Rockwool revenue and operating margins in a slumber

Bottom line results outperform expectations, but fourth quarter revenue and operating result still falls short of analyst projections, Rockwool report shows.
Photo: Rockwool // Pr
Photo: Rockwool // Pr

Even though bottom line figures exceed analysts’ expectations, Rockwool fourth quarter revenue and operating result still disappoints, shows quarterly report published on Wednesday afternoon.

Sales growth in fourth quarter contributed to net revenue of EUR 955m, which falls short of the analyst consensus of EUR 1,015m, according to estimates compiled by Rockwool.

Fourth quarter revenue in 2021 amounted to EUR 842m.

Quarterly earnings before interests and taxes came in at EUR 101m against analyst projections of EUR 116m and earnings in last year’s Q4 clocking in at EUR 95m.

On a plus note, bottom line profits totaled EUR 103m, thereby exceeding both year-on-year profits of EUR 72m and analysts’ estimates of EUR 89m for the quarter.

Global sales growth

The report shows that global sales revenue has gone up. More specifically, sales from Rockwool’s biggest market, Western Europe, ended at EUR 565m against EUR 490 in the same period last year.

Net sales in Eastern Europe, including Russia, amounted to EUR 182m, up from EUR 167m in Q4 2021.

And in the Americas and Asia, Rockwool booked net sales of EUR 208m, outperforming last year’s EUR 185m.

Combined quarterly net sales reached EUR 955m against EUR 842 in the corresponding quarter last year. 

Insulation disappoints

While sales have grown across all geographic regions, the insulation segment faced headwind.

Here, Rockwool netted revenue of EUR 707m and EBIT of EUR 71m – in comparison, analysts projected net sales of EUR 781m and a EUR 83m operating result.

Conversely, combined 2022 revenue has gone up 32% to EUR 3034m, while operating margins fell from 10.4% to 9% flat.

”Sales in the Insulation segment grew in 2022, driven primarily by price increases. This was not sufficient to balance out the high inflation and therefore profitability decreased,” the insulation manufacturer writes in its report.

Rockwool systems segment performed well under present circumstances, delivering sales of EUR 248m and an operating result of EUR 30m.

Full-year revenue amounts to EUR 873m and operating earnings of EUR 90m.

Fourth quarter operating margin landed at 11.9%, and at 10.3% for the entire year against year-on-year margins of 15.9%.

”The lower margin related mainly to impact from a negative product mix and inflationary pressures, not fully offset in the price increases,” Rockwool writes.

Expects a 10% revenue slump

Softened demand in construction and freed-up market capacity leads Rockwool to project 2023 as a challenging year with a global sales decline of up to 10% in local currencies.

In 2023, Rockwool banks on achieving an operating margin of 8-10%, against last year’s 9% and an analyst estimate of 11.5%.

Margin aims are to be reached through lower sales volumes, tight cost control and continued focus on productivity.

According to Rockwool, global growth picture in 2022 pointed to a marked downturn with waning demand, and European construction sentiment surveys showing weaknesses.

”We expect the challenging macroeconomic environment to continue in 2023, with softening demand and high uncertainty,” writes Rockwool while waiting for energy prices to stabilize.

Across European markets, Rockwool expects demand to remain low, especially within residential segments.

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