Bergs Timber - Introduce · The “old” Bergs Timber had an EBIT of SEK 31m (up from SEK 8m y-o-y). Higher lumber prices more than made up for higher input costs and lower sales

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Bergs Timber

Reason: Post-results comment

Strong first quarter as a “new” company

Clean EBIT of SEK 69m, 2% below ABGSCe

Strong market outlook short-term

Norvik acquisition doubles EBIT

Clean EBIT of ~SEK 69m, 2% below ABGSCe

Clean EBIT was SEK 69m, 2% below ABGSCe of SEK 70m. This

corresponds to a clean EBIT margin of 8.2%, a strong figure compared to

historical returns for the Nordic sawmill industry. This was the first

quarter in which the newly acquired Norvik assets were fully

consolidated, contributing with SEK 37m to EBIT. The “old” Bergs Timber

had an EBIT of SEK 31m (up from SEK 8m y-o-y). Higher lumber prices

more than made up for higher input costs and lower sales volumes. We

lower EBIT for 18/19e by 2% and by 8% ‘19/’20e due to a slightly more

cautious outlook for lumber prices. From 2019, Bergs Timber will change

its reporting calendar to a standard calendar year. The ‘17/’18 accounting

year will therefore be extended by four months and the next report will be

for Sep-Dec ’18. We have not taken this into account in our estimates

yet, but will publish new estimates ahead of the next report.

Strong short-term outlook, but still cyclical

A strong global economy has resulted in high demand for lumber. The

short-term market outlook is strong with low stock levels and strong

demand, which has given record prices for sawmill products. Higher input

costs have also followed, but with a lag. However, the sawmill industry is

still cyclical and some macro indicators are starting to show signs of

weaker growth for the global economy.

The Norvik acquisition doubles group EBIT

The Norvik acquisition is transformational for the group as it lifts sawmill

capacity by ~75% and increases downstream exposure. It should also

result in more stable margins over the cycle. 2017/18 pro-forma figures

show that the consolidated company would have had an EBIT of SEK

245m, compared to the “old” Bergs Timber at SEK 115m. Bergs Timber

is now trading at EV/EBIT multiples of 7.0x and 8.8x on 2018/19e and

2019/20e, respectively.

05/10/2018

Performance

Equity Research - 07 October 2018 21:14 CET

SEKm 2017 2018 2019e 2020e 2021e

Sales 1,216 2,029 3,380 3,258 3,118

EBITDA 83 205 336 273 187

EBITDA margin (%) 6.8 10.1 9.9 8.4 6.0

EBIT adj 36 166 252 185 99

EBIT adj margin (%) 3.0 8.2 7.5 5.7 3.2

Pretax profit 31 151 243 178 100

EPS rep 0.15 0.58 0.56 0.41 0.23

EPS adj 0.14 0.61 0.56 0.41 0.23

Sales growth (%) 32.7 66.9 66.6 -3.6 -4.3

EPS growth (%) 626.6 280.1 -3.6 -26.6 -44.0

Source: ABG Sundal Collier, Company data

Lead analyst: Øystein Elton Lodgaard

Martin Melbye

Estimate changes (%)

2019e 2020e 2021e

Sales 1.4% -3.3% 0.0%

EBIT (rep) -2.0% -8.1% 0.0%

EPS (rep) -1.7% -5.9% 0.0%

Source: ABG Sundal Collier

Share price (SEK) 4.1

Paper Products, Sweden

BRGb.ST/BRGB SS

MCap (SEKm) 1,380

MCap (EURm) 132.3

Net debt (EURm) 37

No. of shares (m) 341

Free float (%) 20.3

Av. daily volume (k) 13.3

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8Bergs Timber OMX STH PI

1m 3m 12m

Absolute (%) 12.5 17.4 48.4

OMX STH PI (%) 0.0 6.8 2.1

Source: FactSet

2019e 2020e 2021e

P/E (x) 7.3 9.9 17.7

P/E adj (x) 7.3 9.9 17.7

P/BVPS (x) 1.18 1.09 1.06

EV/EBITDA (x) 5.3 6.0 8.3

EV/EBIT adj (x) 7.0 8.9 15.7

EV/sales (x) 0.52 0.50 0.50

ROE adj (%) 17.4 11.4 6.1

Dividend yield (%) 2.3 3.4 3.0

FCF yield (%) 11.1 12.8 8.4

Net IB debt/EBITDA 1.2 0.9 1.0

Bergs Timber

7 October 2018 ABG Sundal Collier 2

Geographical breakdown, sales, SEK


Business area breakdown, sales, %


EPS estimate changes, 2019e, SEK

Source: ABG Sundal Collier, FactSet

EPS estimate changes, 2020e, SEK

Source: ABG Sundal Collier, FactSet

Quarterly sales and adj. EBIT, SEKm


OpportunitiesHistorically, Bergs Timber has been a typical sawmill group

with a high degree of commoditised wood products. Going

forward, however, the group’s strategy is to increase focus

on value-added processing and perform complementary

acquisitions. Combined with strong macroeconomic

fundamentals, industry consolidation and improvement

programs there should be room for earnings uplift over the

coming years. The acquisition of Norvik Timber will

transform the group into a more vertically integrated player

with potential for margin improvement and a higher degree

of earnings stability.

RisksThe primary end-market for the group’s products is the

building and construction industry. As a result, demand for

the group’s products is cyclical and depends on global

economic developments. Due to a high degree of

commoditised products, the group’s earnings are highly

sensitive to the market prices of its products. An increase

in the price of saw logs could have negative impact the

group’s earnings since it is the most important input factor

in its operations. ~80% of the group’s products are sold in

foreign currencies like GDP, EUR and USD. Currency

fluctuations is therefore another major risk factor.

