Beijer Ref : Reg AB Financial Report

Beijer Ref AB

Q4-2021

English version

Beijer Ref AB

Q4-2021

Strong end to the year

Fourth quarter

• Net sales increased by 25.3% (-0.8) in the fourth quarter compared to the same period the previous year and amounted to SEK 4,271 million (3,408). Organic growth was 11.6% (-0.6). Acquisition effects amounted to 12.8% (6.1) and currency effects amounted to 0.8% (-6.2).
• EBITA amounted to SEK 338 million (271), corresponding to an EBITA margin of 7.9% (7.9). Operating profit amounted to SEK 326 million (256), an increase of 27.4% compared with the previous year. The operating margin amounted to 7.6% (7.5).
• Profit before tax was SEK 303 million (239). Interest costs are higher than in the previous year due to completed acquisitions. Net debt/EBITDA amounted to 2.5 (2.0).
• Cash flow from current activities before change in working capital was positive and amounted to SEK 335 million (210). The company's liquidity has been good and the company has built up stocks during the quarter to meet the increased demand. Unused credit facilities to SEK 1,020 million (1,516). During the quarter, the company has taken up loans of SEK 600 million.
• Profit per share before and after dilution was SEK 0.66 (0.47) and SEK 0.65 (0.47) respectively.
• The acquisition of 80% of the shares in the air conditioning company Inventor AG in Greece was completed during the fourth quarter. The company has sales of just over SEK 800 million and about 80 employees. The company is included from 1 October in the company's accounts in the southern region of EMEA. The company has also made two additional acquisitions: Airstream and Clima Solutions, both in the APAC region.
• Acquired annual sales during the fourth quarter amount to approximately SEK 900 million; in total the acquisi- tions have contributed SEK 437 million in sales to the fourth quarter.

Full year 2021

• Net sales increased by 20.2% compared to the same period last year and amounted to SEK 16,905 million
  (14,062). Organic growth was 14.4% (-6.2). Acquisition effects amounted to 7.8% (3.7). Currency effects amoun- ted to -1.9%(-2.7).
• EBITA amounted to SEK 1,410 million (1,085), corresponding to an EBITA margin of 8.3% (7.7). The operating pro- fit for the period amounted to SEK 1,361 million (1,036), which is an increase of 31.4% compared with the previous year. The operating margin amounted to 8.0% (7.4).
• Profit before tax was SEK 1,292 million (977). Interest costs are higher than earlier years due to increased bor- rowing due to the acquisitions performed.
• Cash flow from current activities before change in working capital was positive and amounted to SEK 1,550 mil- lion (1,112).

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• Profit per share before dilution amounted to SEK 2.58 (1.90) and after dilution to SEK 2.56 (1.89), an increase of
  35.4 and 35.6 per cent respectively.
• 2021 has been an active year and the company has made 10 acquisitions, six of them in APAC and four in Europe. Acquired annual sales amount to approximately SEK 1.8 billion, of which approximately SEK 1.1 billion has had an effect on 2021. The acquisitions contribute positively to the group's operating profit.
• Covid-19has had a minor impact on the company's profit in 2021; individual regions have been affected such as Africa and Asia Pacific. The assessment is that there will be no major effects on profit due to COVID-19 in 2022, unless new outbreaks occur that the company has difficulty in predicting at present.

Key figuresQ4-21 Q4-20 ∆% FY 21 FY 20 ∆%

Net sales, sek m	4 271	3 408	25.3	16 905	14 062	20.2
EBITA, sek m	338	271	24.9	1 410	1 085	29.9
EBITA, %	7.9	7.9	-	8.3	7.7	-
Operating profit, sek m	326	256	27.4	1 361	1 036	31.4
Profit margin, %	7.6	7.5	-	8.0	7.4	-
Net profit, sek m	243	180	34.8	990	729	35.9
Profit per share before dilution, sek	0.66	0.47	39.3	2.58	1.90	35.4
Profit per share after dilution, sek	0.65	0.47	39.5	2.56	1.89	35.6
Return on operating capital, %	3.7	3.4	-	15.4	13.9	-
Return on equity, %	5.0	4.1	-	20.3	16.5	-
Average number of employees	-	-	-	4 157	3 856	7.8

The total amount in tables and statements might not always sum-up as there are rounding differences. The aim is to have each line item corresponding to the source and it might therefore be rounding differences in the total.

