Interim financial report for H1 2020, including reinstated 2020 outlook
Company announcement No. 395, 2020
"The current market situation has shown the strength of the more diversified geographical footprint H+H has today with three core markets, to better absorb unexpected market developments such as Covid-19", says CEO Michael T. Andersen. "The UK market was severely hit in Q2 from the lockdown end of March, whereas, the other markets contributed with positive organic growth despite covid-19. Our Q2 results are positively supported by strict pricing strategies in Germany and Poland and a strong operating cash flow."
Financial highlights for the period 1 January to 30 June 2020
|DKK million||Q2 2020||Q2 2019||H1 2020||H1 2019|
|Organic growth excluding the UK market||2%||5%||7%||8%|
|EBITDA before special items||104||156||234||253|
|EBIT before special items||57||114||142||169|
|EBIT margin before special items||10%||15%||11%||12%|
|NIBD/EBITDA ratio before special items ratio||0.8||1.2||0.8||1.2|
|Free cash flow||108||86||30||39|
Following measures taken by the UK Government on 23 March 2020 distribution centres and building sites closed in the UKH+H halted UK production beginning of April as stock levels were high and demand limited. Governmental support programs for employees on furlough have been utilized in the periodAt the beginning of May, house builders and builder's merchants in the UK initiated a phased reopening of building sites and distribution centresIn early June, all Housebuilders' sales centres and merchants opened and in the end of June, H+H started production again to facilitate the increasing demand. In early August all three factories were running H+H UK was severely hit in Q2 2020 with very limited actively in April. Coming from a low level, sales volumes increased throughout the quarter and continued the trend in July, showing a recovery of the market. As of July, most building construction sites are being reported as open and productivity levels increased as distancing rules are softeningThe German market performed better than initial expectations and above last year and continued the performance in July despite Covid-19The Polish market performed slightly below an extraordinary high activity level in 2019, driven by increased competition on the CSU market but partly offset by good performance in AAC
Outlook for 2020
Due to the recovery and more clarity of the UK market, H+H reintroduces outlook for 2020. Although volumes are partly returning in the UK market, the level of visibility in relation to volumes for the second half of 2020 remains limited. The Group foresees a softening of the other markets in H2 as initially expected. Any resurgence of covid-19 is not expected to have nationwide impact in our markets. As low visibility persists due to covid-19, the range for expected revenue is wider than under normal circumstances.
Revenue growth before acquisitions and measured in local currencies is expected to be in the range -16% to -8%EBIT before special items is expected to be DKK 250-300 millionInvestments, excluding acquisitions, divestments and IFRS 16 effect, are expected to be DKK 100-130 million
Investor and analyst teleconference
H+H International A/S will host an investor and analyst teleconference on 14 August 2020 at 10:00 CEST.
To attend the conference call, please see details below.
The conference call will be available at: https://hplush.eventcdn.net/2020q2/
Investors and analysts are invited to participate by phone
For further information please contact:
CFO Peter Klovgaard-Jørgensen or IR Manager Cristina Rønde Hefting, on telephone +45 35 27 02 00.
H+H's core activity is the manufacture and sale of wall building materials, with a revenue in 2019 of DKK 2.8 billion. The main product lines are aircrete blocks and calcium silicate units used for the residential new building segment. H+H has 29 factories in Northern and Central Europe with a total output of more than 4 million cubic metres of products annually and has a leading position in most of its markets. H+H has more than 1,600 employees and is listed on Nasdaq Copenhagen.
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