AB Fagerhult : Fagerhult, Interim Report Q1 January-March 2023

2,179

Order intake, MSEK

Order intake was MSEK 2,179 (2,204), a decrease of -1.1% adjusted to -4.3% for currency effects of MSEK +89 and business closures of MSEK -20

2,224

Net sales, MSEK

Net sales were MSEK 2,224 (1,873), an increase of +18.7% adjusted to +14.3% for currency effects of MSEK +93 and business closures of MSEK -9

The first quarter

The Group delivered a strong start to the year with overall net sales growth of 18.7% and organic growth of 14.3%.

The strong growth and improved performance resulted in a positive development of both the gross margin and the operating margin. Operating profits increased 40.9% to 244 (173) MSEK.

The development of the financial performance is in line with expectations. The strategic focus areas of sustainability, innovation and people & culture now form a greater share of the focus and we begin to see the benefits impacting the results.

Externally, some markets remain uncertain, but there are many opportunities to overcome these uncertainties. Not least of which is the supply of sustainable solutions for the rapidly growing renovation market.

244

Operating profit, MSEK

Operating profit was MSEK 244.1 (173.3), an increase of +40.9% with an operating margin of 11.0 (9.3)%

158

Net profit, MSEK

Earnings after tax were MSEK 157.9 (119.5)

Order intake for the quarter of 2,179 (2,204) MSEK, -1.1%, is slightly softer than Q1 2022. It is important to state that Q1 2022 showed a strong 19% growth as customers placed orders early to reserve components and production at the start of the supply chain difficulties.

The benefit we see and the growth in the renovation opportunity remain very positive. The order backlog at 1,914 MSEK is healthy.

Net sales at 2,224 (1,873) MSEK for the quarter delivers +14.3% organic growth.

The operating profit for the quarter of 244.1 (173.3) MSEK delivers an operating margin of 11.0 (9.3)%. This is the highest Q1 operating margin for several years.

CEO comment

The first quarter; a great start

The strong performance from 2022 continued in 2023 where, for Q1 the Group delivered a great set of results.

The mega-trends remain positive and the Group's lighting brands continue to improve their positions to deal with these in the optimum way. Our portfolios of modern smart lighting solutions for many application

Innovation

The Group's investments in the innovation agenda receives increased funding as we continue to build the resources and strategy for our smart and sustainable lighting solutions.

Bodil Sonesson,

CEO and President

areas can reduce energy consumption by up to 90%.

The rapidly growing renovation and retrofit business is a major opportunity and we increase our success at winning great projects in this area.

The Group's strategic focus areas; people & culture, innovation and sustainability remain the driving force for decision making, including the recruitment of talent which is increasingly important in a competitive market.

Market activity remains mixed and we continue to see some level of uncertainty affecting some brands.

Our Q1 performance was strong with 19% sales growth delivering a 41% increase in profitability and a 1.7% development of the operating margin to 11.0 (9.3)%.

Order intake at almost 2.2 BSEK was strong, especially for a first quarter and the R12M remains at over 8 BSEK.

Rolling 12 month and quarterly order intake

This quarter we have selected two quite special new and innovative solutions to present to you.

A leading example of world class sustainable innovation was launched in the quarter by Fagerhult. "Kvisten" - a wooden housed luminaire with diffusers from old television sets and 77% recycled materials results in one of the most sustainable luminaires on the market.

The very elegant looking "BeTwo" pendant or surface mount luminaire from iGuzzini for hospitality, retail and offices promotes well-being and efficiency and at 155lm/w ensures a very responsible use of energy.

Both "Kvisten" and "BeTwo" come with smart lighting solutions for even greater energy savings.

Sustainability

With additional resources and focus, our sustainability strategy continues to make strong progress. We have submitted our long term targets to the Science Based Targets initiative and these are currently being validated and we expect feedback during the summer.

2,500

2,250

2,000

1,750

1,500

1,250

1,000

750

500

250

0

Q1

2023

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Outlook; strengthening and well positioned

Looking internally, the Group's financial performance continues to improve. We have improving businesses with healthy order backlogs, good growth and margin development. The strategic focus is clear and we make steady progress on our activities.

Externally, the supply of sustainable solutions for the quickly growing opportunity of renovation projects increases significantly. These projects provide even

Strategic focus areas; securing the long-term

People and culture

The previously announced leadership and talent review programmes are both in process and we expect these will deliver longer term benefit to the Group. The focus on the recruitment of additional skills and competences is increasingly important to further continue the growth and delivery of the strategy.

shorter payback periods as energy prices remain high and also they reduce the carbon footprint for our customers.

We are well positioned for when the markets return to a more stable state, meanwhile we continue to improve and remain prepared for a longer period of uncertain times.

Collection

Collection is home to our brands with a global market footprint. All have an international product portfolio and are well-renowned in the lighting designer and architect communities globally. They offer a wide product range with a focus on indoor and outdoor architectural applications.

Brands included are; ateljé Lyktan, iGuzzini, LED Linear and WE-EF with product development and manufacturing facilities in Sweden, Italy, Canada, China, Germany and Thailand. Seneco is also consolidated in this business area.

Business Area order intake for the quarter of 906 (1,023) MSEK shows an organic decline of -16.7% compared with the previous year which reported a +22.6% organic growth. The two year trend remains positive. Q1 2022 was an all-time record. We have ceased our operation in Russia.

Net sales for the quarter were 1,003 (915) MSEK, an organic increase of 2.9% and the growth comes from three of the four businesses.

Operating profits for the quarter increased 7.2% to 100.3 (93.6) MSEK with a stable operating margin of 10.0 (10.2)%.

During the quarter there were some great projects; Peralada Winery, Spain and The Royal Museum of Fine Arts, Belgium both from iGuzzini and Eleda Stadium, Sweden and The American High School, Sweden both from ateljé Lyktan.

1,003

Net sales, MSEK

100

Operating profit, MSEK

10.0

Operating margin, %