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ABGSC FactSet Consensus Mean

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Company descriptionBergs Timber is the only listed timber pure-play in Sweden.

It sells sawn and processed wood products. ~80% of the

group’s products are exported, mainly to the UK, US and

other European countries. In January 2018, the company

announced its intention to acquire Norvik Timber, a

transformational acquisition that will approximately double

the group’s production capacity and revenues. Norvik

Timber is a vertically integrated group with sawmills,

production of processed wood products like windows,

houses and furniture, and distribution of own and third-

party products.

Bergs Timber


Quarterly results

Net sales in Q4 were SEK 838m, in line with ABGSCe of SEK 836m, and up from

SEK 334m in Q4 last year. Sales increased y-o-y due to units acquired from Norvik,

which contributed SEK 500m, and higher product prices. Sales volumes were

220,000m3, 7% below our estimate of 236,000m3, but this was compensated by

higher output prices. The company invested SEK 30m in a new line at the

Vimmerby sawmill in the quarter. This resulted in a planned ten-week maintenance

stop and 13,000m3 production y-o-y for the “old” Bergs Timber.

Clean EBIT was SEK 69m, 2% below ABGSCe of SEK 70m. This was the first

quarter in which the acquired Norvik assets were fully consolidated. The acquired

units contributed SEK 37m to EBIT, which means that clean EBIT for the “old” Bergs

Timber was SEK 31m, up from SEK 8m in the same period last year. The

improvement was primarily driven by higher prices for sawn wood products, while

higher input prices and lower sales volumes affected the results negatively.

If we look at pro-forma figures for the consolidated company, we see that EBIT was

up 84% y-o-y in Q4 and up 75% y-o-y for the full year.

Outlook

The company states that it continues to see strong demand for its products with

annual demand growth of 1-3%. Production is still high and the stock levels are low,

but Bergs Timber sees a more balanced market compared to the supply deficit seen

in the previous quarter.

Deviation table

Source: ABG Sundal Collier, company data

Pro-forma accounts for Bergs Timber and Norvik consolidated


SEKm Actual ABGSC Dev (%)

Sales volume 220,000 236,000 -7%

Net sales 838.2 836.1 0%

Reported EBITDA 86.9 85.0 2%

Clean EBITDA 87.6 89.0 -2%

Reported EBIT 68.0 66.0 3%

Clean EBIT 68.7 70.0 -2%

Pre-tax profit 63.8 64.8 -2%

Net income 58.8 50.5 16%

EPS 0.17 0.15 15%

Pro-forma numbers 2016/17 2017/18 2016/17 2017/18 Change y-o-y Change y-o-y

SEKm Q4 (Jun-Aug) Q4 (Jun-Aug) Full year Full year Q4 (Jun-Aug) Full year

Net sales 750 838 2,819 3,206 12% 14%

EBITDA 53 87 220 324 64% 47%

EBITDA margin 7.1% 10.4% 7.8% 10.1% 3.3pp. 2.3pp.

EBIT 37 68 140 245 84% 75%

EBIT margin 4.9% 8.1% 5.0% 7.6% 3.2pp. 2.7%

Bergs Timber


Estimate changes

We have lowered 18/19e clean EBIT by 2% because of slightly lower product price

assumptions, which is mostly offset by lower input cost assumptions. It seems that

prices of saw logs (input) and sawn wood products (output) will now be more stable

compared to our previous assumption of continued price increases for both output

and input factors into ‘19/’20.

We have also lowered our EBIT estimate for ‘19/’20e by 8% as we have a bit more

cautious view on the durability of the macroeconomic cycle.

From 2019, Bergs Timber will change its reporting calendar to a standard calendar

year. As a result, the ‘17/’18 accounting year will be extended by four months and

the next report will be for the period Sep-Dec ’18. We have not taken this into

account in our estimates yet, but will publish estimates for the new reporting

calendar ahead of the next financial report.

Estimate changes


Old New Changes

SEKm '17/'18e '18/'19e '19/'20e '17/'18e '18/'19e '19/'20e '17/'18e '18/'19e '19/'20e

Revenues 2,041 3,334 3,371 2,029 3,380 3,258 -1% 1% -3%

Cost of goods sold -1,427 -2,444 -2,517 -1,401 -2,492 -2,418 -2% 2% -4%

Gross profit 614 890 854 629 888 841 2% 0% -2%

Operational expenditures -410 -549 -565 -423 -552 -568 3% 1% 1%

Reported EBITDA 204 341 289 205 336 273 1% -2% -6%

Clean EBITDA 213 341 289 212 336 273 -1% -2% -6%

Depreciations -46 -84 -88 -46 -84 -88 0% 0% 0%

Reported EBIT 157 257 201 159 252 185 1% -2% -8%

Clean EBIT 167 257 201 166 252 185 -1% -2% -8%

Net financials -5 -10 -7 -8 -10 -7 57% -4% -6%

Pre-tax profit 152 247 194 151 243 178 -1% -2% -8%

Taxes -33 -55 -46 -24 -53 -39 -28% -3% -15%

Net income 119 193 148 127 189 139 7% -2% -6%

EPS 0.51 0.57 0.43 0.53 0.56 0.41 5% -2% -6%

Bergs Timber


Bergs Timber highlights

Pure-play timber stock

Bergs Timber is the only pure-play timber stock listed in the Nordics, which

specialises in sawmills and wood products. For investors who want exposure to the

sawmill market, the Bergs Timber stock is the only way to get pure exposure to this

market.

Increased degree of processing – potential for higher and stable margins

The sawmill industry is usually characterised by low margins and volatile earnings,

due to a highly commoditised product and cyclical demand. Bergs Timber has a

strategy of increasing the share of value-added processing in its production. This

could give the company higher and more stable margins over the cycle. The

acquisition of Norvik Timber Industries could be a significant step in this strategy

and has the potential to give higher and more stable margins for the combined

group.

