Purmo Group’s Financial Statements Review 1 January–31 December 2021: Strong net sales growth and record adjusted EBITDA

03 March 2022

Purmo Group Plc, Stock Exchange Release, 3 March 2022 at 08:15 a.m. EET

2021 key achievements:

  • Annual net sales growth of 26 per cent to EUR 843.6 million (671.2)
  • Adjusted EBITDA growth of 22 per cent to EUR 103.9 million (85.1)
  • Radiator division reached 28 per cent growth in net sales to EUR 506.3 million (396.9) and 5 per cent increase in adjusted EBITDA to EUR 66.0 million (62.9)
  • ICS division reached 23 per cent growth in net sales to EUR 337.2 million (274.3) and 62 per cent increase in adjusted EBITDA to EUR 43.7 million (27.0)
  • Good operational performance meeting increased demand in a challenging supply environment
  • Ability to largely pass on increasing raw material prices to customers
  • Earnings improvement and cost savings programme PGUp successfully implemented
  • Merger between VAC Plc and Purmo Group Ltd was completed on 31 December 2021 and on 3 January 2022 the shares of Purmo Group Plc started trading on Nasdaq Helsinki. The listing supports the company’s growth plans and M&A agenda.

October-December 2021 highlights:

  • Net sales improved by 20 per cent to EUR 222.6 million (186.1)
  • Adjusted EBITDA decreased by 6 per cent to EUR 22.6 million (23.9)
  • The adjusted EBITDA margin was 10.1 per cent (12.9 per cent)
  • EBIT decreased to EUR -41.9 million (9.0), affected by a EUR 52.3 million one-time, non-cash IFRS 2 merger impact
  • Earnings per share decreased to -1.58 (0.25)
  • Adjusted earnings per share decreased to 0.39 (0.50)

January-December 2021 highlights:

  • Net sales improved by 26 per cent to EUR 843.6 million (671.2)
  • Adjusted EBITDA increased by 22 percent to EUR 103.9 million (85.1)
  • Adjusted EBITDA margin was 12.3 per cent (12.7 per cent)
  • EBIT decreased to EUR 3.5 million (42.0), affected by a EUR 52.3 million one-time, non-cash IFRS 2 merger impact
  • Adjusted Operating cash flow was EUR 53.1 million (94.2)
  • Earnings per share decreased to -0.65 (0.86)
  • Adjusted earnings per share increased to 1.77 (1.32)
  • Proposed return of capital EUR 0.36 per class C share and EUR 0.07 per class F share.

Unless otherwise stated, the comparison figures in parentheses refer to the corresponding period in 2020. The non-adjusted key figures are affected by a one-time, non-cash IFRS 2 merger impact of EUR 52.3 million as a result of the merger of VAC Plc and Purmo Group Ltd, as well as EUR 17.9 million other items affecting comparability.

2022 financial guidance

In its initial outlook for 2022, Purmo Group expected both net sales and adjusted EBITDA, both excluding impact from acquisitions, to increase from 2021 (EUR 843.6 million and EUR 103.9 million, respectively). Both net sales and adjusted EBITDA in January and February were consistent with this full year outlook.

With the recent escalation of the geopolitical situation in Ukraine, visibility has weakened. The direct exposure to the Russian and Ukrainian markets are not material. Purmo Group’s net sales to Ukraine accounts for less than 1 per cent and to Russia for less than 5 per cent of total net sales, and total assets in these countries represents less than 3 per cent of Purmo Group’s assets. The indirect impacts on other markets that Purmo Group operates in are difficult to assess at this stage.

Return of capital proposal

The Board of Directors proposes for the Annual General Meeting that a return of capital of EUR 0,36 per share be paid for class C share and EUR 0,07 per share for class F share. The return of capital is proposed to be paid in two instalments, in May and October 2022.

Key figures and financial performance

EUR million 10-12/2021 10-12/2020 Change, % 2021 2020 Change, %
Net sales 222.6 186.1 20% 843.6 671.2 26%
Adjusted EBITDA 22.6 23.9 -6% 103.9 85.1 22%
Adjusted EBITDA margin, % 10.1% 12.9% 12.3% 12.7%
Adjusted EBITA 15.1 15.4 -2% 70.8 50.3 35%
Adjusted EBITA margin, % 6.8% 8.3% 8.4% 7.8%
EBIT -41.9 9.0 -567% 3.5 42.0 -92%
EBIT margin, % -18.8% 4.8% 0.4% 6.3%
Profit for the period -46.7 7.4 -735% -18.8 25.3 -174%
Adjusted Profit for the period 11.0 14.5 -24% 51.4 38.5 34%
Earnings per share, basic, EUR -1.58 0.25 -731% -0.65 0.86 -175%
Adjusted Earnings per share, basic, EUR 0.39 0.50 -22% 1.77 1.32 33%
Cash flow from operating activities 32.2 38.4 -16% 35.4 68.9 -48%
Adjusted Operating cash flow, last 12 months1 53,1 94.2 -44% 53.1 94.2 -44%
Cash conversion2 51.1% 110.7% 51.1% 110.7%
Operating capital employed3 271.8 235.6 15% 271.8 235.6 15%
Return on operating capital employed, %4 1.3% 17.8% 1.3% 17.8%
Net debt 239.5 75.1 219% 239.5 75.1 219%
Net debt / Adjusted EBITDA 2.3 0.9 161% 2.3 0.9 161%

