Nobia's net sales increase by 2% in 4Q 2019
Nobia,year end report,2019,4Q,profit margins,net sales,growth
Nobia’s net sales for the fourth quarter increased by 2% and amounted to SEK 3,445m (3,390) while organic growth was -2% (-2).
Investing for the future
A stable Q4 concludes a year characterised by high market volatility. It also marks the end of a highly important year for Nobia, when a new direction is set for the company and decided on for major future investments.
One highlight was the investment of SEK 2bn in a new state-of-the-art factory for the Nordic region, which was announced in December last year. The new factory will be unique in its ability to mass produce made-to-order kitchens and will be instrumental to realise the company’s strategy. Another area where resources have been injected is the important trade segment, where Nobia has capitalised on its strong retail brands and utilised the scale of its nationwide store networks.
Organic growth declined in the quarter, mainly driven by a softer Nordic project market but also as a result of franchising part of the Nordic store network. The quarter includes costs for strategic investments related mainly to the decision to build a new Nordic factory and changes in the UK supply chain. Adjusting for last year’s non-recurring cost and this year’s strategic investments, its operating income and margin were on par with last year.
In the Nordics, an improved margin has been delivered despite an organic decrease in sales, which partly was a result of conversions of Nobia’s own stores to franchise. Deliveries to the project market declined in line with construction activity falling from high levels, mainly in Finland. In Denmark, new product introductions continued to perform well, contributing to another overall good quarter.
In the UK, organic growth is seen despite the market weakness. The Brexit uncertainty continued and was even more apparent ahead of the election in December, burdening retail sales and construction market activity. Its London based project business had higher deliveries, however much less than expected due to market uncertainty and project delays.
Cash flow for the year remained solid and the balance sheet remains strong. This gives Nobia continued financial headroom to focus on profitable growth, organically as well as through acquisitions and the Board of Directors has proposed to maintain the dividend at SEK 4.00 per share. The company looks forward to sharing more of its plans at a capital markets day in Stockholm on March 19.