Strong market for sawmill, but cyclical industry

A strong underlying development in the global economy has led to increased

demand for the company’s products. This has resulted in improved prices and

deliveries of sawn wood products, wood chips and other sawmill by-products. A

slowdown in global economic activity, however, would have a negative effect on the

demand for Bergs’ products, which could significantly impact earnings.

Consolidation trend continues

Bergs Timber has gained a better market position as many sawmill plants in

Sweden have reduced or shut down capacity. The structural changes in the sawmill

industry have resulted in fewer and larger companies, which should affect the

market positively. Bergs Timber has consolidated sawmills in a concentrated

geographical area, thereby reducing costs and improving logistics. Bergs Timber

acquired several mills between 2014 and 2017: Gransjö, Broakulla and Vimmerby.

Transformative acquisition

The acquisition of Norvik Timber Industries is transformative for Bergs, and will

result in a more vertically integrated company with a broader product portfolio. As a

result of the acquisition, the degree of value-added processing increased, which

could result in increased margins at the group level and limit the sensitivity to

fluctuations in the underlying economy.

Double the market cap – more interesting for a broader scope of investors

The acquisition of Norvik Timber has resulted in a doubling of Bergs Timber’s

market cap. Part of the payment for the acquired units was provided in the form of

new shares in the company; the number of shares outstanding doubled on 15 May.

As a result, the market cap increased from SEK 482m on 14 May to SEK 971m on

15 May. This could make the stock more interesting to a broader scope of investors.

However, Norvik Timber currently holds 64.68% of the outstanding shares in

company, which will limit the liquidity in the stock and could result in a share

overhang.

Bergs Timber


Norvik transaction

Through the Norvik transaction, Bergs Timber acquired three sawmills and a plant

that processes sawn wood to create doors, windows, prefabricated houses and

garden furniture. In addition, the acquisition includes a distribution organisation that

distributes its own and third-party wood products to the UK market. The strategic

rationale behind the transaction is to increase the size and financial flexibility of the

company, the liquidity of its stock and expand vertically into distribution and value-

added processing. The transaction effectively doubled the size of Bergs’ operations,

revenues and market value. It should also give the company more stable margins

over the cycle and the economic firepower to continue to expand through M&A.

Payment for the acquisition was made in the form of 170 million newly issued Bergs

Timber shares at a price per share of SEK 2.85 and a cash payment of SEK 270m.

In total, Bergs Timber will pay SEK 755m for the acquired assets excluding

interests. Additionally, an earn-out of SEK 40m will be paid if the group is able to

deliver on certain performance targets, which brings the total payment to SEK

795m. Using figures for the last 12 months ending 31 May, the purchase price gives

an EV/EBITDA of 4.9x-5.2x and EV/EBIT of 6.4x-6.7x.

Overview of the new company


Transaction overview


Bergs Timber


As a result of the acquisition, total sawmill capacity increased from ~530,000m3 to

~920,000m3 per year, an increase in capacity of ~74%. The primary markets for the

acquired units are the Baltics, Great Britain, Japan and the rest of Europe.

Looking at pro forma figures for 2016/17, a combination of the two firms would have

increased net sales by 130%. In this period, Bergs Timber had net sales of SEK

1,244m and Norvik companies had SEK 1,613m, indicating combined sales of SEK

2,857m. Combined EBIT would have been SEK 37m from Bergs Timber and SEK

102m from Norvik, giving a combined figure of SEK 139m.

The Norvik companies had higher margins than Bergs Timber in 2016/17, which

could mean that the combined company will be able to increase its margins

compared to the “old” Bergs Timber.

Margin overview Sep ’16-Aug ‘17


EBIT/EBITDA Sep ’16-Aug ‘17


According to the company, cost synergies are expected to arise in distribution,

commodity and by-products, but the company has not given any guidance on the

size of potential synergies.

Since the sale of Broakulla to Bergs Timber, Norvik has been a large shareholder in

Bergs Timber, holding 29.52% of the outstanding shares. As a result of the

transaction, Norvik has increased its ownership stake in Bergs to ~64.68%. Norvik

has announced its intention to sell down. Hence, the company seeks to hold a level

below 50% in the long term. Norvik has entered a lock-up agreement and may not

sell its shares in Bergs Timber for a period of two years.

The lock-up agreement does not prevent Norvik from divesting its shares in a

bilateral transaction. However, Norvik may not hold an amount of outstanding

shares of less than 40%, which is calculated on the basis of the number of shares

outstanding after the completion of the acquisition.

Pro-forma figures for Sep ‘16–Aug ‘17


Bergs Timber


Strong sawmilling market

The latest data indicate a strong sawmilling market. The sawmilling market is

characterised by relatively short up-cycles and intuitive market dynamics (low stocks

+ high demand = high prices).

Global building and construction activity has risen steadily over the past few years,

particularly in the US and China. As demand for lumber has increased, so have

Swedish lumber exports. As can be seen in the right-hand chart below, stocks have

declined steadily since their peak in 2015 because of the increasing exports.

Swedish sawmills: new export orders

:

Source: ABG Sundal Collier, Woodstat

Swedish sawmills: stocks of finished goods (12m roll. avg.)


As a result, Swedish prices of lumber prices have spiked and are up ~16% y-o-y.

The US lumber price has risen strongly since the trough in 2016. In May, it reached

an all-time high of USD 655/board feet, up 41% YTD. Since May, it has come down

again and is now more in line with prices in other markets. The latest price was USD

350/board feet, which is down 18% y-o-y, but still 60% above the historical average.

