NCAB Group Reports 14% Growth in 2Q Net Sales

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NCAB Group has reported net sales of SEK 473 million for the second quarter of 2019, up by 14% year-on-year. For the first half of the year, net sales increased by 16% to SEK919 million.

“It was a good quarter for NCAB despite raised tariffs. There was a somewhat weaker growth in the quarter in both sales and order intake, however earnings remained strong—up 17% year-on-year,” said NCAB’s CEO Hans Ståhl. “The higher tariffs from China to the USA not only impacted our US operations but also parts of our sales in China whose final destination is the USA. To mitigate this, we have—among other actions—partnered with a Taiwanese manufacturer for the US market in order to offer American customers import without tariffs. Thanks to our strong purchasing power, we also succeeded in reducing prices from our factories, which should strengthen our competitiveness moving forward.”

There was a somewhat weaker growth for NCAB in the second quarter of 2019 in both sales and order intake. According to Ståhl, order intake increased by 10%. “Our US operations are, of course, impacted the most and if we exclude North America, order intake increased 16% compared with the second quarter of 2018,” he said.

Earnings remained strong, up 17% year-on-year and an adjusted EBITA margin of 7.9%.

“Of our segments, Nordic is continuing to deliver healthy growth and high margins. Growth of 25% was mainly driven by Norway, which performed strongly, and the acquisition of Multiprint in Denmark. The high margin declined slightly due to the change in the mix between the countries,” said Ståhl. “Growth in Europe was 12% and the EBITA margin is continuing to increase and is now at more than 6%. This is quite good given that the Europe segment comprises many newly started companies in which we are investing for growth. Our largest companies, such as the ones in Germany and the UK, performed strongly, while we saw a more cautious approach from customers in other countries like France and Spain.”

The performance of the East segment, which includes Asia and Russia, was favourable for the quarter, despite a certain setback in China due to the higher tariffs to the USA. Reported growth was 26% and the EBITA margin was 10.6%.

“We saw a clear break in the trend in the North America segment when the 25% tariffs were introduced in May. Sales declined by more than 20% in USD in the quarter. It is clear that our customers are delaying their orders and hope that tariffs will at least return to 10%,” said Ståhl. “All in all, we are seeing a somewhat cautious approach from some of our customers in Europe and in North America, although it is difficult to say whether this is a temporary situation or the start of a weaker market. It is clear that the trade war between the USA and China is reducing buying pressure in many more countries.”

To mitigate this, the company has been intensifying its focus on sales. It also partnered with a Taiwanese manufacturer for the US market in order to offer American customers import without tariffs. “We also continuously scrutinize our cost base to ensure that we employ the right resources in the right places. Thanks to our strong purchasing power, we also succeeded in reducing prices from our factories, which should strengthen our competitiveness moving forward,” said Ståhl.