05 October 2022
Purmo Group Plc, stock exchange release, 5 October 2022 at 1.00 p.m. EEST
Purmo Group Plc announces a strategy acceleration programme to strengthen the execution of the strategy launched in 2021. The programme addresses a broad area of strategic and operational initiatives, with focus on improving net sales growth, profitability and net working capital efficiency to support reaching its financial targets communicated in conjunction with the stock listing in January 2022:
- Purmo Group targets organic net sales growth in excess of market growth. In addition, Purmo Group aims for notable inorganic growth through acquisitions.
- The company targets an adjusted EBITDA margin above 15% in the medium- to long-term.
- The leverage ratio is targeted not to exceed 3.0x, measured as interest bearing net debt / Adjusted EBITDA on a rolling twelve-month basis.
In order to support the execution of the programme, aligning resources with the strategic direction and to strengthen customer focus, the company announces a new organisational structure effective from 1 January 2023. The new organisation is based on two business divisions: Climate Products & Systems and Climate Solutions.
Key objectives of the strategy acceleration programme
The programme targets adjusted EBITDA run-rate improvements of EUR 15 million by the end of 2023 and cumulatively EUR 35 million by the end of 2024. In addition, the aim is to improve net working capital efficiency. The costs for the programme are expected to be approximately EUR 40 million, of which EUR 30 million is expected to incur before the end of 2023 and the remainder in 2024. The costs are related to restructuring costs and advisory fees of one-off nature and will be treated as items affecting comparability.
The timing of the programme will also mitigate the effects from the current weakened economic outlook in some of the company’s markets. The underlying trend of energy efficiency in indoor climate solutions remains strong.
Growth:
- Strengthened position as a provider of complete indoor climate solutions, including heat pumps
- Expansion of both direct and wholesaler channels
- Introduction of new products
- Increased sales in identified growth markets
Profitability:
- Improved efficiency in manufacturing, supply chain and sourcing
- Strengthened commercial execution
- Increased organisational effectiveness
Net working capital:
- Improved net working capital efficiency, in particular through enhanced inventory turnover
Alongside the programme, the company will continue to pursue acquisition opportunities, to enable the realisation of Purmo Group’s strategy and to complement the current offering in indoor climate solutions.
New organisational structure
To support the execution of the programme, aligning resources with the strategic direction and to strengthen customer focus, the company announces a new organisational structure effective from 1 January 2023.
The new organisation will consist of two business divisions: Climate Products & Systems, which will sell through the wholesaler channels; and Climate Solutions, which will sell integrated solutions directly to installers served by the company’s Emmeti business in South Europe and Thermotech business in the Nordic region.
The management team of Purmo Group will consist of three new roles and three existing roles:
- The current Senior Vice President of Indoor Climate Solutions business Mike Conlon will be appointed Senior Vice President of the Climate Solutions Division.
- The current Senior Vice President of the Radiators business Barry Lynch will be appointed Chief Commercial Officer and will lead sales, marketing and product development for the Climate Products & Systems division.
- The current Chief Financial Officer Erik Hedin will be appointed Chief Operating Officer of the Climate Products & Systems division, and lead the strategy acceleration programme.
- Chief Executive Officer John Peter Leesi and Chief People Officer Linda Currie will continue in their current roles. The search for a new Chief Financial Officer has started.
“Since 2019 we have achieved an annualised sales growth of 12% and a corresponding adjusted EBITDA growth of over 20%. The strategy acceleration programme and the new organisational structure will deliver increased momentum to capture the full potential of our strategy and support reaching our long-term financial targets. During the coming years, we will focus on improvements in supply chain, product offering and solution selling supported by notable M&A. We will also take actions to be the front-runner in technological and digital enhancements and drive sales in our growth markets”, comments John Peter Leesi, Chief Executive Officer of Purmo Group Plc.
Change in segment reporting from Q1 2023
Purmo Group will start reporting based on the new organisation structure from the first quarter of 2023 onwards. The new reporting segments will be Climate Products & Systems and Climate Solutions. The company will provide adjusted comparison figures for the new segments well in advance of the publication of the January–March 2023 interim report.
Virtual investor briefing on 5 October 2022 at 3.00 p.m. EEST
Purmo Group Plc’s Chief Executive Officer John Peter Leesi will introduce the strategy acceleration programme, its financial impacts and the new organisational structure on 5 October at 3.00 p.m. EEST through a virtual investor briefing. The participants can join the investor briefing via webcast or teleconference. A webcast recording will be available on https://investors.purmogroup.com/ir-material/ shortly after the event.
Webcast: https://purmogroup.videosync.fi/investor-event-10-2022/
Teleconference lines: https://call.vsy.io/access-9957
Participants must register through the above link to ask questions through the conference call lines. After registering the participant will receive a teleconference number and a code to join the call. The participants are asked to press number 5 to join the queue for questions.
Purmo Group Plc will communicate about the progress of the strategy acceleration programme in conjunction with regular financial reporting.
Restructuring objectives in this release are based on management’s indicative plans and no decisions on objectives or actions on restructuring have been made.
Further information:
Katariina Kataja, Head of Investor Relations, Purmo Group Plc
Tel. +358 40 527 1427
Distribution:
Nasdaq Helsinki Ltd
Principal media
investors.purmogroup.com
About Purmo Group:
Purmo Group is a leader in sustainable indoor climate comfort solutions in Europe. We provide complete heating and cooling solutions to residential and non-residential buildings, including radiators, underfloor heating, heat pumps, towel warmers, valves and controls. Our mission is to be the global leader in sustainable indoor climate comfort solutions. Our 3,500 employees operate through 46 locations in 21 countries, manufacturing and distributing top quality products and solutions to customers in more than 100 countries globally. www.purmogroup.com