During the third quarter of 2024, we saw signs of pick-up in the Nordics, and we grew in net sales also in Central, Eastern and Western Europe. Despite that low level of demand remained in most of our core markets, we made progress in expanding our product portfolio in our current markets and utilising more sales channels as part of our growth phase in the Accelerate PG programme. After the review period, we completed an acquisition of Unitherm Heating Solutions Ltd, which perfectly supports our solution selling strategy.
During the quarter, Project Grand Bidco (UK) Limited announced that it would complete the tender offer for all shares in Purmo Group. We look forward to working with the members of the consortium in the company’s exciting period of growth.
Pick-up in demand in many sales regions, the acquisition of Unitherm in the Climate Solutions division completed after the review period
In the Climate Products & Systems division, a low-demand environment remained, although sales activities were at a good level in Finland, Central and Eastern Europe in addition to Western Europe, including Germany and Austria. As a result, the division’s net sales were slightly above last year, EUR 143.6 million. In Western Europe, we expanded our long-standing customer relationships to cover more of our heating and cooling solutions. The adjusted EBITDA improved compared to the second quarter of 2024. However, we saw price pressure in all our markets and temporarily, our operational costs were also higher mainly due to the production transfer of operations from Zonhoven to Rybnik. This led to a decline of 9 per cent in adjusted EBITDA to EUR 20.3 million compared to the previous year.
In the Climate Solutions division, demand remained sluggish, whereas improvement in demand was visible in Emmeti’s French and Spanish businesses. In France, we achieved solid growth thanks to heat pump sales during the quarter and the expansion of the distribution network for installers in the previous quarters. Furthermore, we introduced our Emmeti air-to-air heat pump range in Brazil. At the end of the third quarter, our adjusted EBITDA was at EUR 3.0 million, a decrease of 18 per cent from the previous year, driven mostly by lower volumes. The adjusted EBITDA margin decreased to 9.8 from 10.9 percentage points compared to last year.
An important milestone in growing our solutions business was achieved after the review period. We completed the acquisition of Unitherm Heating Systems Ltd, a provider of holistic climate solutions, mostly build around heat pumps. The solutions are sold mainly through wholesalers. The company is headquartered in Dublin and provides, among others, design and supply of heating systems solutions for residential and commercial buildings. I want to thank our Purmo Group team for this fine acquisition and warmly welcome Unitherm employees to the Purmo Group family.
Accelerate PG programme target EUR 50 million expected to be reached
Accelerate PG programme’s cumulative adjusted EBITDA run-rate improvements of EUR 50.0 million are expected to be reached by the end of 2024. This is thanks to the strong execution of the programme, which has been proceeding ahead of plans. The execution of the growth phase is also proceeding as planned, including increased utilisation of different sales channels, such as with our Swedish customer, Ahlsell. Purmo Group’s underfloor heating and water distribution solutions will be soon available in around 20 Ahlsell stores around Sweden. We also expanded our radiator and underfloor heating offerings to our existing customers in Western Europe, as part of the programme initiatives.
Sale of the Russian business
On 11 September 2024, we completed the sale of our Russian business to a Russian investment company. Following this divestment, we do not have any activities in Russia.
During the quarter, Project Grand Bidco (UK) Limited announced that it would complete the tender offer for all shares in Purmo Group. We look forward to working with the members of the consortium in the company’s exciting period of growth.
Continued improvement in health and safety
We continued our dedication to improving health and safety in Purmo Group. As a result, we were able to reduce our Lost Time Injury Frequency Rate to 2.5 compared to 4.0 in the previous year. As part of the initiatives, we launched a trial for Exoskeleton vests to avoid injuries for personnel working in the production lines, and also identified software for monitoring and acting more rapidly on health and safety issues.
Full year guidance 2024 unchanged
Thanks to strong execution by our team, we expect to reach the target for our strategy acceleration programme, Accelerate PG, for 2024. Combined with slight optimism in a few markets and customer expansions we are keeping our guidance for 2024 unchanged. The adjusted EBITDA in 2024 is expected to be on a similar or higher level than in 2023 (EUR 92.3 million).
John Peter Leesi
CEO, Purmo Group Plc
This CEO’s review was published in Purmo Group Plc’s January-September 2024 interim report on the 22th of October 2024.