Swedish sawmills: producer price index


United States: lumber prices down from peak

Source: ABG Sundal Collier, Macrobond

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Bergs Timber


Prices of saw logs usually follow higher timber prices, but with a lag. Prices of saw

logs have been rising both in the Nordics and the Baltics, which has led to higher

input costs for sawmills.

Nordic prices of spruce saw logs (EUR/m3)

Source: ABG Sundal Collier, Luke

Baltic prices of spruce saw logs (EUR/m3)


Structural market changes The Swedish sawmill market has previously been characterized by over-

establishment of sawmill capacity. However, since the 1990s a number of sawmills

have been shut down, while others have increased their production. The number of

sawmills with an annual production of more than 10,000m3 has been reduced from

~280 in 1980 to ~130 in 2017. Since the beginning of the 2000s, the total Swedish

sawmill production has remained relatively flat, only increasing from 16 million m3 to

18 million m3 in 17 years.

Number of sawmills with production >10,000m3


Sawmill production and exports


In, 2016, China’s import of timber increased by 20% compared to the precious year.

As a result, China has become one of the largest export markets of sawn timber for

Sweden and one of Bergs Timber’s largest end-markets.

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Total sawmill production (left) Export (left) Export value (right)

Million m3 SEKbn

Bergs Timber


Bergs Timber has been active in the industry consolidation

In recent years, Bergs Timber has been active in the consolidation of the Swedish

sawmill industry. Of the company’s six plants, five have been acquired in the last 13

years. All the plants are located in the same region in order to create a rational

management of both raw materials and finished goods.

Bergs Timber’s Swedish sawmills (in green)

Source: ABG Sundal Collier, Bergs Timber

Sweden: production per sawmill


The acquisition of Norvik Timber industries in 2017 added more capacity to the

group’s sawmill operations, this time however outside of Sweden.

End-markets

Builders and distributors are the main customers of construction and packaging

materials of spruce and pine. Lumber makes up ~85% of Berg Timber’s total sales,

while by-products, comprising ~15%, are mostly sold as inputs in energy production

or the pulp and paper industry. The company’s demand is highly cyclical and

depends on global economic developments due to the industries in which the end-

customers operate. The group’s earnings are sensitive to market prices due to a

high degree of commoditised products. The demand for sawn timber has been

strong in the US and China recently. Approximately 80% of the group’s products are

exported, mainly to the UK, China, and other European countries.

Net sales by product (2016/17)


Net sales by geography (2016/17)


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Great Britain

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Bergs Timber


Housing market Swedish home sales are significantly down y-o-y. This should in turn lead to a

decline in the construction of new houses. We have already started to see weaker

statistics. New housing starts was down 19% y-o-y in Q1 and 28% y-o-y in Q2.

However, it is important to note that the official statistics understates the actual

number by 20-60% the first quarter after it has been released and that this effect is

strongest in Q2, i.e. the 28% decline could be within the statistical error.

Sweden: housing starts (LTM)

Source: ABG Sundal Collier, SCB

Sweden: Buildings completed (LTM)

Source: ABG Sundal Collier, SCB

US: Housing starts (LTM)


UK: Housing starts (LTM)


China: Housing starts (LTM)


Japan: Housing starts (LTM)


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19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

Thousand units

Bergs Timber


Germany: Housing starts (LTM)


Spain: Housing starts (LTM)


But softer macro indicators Leading macro indicators have started to point down. OECD Industrial Production

m-o-m growth has come down and is approaching negative m-o-m growth for the

first time since July 2016. This does not necessarily mean that we are approaching

a global downturn, but it is a signal that investors should be more cautious.

0

100

200

300

400

500

600

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

Thousand units

0

100

200

300

400

500

600

700

800

900

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

Thousand units

OECD Industrial Production growth (m-o-m annualised)

Source: ABG Sundal Collier, Macrobond, OECD

-15

-10

-5

0

5

10

15

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Bergs Timber


Detailed estimates tables

Key assumptions


Profit and loss statement


17/18 18/19e

Q1 Q2 Q3 Q4 Q1e Q2e Q3e Q4e 16/17 17/18 18/19e 19/20e

Volumes ('000 m3)

Nameplate capacity 133 133 133 230 230 230 230 230 628 920 948

Production volume 142 122 155 185 246 215 240 195 462 604 896 923

Sales volume 130 117 149 220 226 206 240 230 493 616 902 929

Utilisation (%)

Deliveries / production 92% 96% 96% 119% 92% 96% 100% 118% 107% 102% 101% 101%

Capacity utilisation 107% 92% 117% 80% 107% 93% 104% 85% 0% 98% 98% 98%

Price of sawn goods

Growth, y-o-y 4% 7% 12% 16% 15% 10% 3% -1% 4% 10% 7% -7%

Implied realized price (SEK/m3) 2,648 2,837 3,516 3,810 3,293 3,308 4,172 4,295 2,535 3,203 3,767 3,514

Price of saw logs

Sweden - spruce logs (SEK/m3) 518 521 519 531 542 542 542 542 504 522 542 509

Growth, y-o-y 0% 3% 5% 5% 13% 13% 12% 12% -3% 4% 4% -6%

17/18 18/19e

SEKm Q1 Q2 Q3 Q4 Q1e Q2e Q3e Q4e 16/17 17/18 18/19e 19/20e

Net sales 344 332 524 838 743 682 1,001 988 1,244 2,038 3,414 3,281

Change in inventory 18 21 -3 -57 52 23 0 -109 -34 -21 -34 -23

Other income 9 -1 1 4 0 0 0 0 7 12 0 0

Total revenues 371 351 522 785 796 705 1,001 879 1,216 2,029 3,380 3,258

Cost of goods sold -260 -241 -346 -554 -579 -508 -749 -656 -819 -1,401 -2,492 -2,418