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Comments by the CEO

Full year 2021

2021 was a successful year for Bei- jer Ref, despite major disruptions in the supply chain and a number of lockdowns in our markets. With our decentralised business model and our dedicated employees, we have managed to achieve a sales increase of 20%. In 2021, we delivered both strong organic growth and acquisition growth, while operating profit increased by 31%. It is particularly gratifying that all product areas show organic growth during the year. Ove- rall, the company had a good end to 2021 and we are entering 2022 with a strong order book.

Fourth quarter

Sales for the fourth quarter amounted to SEK 4.3 billion, an increase of 25% compared to the previous year. Organic growth was 12% and acquisition effects were 13%, which were mainly related to Sinclair (Czech Republic) and Inventor (Greece). Both these acquisitions broaden our offering and are a good complement to existing brands in HVAC.

All our product areas have experienced increased organic growth during the quarter. When it comes to commercial refrigeration, demand is largely related to the aftermarket and is relatively insensitive to economic cycles, which is largely because sales consist of spare parts for refrigeration systems in supermarkets and AC facilities in offices that need to function at all times regardless of the economic cycle. We also see that refrigerant prices are on a rising trend.

In commercial refrigeration, there is a technology shift in progress in which environmentally hazadours refrigerants are being phased out.

Beijer Ref is at the forefront of new solutions and has its own production of environmentally friendly refrigeration systems. Furthermore, the company operates in a fragmented market that allows for profitable growth through acquisitions. Both HVAC and OEM have had a very positive development

and show double-digit growth figu- res. Our strategic partner, Toshiba, has successfully launched its indoor air/water heat pumps. The demand for these products is high and we clearly see how the green transition is accelerating the process of replacing old technology with new and relevant technologies.

Global impact

The present pandemic has affected us to a limited extent during the fourth

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quarter and most markets have been open. In EMEA and APAC, we note a sharp increase in both sales and pro- fit.

However, the global situation continues to create disruptions in the supply chain with component shor- tages, long lead times and high shipping costs.

Acquisition-intensive

It is with great pleasure that I welcome Inventor, Clima Solutions and Airstream to the group. With these companies, we further expand our portfolio and create new and valuable synergies for the organisation. We have also acquired the remaining 40% of the shares in Patton Albury, a company that offers high-performance and energy efficient products. In total, we have made 10 acquisitions in 2021 and the acquired sales correspond to SEK 1.8 billion on an annual basis.

We continue this high pace of acquisitions and at the beginning of 2022 we acquired Deltron, a market-leading HVAC distributor in Croatia with good profitability. We have a well conceived acquisition process and are constantly evaluating new prospects, in both existing markets and new geographical areas.

A sustainable world

The organisation has been strengthened with important key roles, so as to ensure a high level of delivery and knowledge. We have hired new employees in Sustainability, Supply Chain and IT. The organisation is in an expansive phase and in HVAC and OEM we continue to invest resources in sales, product development and technical support.

Education is an important part of our sustainability work and with the aid of the Beijer Ref Academy we educate the market about sustainable refrige- rants. The response to our courses has been very positive and in Septem- ber 2021 our Swedish subsidiary,

Kylma, opened the doors of a new CO2 academy.

In 2022, we will also implement our Beijer Ref Exchange Programme. This will be the second time we run our exchange programme and the ambition is to promote an inclusive workplace, identify new talents, build cross-border relationships and exchange knowledge.

The transformation to more sustainable refrigeration systems continues in Europe and to meet the increased demand, we inaugurated a new production facility in Padua, Italy in July 2021. It is also gratifying that our subsidiary Fenagy, which manufactures industrial heat pumps and cooling systems based on the environmentally friendly refrigerant CO2, received several important key orders during the quarter.

A positive future

In conclusion, I would like to thank my predecessor Per Bertland and all our fantastic employees: you are our most important asset. I would also like to take this opportunity to welcome our 10 new companies to Beijer Ref: together we have an exciting time ahead of us. The board's proposal for an increased dividend is well in line with the positive belief we have in the future.

CEO

Christopher Norbye

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