Brief: BHG Group Updates On Q3, To Cut Costs By SEK 150–200 Mln

BHG AB

12/10/2022 08:07

Oct 12 (Reuters) - BHG Group  BHGF.ST :
    * SAID ON TUESDAY ANNOUNCES EARNINGS TREND IN THE THIRD
QUARTER
2022, MEASURES TO IMPROVE PROFITABILITY, IMPAIRMENT LOSS AND
RENEGOTIATED COVENANTS
    * DURING Q3, HOME IMPROVEMENT MARKET WAS CHARACTERISED BY
GEOPOLITICAL TURBULENCE, SHRINKING DISPOSABLE INCOME AND CERTAIN
DEGREE OF SATURATION FOLLOWING CONSUMPTION PEAK DURING COVID-19
PANDEMIC, RESULTING IN WEAKER DEMAND COMBINED WITH HIGH
INVENTORY LEVELS
    * NET SALES IN Q3 INCREASED, DESPITE THE CHALLENGING MARKET
ENVIRONMENT, BY TOTAL OF 1.5% TO SEK 3,107 MILLION (3,060),
COMPARED WITH THE CORRESPONDING PERIOD IN 2021
    * Q3 ORDER INTAKE DURING THE QUARTER EXCEEDED NET SALES BY
JUST
OVER SEK 100 MILLION
    * ORDER INTAKE EXCEEDED SALES, WHICH IS EXPLAINED BY LONG
INSTALLATION TIMES FOR CERTAIN PRODUCT GROUPS, PRIMARILY IN THE
HEAT PUMP SEGMENT, WHERE SALES ARE DEVELOPING VERY POSITIVELY AS
A RESULT OF ENERGY PRICE TRENDS
    * ORDER INTAKE DURING Q3 WILL BE REPORTED AS NET SALES
DURING THE
FOURTH QUARTER OF 2022
    * Q3 ADJUSTED EBIT AMOUNTED TO SEK 48 MILLION (164), WITH AN
ADJUSTED EBIT MARGIN OF 1.5 % (5.4)
    * WEAK ADJUSTED EBIT IS MAINLY EXPLAINED BY THE CURRENT
PRICE
PRESSURE IN BHG'S MARKETS, DUE TO WEAK DEMAND
    * BHG WILL CUT ITS COSTS BY SEK 150–200 MILLION ON AN ANNUAL
BASIS
IN ORDER TO ADAPT THE OPERATIONS TO THE CHALLENGING MARKET AND
TO COUNTERACT INFLATIONARY INCREASES OF, FOR EXAMPLE, COSTS FOR
PREMISES AND ENERGY
    * WORK ON THE COST SAVINGS WILL BEGIN IMMEDIATELY, WITH
EXPECTED
FULL EFFECT ON COST LEVELS FROM THE SECOND QUARTER OF 2023
    * SAVINGS PERTAIN PRIMARILY TO STAFF REDUCTIONS AND MEASURES
SUCH
AS STREAMLINING INVENTORY COSTS, AND WILL BE IMPLEMENTED IN
ACCORDANCE WITH LABOUR MARKET LEGISLATION AND PROCEDURES
    * COMPANY WORKS ACTIVELY TO DECREASE THE INVENTORY
    * ITEMS HELD IN INVENTORY WERE REDUCED BY SEK 98 MILLION
DURING
THE THIRD QUARTER, TARGET HAS BEEN SET TO INITIALLY REDUCE ITEMS
HELD IN INVENTORY BY AN ADDITIONAL SEK 100-200 MILLION IN Q4
    * IN TOTAL, LIABILITIES RELATED TO EARN-OUTS AMOUNT TO SEK
1,398
MILLION AT THE END OF THE THIRD QUARTER 2022, COMPARED WITH SEK
1,787 MILLION AT THE END OF THE SECOND QUARTER 2022
    * BOARD OF DIRECTORS ALSO DECIDED TO RECOGNISE AN IMPAIRMENT
LOSS
OF SEK 375 MILLION ON THE VALUE OF ITS INVENTORY AS OF 30
SEPTEMBER 2022
    * IMPAIRMENT, WHICH WILL BE CHARGED TO EARNINGS FOR Q3 2022
AND
MAINLY PERTAINS TO SEASONAL GOODS, IS DUE TO WEAKER SALES DURING
THE SUMMER MONTHS OF 2022
    * BHG HAS RENEGOTIATED AND BEEN GRANTED A TEMPORARY RELIEF
ON
CERTAIN COVENANTS BY ITS CREDITOR BANKS
    * RELIEF WILL REMAIN IN FORCE FROM 30 SEPTEMBER 2022 UP TO
AND
INCLUDING 31 DECEMBER 2023

        
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