Gross profit 110 110 177 231 216 196 252 223 397 629 888 841

Other indirect costs -46 -51 -60 -60 -60 -58 -84 -74 -186 -217 -276 -284

Personell costs -35 -35 -46 -83 -70 -66 -74 -66 -124 -200 -276 -284

Other opex 0 -2 -4 -1 0 0 0 0 -5 -7 0 0

Reported EBITDA 29 23 67 87 86 72 94 83 83 205 336 273

Extraordinary effects 0 -2 -4 -1 0 0 0 0 1 -7 0 0

Clean EBITDA 29 24 71 88 86 72 94 83 81 212 336 273

Clean EBITDA margin 9% 7% 14% 10% 12% 11% 9% 8% 7% 10% 10% 8%

Depreciations -8 -9 -10 -19 -21 -21 -21 -21 -45 -46 -84 -88

Reported EBIT 21 14 56 68 65 51 73 62 37 159 252 185

Extraordinary effects 0 -2 -4 -1 0 0 0 0 1 -7 0 0

Clean EBIT 21 15 61 69 65 51 73 62 36 166 252 185

Clean EBIT margin 6% 5% 12% 8% 9% 8% 7% 6% 3% 8% 7% 6%

Financial income 0 0 0 0 0 0 0 0 0 0 0 0

Financial expenses -1 -1 -2 -4 -3 -3 -3 -3 -6 -8 -10 -7

Pre-tax profit 20 12 55 64 63 49 71 60 31 151 243 178

Taxes -4 -3 -12 -5 -14 -11 -16 -13 -6 -24 -53 -39

Net income 16 10 43 59 49 38 55 47 25 127 189 139

Bergs Timber


Balance sheet


Cash flow statement


17/18 18/19e


Assets

Intangible assets 2 2 188 195 195 195 195 195 2 195 195 195

Tangible assets 264 267 729 778 779 780 781 782 264 778 782 782

Financial assets 1 1 1 8 8 8 8 8 2 8 8 8

Deferred tax assets 18 15 6 0 0 0 0 0 20 0 0 0

Non-current assets 284 285 923 982 983 984 985 986 287 982 986 986

Inventory 232 268 565 517 570 592 592 483 226 517 483 460

Receivables 202 193 448 372 330 303 445 439 178 372 439 424

Cash and cash equivalents 3 1 15 57 95 137 17 178 1 57 178 308

Current assets 437 462 1,027 947 995 1,032 1,054 1,100 406 947 1,100 1,191

Total assets 721 746 1,950 1,928 1,977 2,016 2,039 2,086 693 1,928 2,086 2,177

Equity and liabilities

Liabilities

Long-term interest bearing debt 61 13 346 218 218 218 218 218 65 218 218 218

Other long-term provisions 1 1 53 94 94 94 94 94 1 94 94 94

Total long-term liabillities 62 14 399 312 312 312 312 312 65 312 312 312

Short-term interest bearing debt 43 120 247 356 356 356 356 356 59 356 356 356

Other current liabilities 209 204 373 249 249 249 249 249 170 249 249 249

Total current liabilities 252 324 621 605 605 605 605 605 229 605 605 605

Total liabilities 314 338 1,020 916 916 916 916 916 294 916 916 916

Equity 407 408 931 1,012 1,061 1,099 1,122 1,169 398 1,012 1,169 1,261

Total equity and liabilities 721 746 1,950 1,928 1,977 2,016 2,039 2,086 693 1,928 2,086 2,177

17/18 18/19e


Funds from operations 20 21 62 83 70 59 76 68 74 187 273 227

Change in working capital 9 -32 -5 41 -10 5 -142 115 38 14 -32 38

Cash flow from operations 29 -10 57 124 60 64 -66 183 112 200 241 265

Capex -9 -12 -24 -66 -22 -22 -22 -22 -35 -110 -88 -88

Other changes in non-current assets -9 0 -252 0 - - - - -60 -260 - -

Free cash flow 12 -22 -219 59 38 42 -88 161 17 -170 153 177

Equity raised - - -6 - - - - - - - - -

Dividend - -9 - - - - -32 - - - -32 -47

Net change in debt - - 281 -4 - - - 100 - - 100 70

Change in RCF -11 36 -36 -2 - - - - - - - -

Debt repaid -8 -8 -6 -10 - - - -100 - - -100 -70

Cash flow from financing activities -19 20 233 -16 - - -32 - -68 218 -32 -47

Net cash flow 2 -2 14 42 38 42 -120 161 -16 56 121 129

Bergs Timber


Historic earnings and key figures


SEKm 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19e 19/20e

Net sales 860 778 916 853 825 664 665 853 894 1,244 2,038 3,414 3,281

Net sales growth 16% -10% 18% -7% -3% -19% 0% 28% 5% 39% 64% 68% -4%

Clean EBITDA 44 15 85 6 7 -27 24 37 42 81 212 336 273

Clean EBITDA margin 5% 2% 9% 1% 1% -4% 3% 4% 5% 7% 10% 10% 8%

Clean EBIT 10 -25 42 -37 -34 -70 -13 -3 -1 36 166 252 185

Clean EBIT margin 1% -3% 4% -4% -4% -10% -2% 0% 0% 3% 8% 7% 6%

Net income -5 -27 24 -39 -39 -24 -11 -29 -4 25 127 189 139

EPS -0.68 -3.88 3.49 -5.71 -5.65 -0.25 -0.11 -0.26 -0.03 0.15 0.53 0.56 0.41

Cash convertion ratio -159% -37% -5% -295% 185% n.a. -382% 94% 35% 21% -80% 45% 65%

Net debt 296 301 304 323 310 68 158 178 174 122 517 395 266

NIBD/ EBITDA 6.8x 20.3x 3.6x 57.7x 45.6x -2.5x 6.7x 4.8x 4.1x 1.5x 2.4x 1.2x 1.0x

