During the first half of the year, Purmo Group delivered an increase in adjusted EBITDA margin despite weak market conditions. This was thanks to strong performance in the Accelerate PG programme as well as a strong, continued focus on margin management by our dedicated teams all around Europe and beyond. Volumes were still low in the challenging market, although signs of optimism were visible in Eastern Europe where demand for our radiators increased.
We work constantly to improve and develop our production. As part of our transition, we have shifted our production in Europe to countries with lower production costs, such as China. This has caused temporary inefficiencies in operations during the quarter, which coupled with investments in the transformation of Purmo Group, led to a decline in earnings during the second quarter.
We acknowledge there is interest in Purmo Group, which is demonstrated by the bids we have received from Grand Bidco UK Ltd, as well as Haier Europe Appliances B.V. Management has together with the appointed Board Committee spent time responding to the offers through intensive due diligence preparatory work.
Our strategy for complete solutions remains strong: it is a response to the increasing demand for more energy-efficient buildings and a greener future.
The Climate Products & Systems division was impacted by weak markets, and the Climate Solutions division’s earnings were lower compared to the strong period last year
The demand environment remained weak in our two business divisions in the second quarter. In the Climate Products & Systems division, volumes remained weak, but some early signs of recovery were seen in a few markets. As a whole, the project volumes were low, which led to a net sales decline of 5%. Despite the tough market, the division succeeded well in price and cost management. The adjusted EBITDA was EUR 16.2 million for the quarter, a decrease of 5% from last year. The adjusted EBITDA margin remained roughly on the same level compared to the previous year.
In the Climate Solutions division, net sales declined by 5% in the quarter due to lower demand. Earnings for the division were impacted by low market demand and led the adjusted EBITDA to EUR 5.5 million, a decline of 17% compared to the previous year. Adjusted EBITDA margin decreased by 2.4 percentage points compared to last year.
Accelerate PG programme ahead of plan, growth initiatives kicked off
Our Accelerate PG programme continued to deliver strong run-rate benefits in the second quarter. The programme delivered EUR 5.7 periodic improvements in the quarter compared to the previous year. The cumulative adjusted EBITDA run-rate improvements were EUR 42.3 million. As part of the programme initiatives, we completed the negotiations at the Hull plant in the United Kingdom. The production will be transferred to Gateshead in the third quarter of 2024. Besides cost savings, the growth phase of the programme has started, with various growth initiatives being kicked off during the quarter. The target for the growth phase is to achieve approximately EUR 15.0 million of incremental adjusted EBITDA run-rate improvements by the end of 2025.
Science Based Targets validated
In the second quarter, we received validation from the Science Based Targets organisation for our near-term and long-term targets, which we are very proud of. In the near term, we are committed to reducing absolute Scope 1 and 2 GHG emissions by 54.6% by 2033 from 2022. For the long-term, we will reduce absolute Scope 1 and 2 GHG emissions by 90% by 2050 from 2022. The validation of the targets is a strong achievement for our organisation and worth celebrating.
John Peter Leesi
CEO, Purmo Group Plc
This CEO’s review was published in Purmo Group Plc’s half-year financial report on 17th of July 2024.
