Half-year financial report January–June 2022: Strong Q2 performance, first half year result reached a new high

Uponor Corporation, Stock exchange release, 27 July 2022 at 8:00 am

Half-year financial report January–June 2022: Strong Q2 performance, first half year result reached a new high

April–June 2022 in brief

  • Net sales were €396.2 (353.3) million, a growth of 12.1% or 9.3% in constant currency terms. The organic growth was 9.6% or 6.7% in constant currency terms.
  • Operating profit was €42.8 (47.0) million or 10.8% (13.3) of net sales.
  • Comparable operating profit was €50.5 (48.2) million or 12.7% (13.6) of net sales.
  • Earnings per share were €0.34 (0.32).

January–June 2022 in brief

  • Net sales were €745.7 (662.5) million, a growth of 12.6% or 9.4% in constant currency terms. The organic growth was 9.9% or 6.7% in constant currency terms.
  • Operating profit was €89.6 (94.0) million or 12.0% (14.2) of net sales.
  • Comparable operating profit was €97.7 (95.7) million or 13.1% (14.5) of net sales.
  • Earnings per share were €0.79 (0.75).

Guidance statement for 2022 (unchanged)

Excluding the impacts of currencies, Uponor expects its net sales and comparable operating profit to increase from 2021.

(Increase indicates a growth of 2.5% or more.)

Short-term market outlook

Uponor expects market conditions and the competitive landscape to become tougher in the second half of 2022. Downside risks to the demand outlook in both residential and non-residential construction markets have clearly increased, with monetary policy and energy supply uncertainties adding to increasingly acute builder supply chain challenges, a lack of skilled labor in the construction industry and construction material price inflation.

Michael Rauterkus, President and CEO, comments:

“We are pleased to deliver further net sales growth and an improved comparable operating profit while continuing to face a very challenging cost environment. Uponor Group’s second quarter net sales grew by 12.1% to €396.2 million, driven by successful pricing strategy implementation. The organic growth was 9.6%. The Group’s comparable operating profit rose by 4.8% to €50.5 million. Our pricing actions had a positive impact on the operating profit in a tough supply environment with high inflationary pressures. We were able to fully compensate cost increases caused by higher input prices. The comparable operating margin reached the level of 12.7% (13.6). Earnings per share rose to €0.34 (0.32). Our safety performance improved with an accident frequency rate (LTIF) of 5.6 (6.3). However, we are still far from Uponor’s target of zero accidents.

In Building Solutions – Europe, the strong net sales growth and the comparable operating profit improvement were mainly driven by successful pricing actions. In Building Solutions – North America, net sales growth was slower largely due to distributors’ inventory rebalance as our service levels have improved since the comparison period, but the operating profit remained solid supported by strong price penetration and good operational performance. In Uponor Infra, net sales growth was driven by strong pricing execution, and, despite record high input prices, operating profit increased.

The review of options related to our Russian operations accelerated in the second quarter. This followed an earlier decision to stop all imports from and exports to Russia at the outbreak of the invasion of Ukraine. As an outcome, we reclassified our Russian operations as assets held for sale and made a write down of net assets related to the operations. The write-down has no cash impact but had a negative impact of €-6.2 million on operating profit. Our aim is to find a solution with local ownership that is sustainable long-term for our employees and customers in Russia.

Profitable growth is Uponor’s strategic focus area. In the quarter, we executed as planned on our strategy. We continued to accelerate R&D initiatives, reviewing our strong pipeline of innovations. We took new steps on our sustainability journey, preparing the launch of the next Uponor Blue product series based on certified renewable materials. We also started to work on additional savings opportunities through our procurement and identified new customer service improvement opportunities. To maximize the core, we set focus on select markets with high potential and on increasing cross selling between our product categories and, in the longer term, on shifting focus from selling components to selling our entire offering for buildings as a solution. In the quarter, I was also happy to welcome Andres Caballero to Uponor’s Executive Committee to lead our profitable growth strategy in North America as our new President of Building Solutions – North America division.