ATRoCE 1% -4% 6% -5% -5% -17% -2% -1% 0% 5% 8% 13% 9%

RoE -2% -11% 9% -17% -20% -9% -4% -11% -1% 6% 13% 16% 11%

Bergs Timber


Key figures for Bergs Timber

Net sales (SEKm)


Total sales volume (1,000 m3)


Clean EBIT (SEKm)


After-tax return on capital employed


Leverage ratio (NIBD / EBITDA)


Free cash flow (SEKm)


665853 894

1,244

2,038

3,4143,281

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

13/14 14/15 15/16 16/17 17/18 18/19e 19/20e

SEKm

236

311 328

493

616

902 929

0

100

200

300

400

500

600

700

800

900

1,000

13/14 14/15 15/16 16/17 17/18 18/19e 19/20e

1,000 m3

-13 -3 -1

36

166

252

185

-50

0

50

100

150

200

250

300

13/14 14/15 15/16 16/17 17/18 18/19e 19/20e

SEKm

-2%

-1% 0%

5%

8%

13%

9%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

13/14 14/15 15/16 16/17 17/18 18/19e 19/20e

ATROCE

6.7x

4.8x

4.1x

1.5x

2.4x

1.2x 1.0x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x

13/14 14/15 15/16 16/17 17/18 18/19e 19/20e

NIBD / EBITDA

-91

3515 17

-170

153177

-200

-150

-100

-50

0

50

100

150

200

13/14 14/15 15/16 16/17 17/18 18/19e 19/20e

SEKm

Bergs Timber



Income Statement (SEKm) Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019e Q2 2019e Q3 2019e Q4 2019e

Sales 371 351 522 785 796 705 1,001 879

COGS -260 -241 -346 -554 -579 -508 -749 -656

Gross profit 110 110 177 231 216 196 252 223

Other operating items -81 -88 -110 -144 -130 -124 -158 -140

EBITDA 29 23 67 87 86 72 94 83

Depreciation on tangibles -8 -9 -10 -19 -21 -21 -21 -21

Depreciation on intangibles 0 0 0 0 0 0 0 0

EBITA 21 14 56 68 65 51 73 62

Goodwill impairment charges 0 0 0 0 0 0 0 0

Other impairment and amortisation 0 0 0 0 0 0 0 0

EBIT 21 14 56 68 65 51 73 62

Interest Net -1 -1 -2 -4 -2 -2 -2 -2

Other financial items 0 0 0 0 0 0 0 0

Associated income 0 0 0 0 0 0 0 0

Other EO items 0 0 0 0 0 0 0 0

Pretax profit 20 12 55 64 63 49 71 60

Tax -4 -3 -12 -5 -14 -11 -16 -13

Net profit 16 10 43 59 49 38 55 47

Minority interest 0 0 0 0 0 0 0 0

Net profit discontinued 0 0 0 0 0 0 0 0

Net profit to shareholders 16 10 43 59 49 38 55 47

EPS 0 0 0 0 0 0 0 0

EPS Adj 0 0 0 0 0 0 0 0

Total extraordinary items after tax 0 -2 -4 -1 0 0 0 0

Tax rate (%) 21.8 22.0 21.6 7.8 22.0 22.0 22.0 22.0

Gross margin (%) 29.7 31.4 33.9 29.5 27.2 27.9 25.2 25.4

EBITDA margin (%) 7.9 6.4 12.7 11.1 10.9 10.3 9.4 9.5

EBITA margin (%) 5.7 3.9 10.8 8.7 8.2 7.3 7.3 7.1

EBIT margin (%) 5.7 3.9 10.8 8.7 8.2 7.3 7.3 7.1

Pretax margin (%) 5.5 3.5 10.5 8.1 7.9 6.9 7.0 6.8

Net margin (%) 4.3 2.7 8.2 7.5 6.2 5.4 5.5 5.3

Growth rates Y/Y Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019e Q2 2019e Q3 2019e Q4 2019e

Sales growth (%) 33.2 19.9 45.0 175.7 114.7 100.5 91.7 11.9

EBITDA growth (%) 80.4 132.0 95.9 286.2 194.1 221.4 41.1 -3.9

EBIT growth (%) 283.6 +chg 156.4 501.8 210.3 274.5 29.4 -8.1

Net profit growth (%) 364.7 +chg 165.8 583.7 211.3 297.4 28.6 -20.3

EPS growth (%) 364.7 +chg 165.8 583.7 211.3 297.4 28.6 -20.3

Adj earnings numbers Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019e Q2 2019e Q3 2019e Q4 2019e

EBITDA Adj 29 24 71 88 86 72 94 83

EBITDA Adj margin (%) 7.9 6.8 13.6 11.2 10.9 10.3 9.4 9.5

EBITA Adj 21 15 61 69 65 51 73 62

EBITA Adj margin (%) 5.7 4.3 11.6 8.8 8.2 7.3 7.3 7.1

EBIT Adj 21 15 61 69 65 51 73 62

EBIT Adj margin (%) 5.7 4.3 11.6 8.8 8.2 7.3 7.3 7.1

Pretax profit Adj 20 14 59 65 63 49 71 60

Net profit Adj 16 11 47 60 49 38 55 47

Net profit to shareholders Adj 16 11 47 60 49 38 55 47

Net Adj margin (%) 4.3 3.2 9.0 7.6 6.2 5.4 5.5 5.3

Bergs Timber



Income Statement (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Sales 804 701 697 876 917 1,216 2,029 3,380 3,258 3,118

