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Jotul Holdings SA Interim financial report - Half-year ended 30 June 2020

Jøtul AS
·4-min read

In the first half of 2020, the Jotul Group reached a consolidated profit of MNOK -68.5 (H12019: MNOK -46.9). The operating result totaled MNOK -60.1 in H1 2020 (H1 2019: MNOK -16.7). The 2020 total comprehensive loss for the half-year was MNOK -52.3 (H1 2019: MNOK -54.1).

Sales for the period declined by 6% (MNOK 360.4 in H1 2020 vs. MNOK 383.6 in H1 2019), mainly driven from an unseasonal warm weather and low energy prices as well as initial start-up capacity from the new production facility in Poland. In addition, the COVID-19 impact in the second quarter contributed to a decline of approximately 8%, significantly less than previously anticipated. The decline in sales derives with no large variations from the main markets, with the exception of North America which saw a decline of approximately 18%. Order intake in the period is slightly down, with approximately 10%, with the exception for the East European and North American which have seen a recovery towards end of Q2 and in line with order intake of last year.

The negative impact of the COVID-19 pandemic is less than initially anticipated, and we have seen higher activities mainly in the European markets, particularly towards end May following the ease in restrictions of movements. The North American market on the other hand has continued to be suppressed through-out Q2 following imposed restrictions. However, towards the end of Q2 the market shows a recovery and the month of June with an order intake of 5% above last year. In several of our main markets the pandemic initially impacted demand and productions and we also had lack of delivery from several suppliers due to COVID-19 close down. The Scandinavian market showed a quick recovery as the retail business were allowed to stay open. The other main European markets, notably France, Italy and Germany began the recovery as imposed restrictions were lifted towards end May. The North American market has seen market restrictions imposed in several states during Q2 and the production was closed until end June.

In light of the outbreak, we have implemented comprehensive mitigation actions. In addition to furloughs for employees affected by reduced activity, we have strengthened our management processes to monitor our working capital. Furlough schemes have been lifted, since end June in North America, and we have resumed to full capacity to meet order intake. To further secure liquidity situation and as previously communicated the company has entered a re-financing program with bondholders, shareholders and an increased capacity of the RCF facility has been negotiated with the bank. The Group’s gross margin declined year-on-year, mainly due to the decline in sales and higher reallocation cost of production facilities from Norway & Denmark to Poland during the transition period. Due to the COVID-19 situation we had to halt the presence of personnel from Norway and Denmark in the new factory in Poland from mid March to mid June, resulting in very low productivity.

EBITDA (Earnings before interests, taxes, depreciations and amortizations: Operating result less Depreciations) was MNOK -23.6 in the first six months of 2020 (H1 2019: MNOK 24.8). This contains effect of non recurring items of MNOK 27.1 (H1 2019: MNOK 15.8). Adjusted EBITDA (net of non-recurring items) was MNOK 3.5 in H1 2020 (H1 2019: MNOK 40.7).

In the first half of 2020 non-recurring cost of MNOK 6 are primarily related to the relocation project and transfer of production and assembly from Norway and Denmark to the new operations in Poland and costs related to the liquidity financing that was concluded in June.

The Group’s capital investments in the first half of 2020 amounted to MNOK 30.3 compared to MNOK 27.0 in the first half of 2019. The increase is related to investments in the new factory in Poland.

Jotul France acquired Aico France end of June 2019, and this entity had its first full-quarter effect on group financials in Q3 2019. The company contributed with MNOK 9.1 to net revenue and MNOK -0.1 to EBITDA in the first six months of 2020.

In the first six months of 2020, the Group had an average of 489 full-time employees (H1 2019: an average of 538 full-time employees).