High order intake and gross margin
COVID-19: minor negative effect on net sales due to delayed deliveries, primarily in southern Europe
First quarter 2020
- Net sales amounted to SEK 225.9 M (261.9), a decrease of 14 percent compared to the same period last year.
- Operating profit amounted to SEK 7.3 M (17.6), which corresponds to an operating margin of 3.3 percent (6.7).
- Order intake was SEK 371* M (208), an increase of 79 percent compared to the same period last year.
- Order backlog amounted to SEK 933* M (169), of which the majority is expected to be delivered in 2020.
- Profit for the period was SEK 14.8 M (19.3).
- Earnings per share (basic and diluted) were SEK 0.13 (0.18).
- Cash flow from operating activities was SEK 2.2 M (52.3).
*– order intake for the first quarter and order backlog as per March 31, 2020, have been adjusted to reflect the agreement reached with Best Buy for a reduced scope of the project of 150 stores in accordance with the communication on April 23, 2020
Comments from CEO Helena Holmgren
First and foremost, I would like to say a heartfelt Thank You to all the employees at Pricer who are doing their best to adapt to the new reality that has descended upon us and that on many fronts has introduced a number of limitations and restrictions in both our private and our professional lives. It is with pride, happiness and gratitude that I have observed that the innovativeness of my colleagues to maintain a good level of service, high productivity and continued sense of community through these challenging times has been outstanding. Always with the customers in focus, and always with the belief that we will come out of this stronger. Thank you!
Net sales during the first quarter amounted to SEK 226 M, which was lower compared to the same period last year. The decrease was primarily due to a considerably higher order backlog at the beginning of the year for deliveries planned for the first quarter in 2019 compared to 2020. Of the total order backlog of SEK 731 M at the beginning of 2020, approximately SEK 625 M was related to the American customer project which is scheduled to begin in the second quarter of the year. As previously communicated, in late March as more countries introduced restrictions on people’s movement and limitations on store operations, we noted in addition that a number of store installations primarily in southern Europe were being postponed, which had somewhat of a negative impact on net sales in the quarter.
On the North American market, many retail chains, including our American customer Best Buy, turned their stores to a curbside service model at the end of March, thus closing the stores to customers and other external parties. Due to this shift, Pricer and Best Buy have reached an agreement to reduce the pace of the roll-out of Pricer’s ESL system from the previously planned 680 stores to around 490 stores in 2020. An additional 40 stores remain in the order backlog and are planned for delivery during Q1 2021, while 150 stores have been removed from the order backlog. Adjusted for this change, order intake was SEK 371 M in the first quarter.
Order backlog at the end of the first quarter, adjusted for the above change with regards to the American customer project, was record high at SEK 933 M, of which a total of around SEK 820 M is related to the major American customer project. Given the high order backlog, we expect continued high delivery activity during the year, even if some deliveries and store installations are postponed in the second quarter while waiting for stores to open and staff to become available.
The underlying demand for Pricer’s system for in-store digital communication continues to be high. A number of evaluation projects have been postponed largely due to practical reasons, but most customer dialogues and negotiations are continuing according to plan. We are expecting some delay in customers’ investment decisions near-term, mainly because the focus of many retail chains has temporarily shifted to securing daily store operations and security for both employees and customers. In addition, there is currently a general sense of uncertainty that is having a general impact on investment decisions.
Pricer has focused its product development for a long time on solutions that improve the efficiency of many resource-intensive store processes such as in-store picking, shelf replenishment, inventory-taking, etc. In the wake of COVID-19, we are seeing how grocery stores in particular are struggling to meet the sharp increase in demand for various e-commerce solutions and how the shelves are empty much too often. The need for automation and streamlining of stores processes has never been greater, and we expect continued high demand for our solutions as societies open up and business returns to more normal forms.
COVID-19 is affecting us as individuals and our business on a daily basis. New challenges are constantly emerging, and the conditions for the business are more variable than ever before. It is currently not possible to quantify the impact, but it is probable that the financial effects will be larger in the second quarter than in the first quarter due to the closure of several markets that began in March. We are fully focused on continuing to develop solutions that increase our competitiveness and thus in the long term strengthen our position on the market.
Helena Holmgren
President and CEO
Every care has been taken in the translation of this document. In the event of discrepancies, the Swedish original will supersede the English translation.
This information is information that Pricer AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted through the agency of the contact person mentioned below for publication on April 24, 2020, at 08:30 AM CET.
For more information, please contact:
Helena Holmgren, President and CEO
Susanne Andersson, CFO
Phone: +46 8 505 582 00
Mail: ir@pricer.com
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