1) Adjusted EBITDA on a rolling 12 month basis deducted by the change in net working capital and capex on a rolling 12 month basis.
2) Adjusted operating cash flow divided by Adjusted EBITDA, both on a rolling 12 month basis.
3) Net working capital, other intangible assets, property, plant and equipment, and right-of-use-assets.
4) EBIT based on a rolling twelve-month calculation divided by operating capital employed. Return on operating capital employed without non-recurring items was 27.1% (23.4%).

CEO review: Great progress in an unusual year

The year 2021 was a great success for Purmo Group and we are proud of what the entire company achieved including the listing on the Nasdaq Helsinki.

Strong performance improvement

Sales, with strong organic sales growth, recovered to above pre-pandemic levels and the value of our PGUp earnings and cost improvement programme shone in our bottom-line performance. 2021 was a record year for adjusted EBITDA.
The seasonal pattern of 2021 was markedly different from normal years, as the year started with a strong recovery from the pandemic and customer pre-buying ahead of expected price increases as well as being able to meet higher demand. The demand normalised towards the end of 2021.

The world stepped up its response to climate change, which we expect to benefit our markets. The EU’s Energy Performance of Buildings Directive (EPBD) recognized the enormous effect that its 260 million buildings have on CO2 emissions and it set out the measures needed in heating and cooling to reach carbon neutrality. The relevance of indoor climates not costing the planet’s climate became a dominant issue.

Highlights from our divisions

In Radiators Division volumes grew by 14 per cent, the price of steel more than doubled and supply chains were stretched. Nonetheless, we were able to supply and the need to pass on the increased steel cost was largely achieved. In China we surpassed our sales goals. Part of the volume growth was supported by the majority acquisition of Russian Evrorad in April 2021.

In 2021, the ICS Division (Indoor Climate Systems) sales were up by 23 per cent and margins expanded significantly. Italy was our strongest market supported by the Italian government’s green incentive programme. Several other markets also performed well, thanks to a combination of post-pandemic recovery, sales price increases as well as underlying market growth of indoor climate systems.

Strategy and operations

We crowned the year by becoming listed on Nasdaq Helsinki. We are excited to start the next phase as a publicly listed company with a clear ambition to become the global market leader in indoor climate comfort solutions. This allows us to pursue our growth strategy including notable M&A.

Our strategy of smart products, whole solutions and growth markets answers demand for lower temperature systems, lower energy consumption, and the performance and aesthetic needs of renovation.

In 2021, we released Tinos H, a smart and less conspicuous decorative panel radiator that offers flexibility in colour, configuration and thermal output. The Figuresse range of bathroom heaters delivered new, more sophisticated styles. We expanded underfloor heating in Romania and the Balkan states; launched initiatives in France and Germany for water distribution systems; released radiant heating and cooling panels for ceilings in Sweden; and expanded thermostatic valves in Eastern Europe. In the UK we increased our focus on installers of bespoke underfloor heating systems.

During the year we developed a four-sided sustainability strategy called “Complete Care”. We also launched our first PGOS (Purmo Group Operations System) initiative in Hungary to drive continuous improvement.

We saw a record turnout in our employee engagement survey, revealing an increase in engagement and some very clear pointers to what management can do to make the Group a better place to work.

So let us end by thanking everybody for the good performance in 2021.

News conference and webcast for analysts, investors and media

Purmo Group’s 2021 Financial Statements Review has today been published and is available on Purmo Group’s's website at https://investors.purmogroup.com/ir-material/ in English and Finnish.

CEO John Peter Leesi and CFO Erik Hedin will present the results in a live webcast today on Thursday 3 March 2022 at 10:00EET at https://purmogroup.videosync.fi/financial_statements_2021/register. The event including the Q&A session will be held in English.

A recording and a transcript of the webcast will be available on https://investors.purmogroup.com/ir-material shortly after the event has ended.


Further information:
Erik Hedin, CFO, Purmo Group, tel. +44 7979 363473
Josefina Tallqvist, Investor Relations (interim), Purmo Group, tel. +358 40 745 5276

Nasdaq Helsinki
Major media

Purmo Group Plc 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, towel warmers, underfloor heating, convectors, valves and controls. Our mission is to be the global leader in sustainable indoor climate comfort solutions. Our approximately 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. Purmo Group Plc’s shares are listed on Nasdaq Helsinki (symbol: PURMO). www.purmogroup.com

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