Interim report January–March 2023: Transformation on track with strong margin
Uponor Corporation, Stock Exchange Release, 26 April 2023 at 09:00 am EEST
Interim report January–March 2023: Transformation on track with strong margin
January–March 2023 in brief
- Net sales were €329.4 (349.5) million, a decrease of -5.8% or -5.7% in constant currency terms.
- Operating profit was €49.5 (46.8) million or 15.0% (13.4) of net sales.
- Comparable operating profit was €45.5 (47.2) million or 13.8% (13.5) of net sales.
- Earnings per share were €0.43 (0.45).
Guidance statement for 2023 (unchanged)
Excluding the impacts of currencies, Uponor expects its net sales to be between €1,300 and €1,400 million in 2023, and its comparable operating margin to be above 10%.
Short-term market outlook
Uponor expects that demand in its markets will continue to be soft overall, especially in the new housing segment, in the second quarter of the year. While some key indicators, such as inflation, consumer confidence and builder confidence have shown tentative signs of stabilisation, the construction market continues to experience headwinds. Elevated construction material prices and interest rates, combined with high levels of uncertainty amongst consumers and businesses, are expected to continue to constrain the initiation of new construction projects.
Michael Rauterkus, President and CEO, comments:
‟Uponor’s performance continued to be solid in the first quarter despite softer overall market demand. In this environment, we prioritized strengthening our focus on margin management and I am very pleased with the progress we have made. As a result, while Uponor Group’s first quarter net sales decreased by 5.8%, our comparable operating profit margin remained strong and improved to 13.8% (13.5).
Margin resilience was visible in all divisions’ performance during the quarter. In Building Solutions – Europe, the comparable operating margin was stable while net sales decreased due to lower underlying demand and the absence of sales from the Russian operation which was sold on 1 March. Building Solutions – North America’s net sales were stable supported by a strong order book at the end of 2022 and the operating profit margin remained strong. In a seasonally slow quarter for Uponor Infra, profitability was supported by favourable product mix and execution of the ongoing Group-wide transformation programme.
Our vision is to be the leader in sustainable water solutions, and we continued to accelerate our sustainability work toward reaching our targets. Uponor’s sustainability work has a legacy of industry firsts, including introducing the first PEX pipe based on renewable raw materials and the first circular PEX pipe produced from own PEX production waste. After the reporting period Uponor received, also as the first in its industry, approval for its net-zero target by the Science Based Targets initiative. Validation from the Science Based Targets initiative shows that we are on the right track.
We continued to systematically execute on our growth strategy while improving the resiliency of the company. After launching the transformation programme in February 2023, we have kept the pace and made good progress on our journey to transform our company to become leaner and more resilient. The actions implemented so far within the programme are already expected to generate annualized savings of €14.4 million of the total targeted €30 million cost savings by the end of 2024.
In line with our strategy of maximizing the core, we continued to pursue growth with a systematic 4C approach in our key markets during the quarter. We are focusing on our profitable core in each division. In accordance with this, Uponor Infra divested its district energy operation as it had limited synergies with the core Uponor Infra business.
When it comes to our People First agenda, I was pleased to see that the steps we have taken to transform the safety culture at Uponor started to bear fruit. Our safety performance improved clearly with a lost time injury frequency rate, LTIF, of 4.6 (7.5).
There are strong megatrends driving mid-and long-term demand for sustainable and energy-efficient heating and cooling systems as well as systems for safe and clean water in our markets. However, in the near term, we are prepared for high market volatility and a soft demand picture in the construction sector impacted by the effects of the war in Ukraine, the rise in interest rates and high inflation.
Our solid performance in the first quarter emphasizes the agility of our team and the strength of our strategy also under tough market conditions. Backed by our robust strategic plan and healthy balance sheet, we are well equipped to achieve our strategic targets. For us, the main priority is to stay the course, focus on our profitable core and execute our profitable growth strategy. We have a strong brand and unique capabilities that enable us to fulfil our customers’ needs and lead the change in sustainable water solutions.
Finally, I would like to thank our customers and stakeholders for their continued trust in us as well as all Uponorians for their dedication and hard work.”
Key figures
| M€ | 1–3/2023 | 1–3/2022 | Change | 1–12/2022 |
| Net sales | 329.4 | 349.5 | -5.8% | 1,386.2 |
| Operating expenses | 278.5 | 289.8 | -3.9% | 1,197.8 |
| Depreciation and impairments | 13.0 | 12.9 | +0.2% | 54.5 |
| Operating profit | 49.5 | 46.8 | +5.7% | 135.5 |
| Operating profit, % | 15.0 | 13.4 | +12.2% | 9.8 |
| Comparable operating profit | 45.5 | 47.2 | -3.7% | 153.7 |
| Comparable operating profit, % | 13.8 | 13.5 | +2.1% | 11.1 |
| Financial income and expenses | -1.9 | -1.0 | +99.2% | -1.0 |
| Profit before taxes | 47.6 | 45.9 | +3.6% | 134.9 |
| Profit for the period | 34.1 | 33.3 | +2.5% | 97.5 |
| Earnings per share | 0.43 | 0.45 | -5.4% | 1.21 |
| | 31 Mar | 31 Mar | Change | 31 Dec |
| 2023 | 2022 | 2022 | ||
| Net working capital, M€ | 139.3 | 141.5 | -1.6% | 164.5 |
| Net-interest bearing debt, M€ | 35.9 | 85.9 | -58.2% | 48.5 |
| Solvency, % | 52.2 | 48.4 | +7.9 % | 55.2 |
| Gearing, % | 7.0 | 18.4 | -62.0% | 9.1 |
| Return on investment, % | 30.7 | 31.8 | -3.5% | 22.2 |
Results briefing and live webcast
A live webcast for analysts, institutional investors and the media will be broadcast on Wednesday, 26 April at 14:30 EEST. The briefing is in English. Uponor’s President and CEO Michael Rauterkus, CFO Markus Melkko and Board member Hans Sohlström chairing the board ad hoc committee will be present at the webcast. The webcast and its recording can be viewed via our website at uponorgroup.com > Investors > Reports and presentations or via the Uponor IR mobile app along with all presentation materials.
Uponor Corporation’s financial calendar for 2023
20 Jul 2023 Half-year financial report 2023
25 Oct 2023 Interim report 1–9/2023
For further information, please contact:
Markus Melkko, CFO, tel. +358 20 129 2038
Franciska Janzon, Senior Vice President, Communications and IR tel. +358 20 129 2821
DISTRIBUTION:
Nasdaq Helsinki
Media
www.uponorgroup.com
Uponor in brief
Uponor is a leading global provider of solutions that efficiently and effectively move water through cities, buildings, and homes. We help customers in residential and commercial construction, municipalities, and utilities, be more productive – and continuously find new ways to conserve, manage and provide water responsibly, unlocking its potential to provide comfort, health, and efficiency. Our safe drinking water, energy-efficient radiant heating and cooling systems, and reliable infrastructure solutions are sold in more than 80 countries. Uponor employs about 3,900 professionals in 26 countries in Europe and North America. In 2022, the company’s net sales totalled approximately €1.4 billion. Uponor Corporation is based in Finland and listed on Nasdaq Helsinki. www.uponorgroup.com
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