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engcon’s interim report Q4 2023: Stable earnings for the year despite weak fourth quarter

Fourth quarter 2023

  • Order intake declined 25 per cent to SEK 414 million (553); organic order growth was -26 per cent.
  • Net sales declined 43 per cent to SEK 308 million (541); organic net sales growth was -43 per cent.
  • Operating profit declined 84 per cent to SEK 19 million (121) and the operating margin was 6.2 per cent (22.4).
  • Profit for the quarter decreased 90 per cent to SEK 9 million (90).
  • Basic and diluted earnings per share amounted to SEK 0.07 (0.59).

January – December 2023

  • Order intake declined 24 per cent to SEK 1,510 million (1,978); organic order growth was -27 per cent.
  • Net sales declined 2 per cent to SEK 1,898 million (1,938); organic net sales growth was -6 per cent.
  • Operating profit declined 9 per cent to SEK 376 million (415) and the operating margin was 19.8 per cent (21.4).
  • Profit for the period declined 12 per cent to SEK 285 million (325).
  • Basic and diluted earnings per share amounted to SEK 1.81 (2.01).
  • The Board of Directors proposes a dividend of SEK 0.94 (0.85) per share, to be paid in two equal instalments.

CEO Krister Blomgren comments:

”We can reflect on a year that was characterised by geopolitical turbulence, inflation, interest-rate hikes, and a resulting cautious market. Faced with challenging conditions, we delivered favourable profitability and a strong cash flow at the same time as we commenced the implementation of a new business system during ongoing production. We have reached a historic milestone in that our regions outside of the Nordic region now account for more than 50 per cent of our sales.

Net sales for the quarter amounted to SEK 308 million (541). The gross margin for the quarter was 40.3 per cent (44.0) and was impacted by low sales and production-related personnel costs. The operating margin amounted to 6.2 per cent (22.4) as a result of high overheads in relation to lower sales. Cash flow from operating activities was SEK 96 million (56) and remains strong, primarily due to lower tied-up capital. The change of business system has challenged the organisation and impacted earnings as a result of reduced production capacity, while also requiring considerable resources.

Order intake declined organically by 26 per cent but increased compared with the third quarter, indicating a stabilisation. Pre-ordering effects were comparably low compared with previous years. The Nordic market remains under pressure from the stalled construction sector and is displaying few signs of recovery in the short term. The situation in our growth markets in more fragmented. It is pleasing to note that Europe is growing organically despite economic uncertainty. In Asia-Oceania, we are seeing an increased order intake following a period of decline, with both Australia and South Korea showing positive signs. The trend in America is challenging however our faith in the American market remains strong and we are actively monitoring developments.

We remain cautious in our outlook. We do not believe that we will see any dramatic growth in the quarters ahead. However, our strategy and our financial targets stand firm and we are working purposefully to achieve them.”

Q4 presentation today at 11.00 CEST

The report will be presented by Krister Blomgren, CEO at 11.00 a.m. CEST today at a webcasted telephone conference accessible via this link: https://ir.financialhearings.com/engcon-q4-report-2023

To access the teleconference, and thereby be able to ask questions, please register via the link below. After registration, you will be provided phone numbers and a conference ID to log in.

The presentation material and a recorded version of the conference will be available at www.engcongroup.com.

For more information, please contact:
Anne Vågström, Head of Investor Relations
+46 76 126 40 84

engcon is the leading global supplier of tiltrotators and associated equipment that enhance efficiency, flexibility, profitability, safety and sustainability of excavators. With knowledge, commitment and a high level of service, engcon's slightly more than 400 employees create success for their customers. engcon was founded in 1990, headquartered in Strömsund, Sweden and address the market through 14 local sales companies and an established network of resellers around the world. Net sales amounted to approximately SEK 1.9 billion in 2023. engcon’s B share is listed on Nasdaq Stockholm.

For more information, visit www.engcongroup.com