We have kept our outlook for 2022 unchanged. We still however expect to face even stronger headwinds in the second half, particularly with volatility in raw materials, energy and component supply, and high levels of inflation as well as interest rate hikes adding uncertainty to the demand picture. We are preparing for potential energy supply shortages and monitoring closely risks around component and raw material availability. To mitigate the cost pressure, we are continuing to focus on active pricing actions, managing product costs and increasing productivity.

We believe the current energy crisis will further accelerate the transformation toward and demand for more energy-efficient systems. We are well positioned to seize the opportunities created by the growing demand for our energy-efficient heating and cooling systems as well as for our sustainable systems for safe and clean water.

Our maximizing the core strategy, our sustained innovation, our continued focus on operational efficiencies, our strong balance sheet and skilled employee base give me confidence that Uponor is well equipped and positioned to meet current and long-term challenges by taking market share and emerging stronger from this environment of high uncertainty. Overall, I am happy with the progress made in the first half. I want to thank our customers for their trust and all of team Uponor for their hard work and engagement.”

Key figures

M€  46/
Change 16/
Change 112/
Net sales 396.2 353.3 +12.1% 745.7 662.5 +12.6% 1,313.2  
Operating expenses 340.5 294.5 +15.6% 630.3 544.6 +15.7% 1,110.0  
Depreciation and impairments 13.1 12.2 +7.4% 26.0 24.5 +6.3% 49.1  
Other operating income 0.1 0.4 -69.3% 0.2 0.6 -66.2% 0.1  
Operating profit 42.8 47.0 -8.9% 89.6 94.0 -4.6% 154.1  
Operating profit, % 10.8 13.3 -18.8% 12.0 14.2 -15.3% 11.7  
Comparable operating profit 50.5 48.2 +4.8% 97.7 95.7 +2.0% 160.5  
Comparable operating profit, % 12.7 13.6 -6.6% 13.1 14.5 -9.3% 12.2  
Financial income and expenses 0.3 -3.0 -111.4% -0.6 -5.8 -89.4% -1.0  
Profit before taxes 43.2 37.6 +14.9% 89.1 80.7 +10.3% 21.9  
Profit for the period 29.6 25.9 +14.2% 62.9 57.6 +9.1% 18.4  
Earnings per share 0.34 0.32 +3.9% 0.79 0.75 +4.9% 1.33  

30 Jun 2022 30 Jun 2021 31 Dec 2021
Net working capital, M€ 165.3 72.0 +129.7% 93.3
Net-interest bearing debt, M€ 77.0 -5.3 -1,563.7% 20.9
Solvency, % 49.2 43.2 +13.9% 50.2
Gearing, % 15.1 -1.2 -1,361.1% 4.3
Return on investment, % 29.8 27.6 +7.9% 24.7

Results briefing and live webcast

A live webcast for analysts, institutional investors and the media will be broadcast on Wednesday, 27 July at 14:30 EEST. The briefing is in English. The webcast and its recording can be viewed via our website at uponorgroup.com > Investors > Reports and presentations or via the Uponor IR mobile app along with all presentation materials.

Uponor Corporation’s financial calendar for 2022 and 2023

4 Nov 2022         Interim report 1–9/2022
15 Feb 2023       Financial statements bulletin 2022
26 Apr 2023        Interim report 1–3/2023
26 Jul 2023        Half-year financial report 2023
25 Oct 2023        Interim report 1–9/2023

Uponor Corporations’ Annual Report for 2022 will be published the week starting 20 February 2023 and the Annual General Meeting 2023 will be held on Friday, 17 March 2023.

For further information, please contact:
Markus Melkko, CFO, tel. +358 20 129 2038
Franciska Janzon, SVP, Corporate Communications and IR, tel. +358 20 129 2821

Nasdaq Helsinki

Uponor in brief
Uponor is rethinking water for future generations.  Our offering, including safe drinking water delivery, energy-efficient radiant heating and cooling and reliable infrastructure, enables a more sustainable living environment. We help our customers in residential and commercial construction, municipalities and utilities, as well as different industries to work faster and smarter. Uponor employs about 3,900 professionals in 26 countries in Europe and North America and Uponor’s products are sold in some 80 countries. In 2021, Uponor's net sales totalled approximately €1.3 billion. Uponor Corporation is based in Finland and listed on Nasdaq Helsinki. www.uponorgroup.com