher profitability. We are of course aware of the negative impact from Covid-19. By creating the right preconditions, however, we will be able to take us out of the pandemic as a stronger company.
We will share our progress on the Lift Up Program as we start to show the expected results. The first update will take place on June 12, 2020.
President and CEO
Auditors’ review report
This year-end report has not been reviewed by the company’s auditors.
A telephone conference, hosted by Johan Ek, President and CEO, and Pernilla Lindén, CFO, kl. 10.00 CET on 23 April 2020. To participate, please register in advance using the following link: http://emea.directeventreg.com/registration/6893968
A presentation will be available at www.handicaregroup.com/investors
Dates for financial reports and Annual General Meeting:
Annual general meeting 6 May 2020
Interim report April – June 2020 17 July 2020
Interim report July – September 2020 5 November 2020
Year-end report 2020 17 February 2021
For more information, contact:
Johan Ek, CEO, Tel + 46 705 15 94 77
Pernilla Lindén, CFO & IR, Tel +46 708 775 832
This information is information that Handicare Group AB (publ) is required to disclose 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 23 April 2020.
To the extent this report contains forward-looking statements, these statements are based on the current expectations of Handicare’s Group management. Although management considers the expectations expressed in such forward-looking statements to be reasonable, there is no guarantee that these expectations will prove correct. Accordingly, actual future outcomes may differ significantly from those expressed in the forward-looking statements due to such factors as changed economic, market and competitive conditions, changes in regulatory requirements and other policy measures, and fluctuations in exchange rates.
Handicare offers solutions to increase the independence of disabled or elderly people, and to facilitate for their care providers and family. The offering encompasses a comprehensive range of curved and straight stairlifts, transfer, lifting and repositioning aids and vehicle adaptations. Handicare is a global company with sales in more than 40 countries and is one of the market leaders in this field. The head office is in Stockholm, Sweden and manufacturing and assembly is located at five sites distributed across North America, Asia and Europe. In the twelve-month period to March 2020, revenue amounted to MEUR 265 and the adjusted EBITA margin was 7.6%. Employees amounted to 1,034 and the share is listed on Nasdaq Stockholm. For more information, www.handicaregroup.com.