Dovre Group Plc Stock exchange release October 27, 2020 at 8.45 a.m.
DOVRE GROUP TRADING STATEMENT JANUARY 1 – SEPTEMBER 30, 2020
Dovre’s net sales January to September totaled EUR 59.7 (59.8) million and operating result was EUR 1.8 (2.0) million, Q3 net sales totaled to EUR 16.5 (21.6) million and operating result was EUR 0.6 (1.5) million.
Dovre Group Plc issues today a trading statement for the nine months ended on September 30, 2020. The figures presented in this trading statement are not audited. Last year’s corresponding period in parentheses.
Net sales EUR 16.5 (21.6) million – decrease 23.7% following the temporary slowdown in demand caused by the coronavirus pandemic and the adverse impacts of currency exchange rates.
Project Personnel: net sales EUR 13.4 (20.3) million – decrease 33.6%.
Consulting: net sales EUR 3.1 (1.4) million – increase 121.6%.
Operating result EUR 0.6 (1.5) million – decrease 59.0%. In the comparison period operating result included a non-recurring gain of EUR 0.8 million from the sale of Kuukoti office premises.
Net sales EUR 59.7 (59.8) million – decrease 0.3%. Net sales at constant currencies increased by 6.7% year-on-year.
Project Personnel: net sales EUR 48.9 (55.4) million – decrease 11.8%.
Consulting: net sales EUR 10.8 (4.4) million – increase 145.1%.
Operating result EUR 1.8 (2.0) million – decrease 13%. Operating result increased by 50%, if the non-recurring gain of EUR 0.8 million from the sale of Kuukoti office premises in the comparison period is excluded.
Net cash flow from operating activities EUR 2.0 (2.2) million.
Outlook for 2020 unchanged (issued on 28 April 2020):
The impact of the pandemic, oil price and currencies on Dovre's operations and business environment will depend on the duration and extent of the crisis. Based on the current situation, Dovre’s net sales are expected to be slightly below 2019 and the operating profit is expected to be in line with 2019 excluding non-recurring items and currency effects.
Due to the company's healthy balance sheet and sound business, we still consider Dovre's long-term growth opportunities and prospects to be good.
ARVE JENSEN, CEO:
As expected, Dovre’s net sales turned downwards in Q3 and totaled EUR 16.5 million. During the period, our net sales continued to be adversely impacted by the slowing demand caused by the coronavirus pandemic, especially in the Project Personnel segment. In addition, the weak Norwegian krone against the euro pressed our euro-nominated net sales.
However, our underlying business is sound and Dovre’ both business segments are developing well under the current extraordinary circumstances. Our net sales in the first nine months of the year were flat against the comparison period and our operating profit was EUR 1.8 million - an increase of 50% year-on-year, if the non-recurring gain from an asset sale in the comparison period is excluded. We continue to see clear strengths in our current business model and our plan is to further develop our services.
In Norway, we have seen positive market development after the holiday period. The main reasons are the effect of relatively low corona spread after the lock-down and the recent tax changes for the oil companies.
The market in the other units is also experiencing a more positive development after the main lock downs have been released.
The oil price has been quite stable in the last months, but its long-term development is difficult to predict in the current market.
Dovre will continue to take active steps to diversify its services further into the Energy sector where a major transformation is ongoing moving the sector towards a more extensive use of renewable energy. Our current business outside oil and gas is approx. 30 percent of our total business. In addition we are currently growing our consulting business to include new clients and projects in transportation, buildings and construction, ICT, defense and health sectors.
We have won several new frame agreements so far this year and have received extensions and confirmed options to extend with several of our most important existing clients – in all units. This gives us a positive competitive position when the market hopefully normalize further.
At the moment we expect the negative effects of the pandemic to impact our business to some degree at least for the next six months period. We continue to monitor market developments closely and will continue to adjust our operations accordingly.
In Q3, Dovre Group’s net sales decreased by 23.7% to EUR 16.5 (21.6) million mainly due to the slowdown in demand caused by the coronavirus pandemic and the adverse impacts of currency exchange rates on Group net sales.
Project Personnel accounted for 81 (94) percent and Consulting for 19 (6) percent of the Group’s net sales. Project Personnel’s net sales decreased by 33.6% to EUR 13.4 (20.3) million and net sales in Consulting increased by 121.6%, totaling EUR 3.1 (1.4) million. Reported net sales figures are impacted, in addition to general business demand, by the organization changes in Norway in January 2020.
Development in January–September
In January–September, Dovre Group’s net sales were at comparison period’s level totaling EUR 59.7 (59.8) million. Project Personnel accounted for 82 (93) per cent and Consulting for 18 (7) percent of the Group’s net sales. Project Personnel’s net sales decreased by 11.8% to EUR 48.9 (55.4) million and net sales for Consulting increased by 145.1%, totaling EUR 10.8 (4.4) million.
