We entered the second quarter with great uncertainty due to the world’s reactions to the rapid spread of Covid-19. Overnight, some of our customers, mainly subcontractors to the automotive industry, lost 80 percent of their sales and our single largest customer announced with one day’s notice that they would temporarily shut-down their entire business. A lot of effort has been put into implementing measures, such as introducing a shortened work-week, renegotiating agreements, monitoring working capital and going through expenses.

Now as we sum up the second quarter and the first half of 2020, I still think that we succeeded well. All of the companies except Lecor Stålteknik are declining in sales, but on the other hand, all of the companies strengthened their gross margins, in some cases clearly. The underlying operating result amounted to SEK 28 M (32) for the quarter and SEK 70 M (72) for the first six months. In addition to the impact of Covid-19, this should be viewed in light of the decline in demand that began in the second quarter of 2019 and continued into 2020.

In the second quarter, we decided to restructure the operations in the Baltics. We will continue to be represented in all of the Baltic countries, but warehousing and production service are being consolidated to Estonia. One-off costs of approximately SEK 5 M were charged to the operating result in the second quarter and is expected to have a payback time of about 1 year.

Cash flow remained stable as a result of the positive earnings and good control of working capital. Operating activities generated SEK 95 M (67) during the quarter and SEK 188 M (129) for the first six months.

The future

The uncertainty regarding the effects of Covid-19 on the upcoming quarters remains. We are carefully monitoring the development and are prepared to take more and stronger measures if necessary, at the same time that we can shift into high gear at short notice to meet demand from both new and old customers.

We are continuing to focus on building a good company for the future. The automated production line in Norrköping is in full operation and fine-tuning is ongoing. The centralization of warehousing and production operations to Norrköping together with the closure of the warehouse in Malmö is proceeding according to plan. We have begun a restructuring of the operations in the Baltics and decided for some minor, but interesting, investments in Finland. We also decided to build and launch a new e-commerce portal. All of this leads to renewal and strengthening of the offering to the market at the same time that we are clearly reducing the operating costs.

Peter Andersson
President and CEO