COGS -583 -473 -485 -623 -634 -819 -1,401 -2,492 -2,418 -2,345

Gross profit 221 229 212 253 283 397 629 888 841 772

Other operating items -214 -205 -183 -243 -237 -315 -423 -551 -568 -585

EBITDA 7 23 29 11 46 83 205 336 273 187

Depreciation on tangibles -41 -43 -36 -40 -43 -45 -46 -84 -88 -88

Depreciation on intangibles 0 0 0 0 0 0 0 0 0 0

EBITA -34 -20 -7 -29 2 37 159 252 185 99

Goodwill impairment charges 0 0 0 0 0 0 0 0 0 0

Other impairment and amortisation 0 0 0 0 0 0 0 0 0 0

EBIT -34 -20 -7 -29 2 37 159 252 185 99

Interest Net -18 -12 -6 -8 -6 -6 -8 -10 -7 0

Other financial items 0 0 0 0 0 0 0 0 0 0

Associated income 0 0 0 0 0 0 0 0 0 0

Other EO items 0 0 0 0 0 0 0 0 0 0

Pretax profit -53 -31 -13 -37 -4 31 151 243 178 100

Tax 14 7 3 8 0 -6 -24 -53 -39 -22

Net profit -39 -24 -11 -29 -4 25 127 189 139 78

Minority interest 0 0 0 0 0 0 0 0 0 0

Net profit discontinued 0 0 0 0 0 0 0 0 0 0

Net profit to shareholders -39 -24 -11 -29 -4 25 127 189 139 78

EPS -5.66 -0.25 -0.11 -0.26 -0.03 0.15 0.58 0.56 0.41 0.23

EPS Adj -5.66 -0.77 -0.16 -0.02 -0.05 0.14 0.61 0.56 0.41 0.23

Total extraordinary items after tax 0 51 5 -26 3 1 -7 0 0 0

Tax rate (%) 26.1 22.5 20.9 21.9 10.0 19.7 15.8 22.0 22.0 22.0

Gross margin (%) 27.4 32.6 30.4 28.9 30.9 32.7 31.0 26.3 25.8 24.8

EBITDA margin (%) 0.8 3.3 4.2 1.2 5.0 6.8 10.1 9.9 8.4 6.0

EBITA margin (%) -4.3 -2.8 -1.0 -3.4 0.3 3.1 7.8 7.5 5.7 3.2

EBIT margin (%) -4.3 -2.8 -1.0 -3.4 0.3 3.1 7.8 7.5 5.7 3.2

Pretax margin (%) -6.6 -4.4 -1.9 -4.2 -0.4 2.6 7.4 7.2 5.5 3.2

Net margin (%) -4.9 -3.4 -1.5 -3.3 -0.4 2.1 6.3 5.6 4.3 2.5

Growth rates Y/Y 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Sales growth (%) -11.4 -12.8 -0.6 25.7 4.6 32.7 66.9 66.6 -3.6 -4.3

EBITDA growth (%) 21.4 244.1 23.9 -62.4 318.3 80.9 149.0 63.7 -18.9 -31.3

EBIT growth (%) 6.0 43.3 63.1 -308.3 108.2 1,454.2 326.8 58.4 -26.7 -46.2

Net profit growth (%) 1.0 38.2 56.0 -172.6 87.5 800.0 404.0 49.0 -26.6 -44.0

EPS growth (%) 1.0 95.6 56.0 -141.1 89.1 626.6 280.1 -3.6 -26.6 -44.0

Profitability 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

ROE (%) -18.5 -10.6 -4.1 -11.1 -1.2 6.8 18.0 17.4 11.4 6.1

ROE Adj (%) -18.5 -32.8 -6.2 -1.0 -2.2 6.4 18.9 17.4 11.4 6.1

ROCE (%) -6.5 -4.7 -1.9 -7.2 0.6 7.5 15.8 16.4 12.0 6.7

ROCE Adj(%) -6.5 -17.0 -3.4 -0.8 -0.1 7.3 16.4 16.4 12.0 6.7

ROIC (%) -4.0 -3.0 -1.3 -4.5 0.4 4.6 10.6 10.5 7.7 4.2

ROIC Adj (%) -4.0 -10.7 -2.2 -0.5 -0.1 4.5 11.0 10.5 7.7 4.2

Adj earnings numbers 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

EBITDA Adj 7 -27 24 37 42 81 212 336 273 187

EBITDA Adj margin (%) 0.8 -3.9 3.4 4.2 4.6 6.7 10.4 9.9 8.4 6.0

EBITA Adj -34 -70 -13 -3 -1 36 166 252 185 99

EBITA Adj margin (%) -4.3 -10.0 -1.8 -0.4 -0.1 3.0 8.2 7.5 5.7 3.2

EBIT Adj -34 -70 -13 -3 -1 36 166 252 185 99

EBIT Adj margin (%) -4.3 -10.0 -1.8 -0.4 -0.1 3.0 8.2 7.5 5.7 3.2

Pretax profit Adj -53 -82 -19 -11 -7 30 157 243 178 100

Net profit Adj -39 -75 -16 -3 -7 24 134 189 139 78

Net profit to shareholders Adj -39 -75 -16 -3 -7 24 134 189 139 78

Net Adj margin (%) -4.9 -10.6 -2.3 -0.3 -0.7 2.0 6.6 5.6 4.3 2.5

Bergs Timber



Cash Flow Statement (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

EBITDA 7 23 29 11 46 83 205 336 273 187

Net financial items -18 -12 -6 -8 -6 -6 -8 -10 -7 0

Paid tax 0 0 0 0 0 0 -24 -53 -39 -22

Non-cash items -11 -76 -16 91 -2 73 0 0 0 0

Cash flow before change in WC -22 -64 6 94 38 150 173 273 227 166

Change in WC 39 92 -54 -54 -71 -38 -485 -32 38 38

Operating cash flow 17 28 -48 40 -34 112 200 241 265 204

CAPEX tangible fixed assets -4 118 -43 -5 49 -95 -370 -88 -88 -88

CAPEX intangible fixed assets 0 0 0 0 0 0 0 0 0 0

Acquisitions and disposals 0 0 0 0 0 0 0 0 0 0

Free cash flow 13 146 -91 35 15 17 -170 153 177 116

Dividend paid 0 0 0 0 0 0 0 -32 -47 -42

Share issues and buybacks 0 0 0 0 0 0 0 0 0 0

Other non cash items 2 103 3 -44 -5 29 -238 0 0 0

Decrease in net IB debt 15 249 -87 -9 10 46 -408 121 129 75

Balance Sheet (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Goodwill 0 0 0 0 0 0 0 0 0 0