Considering the retrospective impact of the organizational changes in Norway in January 2020 to January–September 2019 figures, Project Personnel would have accounted for 80% of net sales and Consulting for 20% of new sales in the comparison period in 2019. Consequently, net sales in the Project business would have grown by 2.6% year-on-year in the period under review. In the Consulting business net sales would have declined by 11.6% year-on-year.
Year-on-year fluctuations in foreign currency exchange rates, especially the depreciation of the Norwegian krone against the euro, had a clear negative impact on the Group’s net sales in the period under review. At constant currencies, net sales would have increased by 6.7% year-on-year in January–September instead of being flat.
Net sales by reporting segment
In Q3, the Group’s operating result was down to EUR 0.6 (1.5) million. Project Personnel’s operating result was EUR 0.6 (0.8) million. Consulting’s operating result totaled EUR 0.2 (0.2) million. The operating result of the Group’s Other functions was EUR -0.1 (0.6) million. In the comparison period the figure included the capital gain of EUR 0.8 million from sale of Kuukoti office premises in September 2019.
Development in January–September
In January–September the Group’s operating result decreased to EUR 1.8 (2.0) million. Project Personnel’s operating result was EUR 1.5 (1.6) million. Consulting’s operating result totaled EUR 1.0 (0.4) million. The operating result of the Group’s Other functions was EUR -0.5 (0.2) million. In the comparison period the figure included the capital gain of EUR 0.8 million from sale of Kuukoti office premises in September 2019.
Considering the retrospective impact of the organizational changes in Norway in January 2020 to January–September 2019 figures, the operating profit of Project Personnel would have been EUR 0.9 million and the operating profit of the consulting business EUR 1.1 million in the comparison period of 2019.
*) Unallocated expenses include amortization of customer agreements and relations, expenses recorded as a result of adopting of IFRS 16 in 2019.
On September 30, 2020, Dovre Group employed 589 (681) people, 499 (641) of whom were employed by Project Personnel, 86 (37) by Consulting and 4 (3) by Other functions. The changes reflect especially the organizational change implemented in Norway at the beginning of the year. In addition, Dovre has adjusted its operations from Q2 onwards in Norway by implementing temporary layoffs to meet the current changes in demand.
On September 30, 2020, the Group’s net debt was EUR -1.3 (0.4) million. The Group’s cash and cash equivalents totaled EUR 6.6 (5.0) million. The Group’s interest-bearing liabilities were EUR 5.3 (5.3) million, a total of EUR 3.0 (2.3) million of which were current and EUR 2.3 (3.0) million non-current. In addition, the Group has an unused credit limit of EUR 2.1 million.
In January–September, net cash flow from operating activities was EUR 2.0 (2.2) million, which includes EUR 0.3 (1.3) million change in working capital. Working capital declined during the period due to a decline in both accounts receivable and accounts payable.
OTHER EVENTS DURING THE REVIEW PERIOD
Following the resignation of Dovre Group’s former CFO, Ms. Mari Paski, from her position in Dovre Group on July 7, 2020, Dovre Group appointed Ms. Sirpa Haavisto (M.Sc. Econ) as the new CFO as of October 1, 2020. She reports to CEO Arve Jensen and is a member of the Dovre Group's Executive team.
A change in majority holdings
The ownership of Joensuun Kauppa ja Kone Oy of the shares and voting rights in Dovre Group Plc increased to above 10% in a transaction announced on 27 August 2020. Joensuun Kauppa ja Kone Oy is an entity controlled by Kyösti Kakkonen. Up to date information on Dovre Group’s largest shareholders is available at https://www.dovregroup.com/investors/share-and-ownership.html.
EVENTS AFTER THE REVIEW PERIOD
On October 26, 2020, the Board of Directors of Dovre Group Plc has decided based on the authorization by the Annual General Meeting 2020, that a dividend of EUR 0.01 per share will be paid. The dividend will be paid to a shareholder, who is registered in the company’s shareholder register maintained by Euroclear Finland Ltd on the date of record of November 2nd, 2020. The dividend will be paid on November 10th, 2020.
In Espoo, October 27, 2020
DOVRE GROUP PLC
BOARD OF DIRECTORS
For additional information, please contact:
Dovre Group Plc
Arve Jensen, CEO
Tel. +47 90 60 78 11
Sirpa Haavisto, CFO
Tel. +358 20 436 2000
Dovre Group is a global provider of project management services. Dovre Group has two business areas: Project Personnel and Consulting. Dovre Group has offices in Canada, Finland, Norway, Russia, Singapore and the US, and employs more than 670 people worldwide. Dovre Group is listed on the Nasdaq Helsinki (symbol: DOV1V). Company website www.dovregroup.com.
Nasdaq Helsinki Ltd