Year-end Report 2023

Fourth quarter

• Net sales amounted to SEK 460.2 M (438.4), an increase of 5 percent. Organic growth was -5 percent
• EBITA amounted to SEK 59.4 M (54.2), corresponding to a margin of 12.9 percent (12.4)
• EBIT amounted to SEK 41.4 M (47.7), corresponding to a margin of 9.0 percent (10.9)
• Items affecting comparability amounted to SEK -14.8 M (-4.7)
• Profit before tax amounted to SEK 23.1 M (38.7)
• Earnings per share amounted to SEK 0.27 (0.85)
• Free cash flow amounted to SEK 51.3 M (99.8)

Full year

• Net sales amounted to SEK 1,823.7 M (1,832.9), a decrease with 1 percent. Organic growth was -6 percent
• EBITA amounted to SEK 240.0 M (251.1), corresponding to a margin of 13.2 percent (13.7)
• EBIT amounted to SEK 210.4 M (234.4), corresponding to a margin of 11.5 percent (12.8)
• Items affecting comparability amounted to -18.4 M (-7.3)
• Profit before tax amounted to SEK 159.7 M (206.0)
• Earnings per share amounted to SEK 3.37 (4.90)
• Free cash flow amounted to SEK 169.9 M (202.6)
• Board proposal dividend SEK 1.00 (1.50)

Significant events during the quarter

• Svedbergs Group acquires all shares in the Dutch company Thebalux Holding B.V.
• Extraordinary General Meeting authorizes the Board of director to decide on a rights issue of approximately SEK 406 million

Subsequent events

• Svedbergs Group carries out the rights issue and is provided with approximately SEK 390 million after deduction for issuance costs. After the issue amount has been used to amortize the credit facility, net debt / EBITDA on an annual basis is expected to be below 2.0.

CEO comments
Strong Performance in a Challenging Market
We conclude 2023 with a strong final quarter in a challenging market, where our assessment is that we are increasing our market shares and our EBITA margin. This is the result of the appreciation of our customer offering and the good work of all our employees.
Overall, sales during the quarter increased by +5 percent to SEK 460.2 million compared to the corresponding quarter of the previous year. The increase was entirely driven by currency and acquisitions. The organic growth was negative, -5 percent. Looking at our geographies, sales in the Swedish and Finnish markets continued to be weak, while in other markets, sales were stronger than in the corresponding quarter of the previous year. The gross margin for the quarter was 46.2 percent, an increase of +4.9 percent units compared to the corresponding quarter of the previous year. The EBITA result amounted to SEK 59.4 million (54.2), corresponding to an EBITA margin of 12.9 percent (12.4).
The driving factors include good cost control, lower freight, and material prices, and implemented price increases. This was somewhat counteracted by increased operating costs, among other things due to investments in sales and product launches in the UK.
At the same time, we continue to generate a good cash flow of SEK 51.3 million (99.8), a direct consequence of focused work that reduces working capital despite acquisitions. Cash conversion after capex was 58 percent. For the full year, sales amounted to SEK 1,823.7 million (1,832.9). Positive effects from currency and acquisitions essentially balanced out a negative organic growth of -6 percent. The EBITA result amounted to SEK 240.0 million (251.1), corresponding to an EBITA margin of 13.2 percent (13.7). Behind the development lies good cost control and implemented efficiency improvements. This is also something we will carry with us when the market eventually turns.

Very strong development for Roper Rhodes in the UK, more challenging in the Nordics
Looking at the individual brand companies, there are differences between the various segments, which clearly demonstrates the strength of being present in different geographies and the risk diversification this entails.
Both in the quarter and for the full year, Roper Rhodes continues to deliver strong results, despite a clear general slowdown in the UK market. Our perception is that we are taking market shares and strengthening our position. Through continued investments in product development and new product categories, we also create conditions for continued good development. Cassøe in the Danish market also makes a strong result, with an EBITA margin of about 20 percent for both the quarter and the full year. Macro Design has levelled out and has sales for the quarter corresponding with the previous year. During the quarter, Macro Design has started assembling bathroom furniture in its factory to increase the service level to its customers. At Svedbergs, we face challenging market conditions, where the tougher economic situation for Swedish households in particular is clearly reflected in decreased sales. This is also contributed to by a sharp slowdown in the project market.
During the year, all companies have successfully focused on efficiencies, good cost control, and offensive product launches to strengthen the customer offering.

The acquisition of Thebalux has been completed.
During the quarter, significant focus was placed on the completion of the acquisition of Thebalux. This acquisition is a crucial step in Svedberg Group’s ongoing growth journey to organically and through acquisitions increase our market share in the European bathroom market.
The acquisition means that we are adding additional strong brands and professional employees to our group. We are convinced that this will strengthen both us as a group and the individual brand companies. Thebalux is a well-established, profitable entity with a strong market position and over 25 years of experience in the design, production, and distribution of bathroom furniture and products. Through this acquisition, we are now expanding our operations to the Netherlands, an interesting market characterized by a fragmented retail structure and a need for new construction and renovation. From an industry logic perspective, there are also significant similarities with the Nordic region.

Fully subscribed rights issue
To repay part of the bridge loan facility that Svedberg Group took up in connection with the acquisition of Thebalux and at the same time strengthen the group’s capital structure, a rights issue was carried out in January 2024. The issue, which was fully subscribed, provided Svedberg Group with approximately SEK 406 million before deduction of issue costs. We are both grateful and proud of the strong support that existing and new shareholders have shown us.

First Environmental Product Declarations published.
After extensive preparatory work, we published our first Environmental Product Declarations (EPDs) at the end of 2023. For us, this is a milestone that clearly emphasizes our commitment to sustainability and environmental responsibility. The reporting takes a comprehensive approach to the impact of individual products, including CO2 emissions, across the entire lifecycle; from the extraction of raw materials, transport, and manufacturing processes to use, end of life, and recycling potential. The publication is fully in line with our aim to reduce the group’s climate impact and contribute to increased transparency. It helps us further develop our product portfolio and manufacturing process, which ultimately contributes to enhanced competitiveness. At the same time, it is an important tool for consumers, architects, builders, and others to make more informed and environmentally responsible choices.

Outlook
As we now summarize the year, we can conclude that it has been an intense and eventful year. The situation in the external world and on the market is challenging and is likely to continue to be so during 2024. This is something we have to deal with. We have taken measures and are prepared to handle the situation in the best possible way. We look forward to continuing the work of strengthening ourselves, both as a group and individual brand companies. We have a fundamentally well-functioning operation characterized by good profitability and strong cash flows. Altogether, this creates good conditions for the continued work of increasing our market shares in the European bathroom market and offering attractive bathroom solutions.