February 23rd, 2023
CEO Comments
Consolis delivered a solid fourth quarter characterized by the turnaround of West Nordics and improved cash generation across the group, thus confirming the trajectory from Q3. The fourth quarter closed with a high-quality order book which creates good visibility on business activities for the first half of 2023. In addition, Consolis accelerated its Green Spine Line® product sales in the quarter, and is entering 2023 with confidence.
Resilience in turbulent times
Consolis continued to show resilience in a complex market environment, and we delivered an encouraging fourth quarter, where profitability of the group was restored to pre-Ukrainian war levels. The efforts to improve commercial terms and therefore mitigate costs increases continued to be successful, now also visible in our West Nordic segment. Here, the pricing actions combined with the restructuring program delivered positive margins after several quarters of negative performance.
On order intake, the trends that we observed during the year continued into Q4. Non-residential holds up well, whereas the residential segment continuous to be negatively affected by rising interest rates. This translated in an order intake at € 188 million in the quarter, which equals a book-to-bill ratio of 0.6. Our order book, which totaled € 674 million at the end of the fourth quarter, offers the group good visibility for the first semester of 2023.
Net sales in the fourth quarter amounted to € 321 million (308), up 4 percent vs. last year. Adjusted EBITDA in the quarter amounted to € 21.1 million (20.7) equal to an adjusted EBITDA-margin of 6.6 percent (6.7). Free cash flow in the quarter amounted to € 45.2 million (34.4), driven by the seasonal reduction of working capital including a reduction of our inventories.
Taking the lead in low carbon concrete as a competitive advantage
During the quarter, Consolis accelerated its low-CO2 prefabricated concrete product sales. The Green Spine Line® continues to deliver higher than average margins, and during 2022, some 9% of Consolis total produced volume was Green Spine Line® products. This equals some 436 000 tons certified products with a direct saving of over 12 000 tons carbon dioxide emissions when compared to regular precast concrete. During the year, we have seen a gradual increase of the proportion of our produced volume under the Green Spine Line, as well as a corresponding gradual increase in sales.
Entering 2023 with confidence – precast concrete set for increased relative competitiveness
As we are entering a period of lower business activity in 2023, we have initiated resizing of our cost base across markets, in particular through temporary lays-offs, hence capitalizing on the agility we demonstrated during the Covid period. The restructuring program in West Nordics has also progressed per plan and is set to deliver the savings indicated in the Q3 report.
Overall we are entering 2023 with confidence. Our solid and high quality backlog provides us good visibility on the first half of the year, and we see tendering activity remaining high across markets. This is true especially in the non-residential segment which represents 70% of our order backlog.
Longer term, Consolis is ready to capitalize on attractive pre-cast industry tailwinds, pent-up housing demand, need for sustainable construction, and helping the construction industry address its environmental challenges.
Highlights of the fourth quarter 2022:
- Net sales from continued operations amounted to € 321 million (308), corresponding to 4 percent sales growth. Currency effect was negative by minus 3.6 percent, primarily in Egypt and Sweden.
- Operating profit (EBIT) amounted to € -4.6 million (12.3).
- Adjusted EBITDA amounted to € 21.1 million (20.7), corresponding to a margin of 6.6 percent (6.7). Exchange rates had a negative impact of 6.8 percent.
- Order book decreased 19 percent to € 674 million, compared to € 828 million at the beginning of the quarter. Order intake in the quarter totaled € 188 million, and the book to bill ratio corresponded to 0.6.
- Free cash flow from continued operations in the quarter amounted to € 45.2 million (34.4), primarily explained by working capital seasonality and the impact of inventory level reduction. LTM cash conversion was 64 percent, 18 percent above Q3 2022, and 34 percent above Q2 2022.
Telephone conference:
Consolis will host a presentation with the possibility to attend through a telephone conference at 10.00 CET today.
The presentation will be held in English and also available as a recorded webcast on www.consolis.com, and the direct link:
https://edge.media-server.com/mmc/p/g88k4hwf
Dial-in details:
To ensure that you are connected to the conference call, please use the following link at least five minutes before the start of the conference call to register your attendance.
https://register.vevent.com/register/BI478eda197845447d932fd9920cc6e6e7
The quarterly earnings report and associated presentation will be available on www.consolis.com