Indefinite intangible assets 3 2 2 2 2 2 195 195 195 195

Definite intangible assets 0 0 0 0 0 0 0 0 0 0

Tangible fixed assets 321 223 234 245 251 264 778 782 782 782

Other fixed assets 2 7 11 22 28 22 8 8 8 8

Fixed assets 325 232 247 269 280 287 982 986 986 986

Inventories 185 108 151 189 254 226 517 483 460 438

Receivables 94 79 90 106 113 178 372 439 424 408

Other current assets 0 0 0 0 0 0 0 0 0 0

Cash and liquid assets 0 48 2 0 17 1 57 178 308 382

Total assets 604 467 490 564 663 693 1,928 2,086 2,177 2,213

Shareholders equity 191 263 253 266 347 398 1,012 1,169 1,261 1,297

Minority 0 0 0 0 0 0 0 0 0 0

Total equity 191 263 253 266 347 398 1,012 1,169 1,261 1,297

Long-term debt 67 104 102 17 53 65 218 218 218 218

Pension debt 0 0 0 0 0 0 0 0 0 0

Convertible debt 0 0 0 0 0 0 0 0 0 0

Deferred tax 0 0 0 0 0 0 0 0 0 0

Other long-term liabilities 3 1 1 1 1 1 94 94 94 94

Short-term debt 243 11 58 162 137 59 356 356 356 356

Accounts payable 0 0 0 0 0 0 0 0 0 0

Other current liabilities 100 88 77 119 125 170 249 249 249 249

Total liabilities and equity 604 467 490 564 663 693 1,928 2,086 2,177 2,213

Net IB debt 309 60 147 156 146 100 508 387 258 183

Net IB debt excl. pension debt 309 60 147 156 146 100 508 387 258 183

Capital invested 603 412 477 542 619 670 1,863 1,899 1,861 1,823

Working capital 279 187 241 295 366 404 889 922 884 845

EV breakdown 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Market cap. diluted (m) na 166 254 275 251 435 829 1,380 1,380 1,380

Net IB debt Adj 309 60 147 156 146 100 508 387 258 183

Market value of minority 0 0 0 0 0 0 0 0 0 0

Reversal of shares and participations 0 0 0 0 0 0 0 0 0 0

Reversal of conv. debt assumed equity 0 0 0 0 0 0 0 0 0 0

EV na 226 401 432 397 536 1,337 1,767 1,638 1,563

Capital efficiency (%) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Total assets turnover (%) 125.5 130.9 145.8 166.3 149.3 179.4 154.9 168.4 152.9 142.0

Capital invested turnover (%) 125.8 138.3 156.9 172.0 157.9 188.7 160.3 179.7 173.3 169.2

Capital employed turnover (%) 152.7 170.4 192.8 213.2 200.2 245.2 201.1 219.8 212.0 207.9

Inventories/sales (%) 24.3 20.8 18.5 19.4 24.1 19.7 18.3 14.8 14.5 14.4

Customer advances/sales (%) 0 0 0 0 0 0 0 0 0 0

Payables/sales (%) 0 0 0 0 0 0 0 0 0 0

Working capital/sales (%) 37.2 33.2 30.7 30.6 36.1 31.7 31.9 26.8 27.7 27.7

Financial risk and debt service 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Net debt/equity (%) 161.6 22.8 58.2 58.8 42.1 25.2 50.2 33.1 20.4 14.1

Net debt/market cap (%) na 47.4 58.1 55.8 55.6 25.7 81.8 28.0 18.7 13.3

Equity ratio (%) 31.6 56.4 51.6 47.2 52.3 57.5 52.5 56.1 57.9 58.6

Net IB debt adj./equity (%) 161.6 22.8 58.2 58.8 42.1 25.2 50.2 33.1 20.4 14.1

Current ratio (%) 81.4 236.8 179.8 105.3 145.8 176.9 156.6 182.0 197.1 203.1

EBITDA/net interest (%) 37.0 201.7 467.7 143.4 712.5 1,398.3 2,474.7 3,502.3 4,011.3 -46,832.9

Net IB debt/EBITDA (%) 4,538.2 256.8 507.6 1,433.9 320.2 121.8 247.4 115.1 94.5 97.7

Interest cover (%) -187.0 -168.1 -109.4 -386.8 39.4 632.2 1,896.4 2,526.2 2,571.8 nm

Bergs Timber



Valuation and Ratios (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Shares outstanding adj. 7 97 97 109 125 166 220 341 341 341

Fully diluted shares Adj 7 97 97 109 125 166 220 341 341 341

EPS -5.66 -0.25 -0.11 -0.26 -0.03 0.15 0.58 0.56 0.41 0.23

Dividend per share Adj 0 0 0 0 0 0 0.1 0.1 0.1 0.1

EPS Adj -5.66 -0.77 -0.16 -0.02 -0.05 0.14 0.61 0.56 0.41 0.23

BVPS 27.70 2.73 2.62 2.44 2.78 2.40 4.59 3.43 3.70 3.81

BVPS Adj 27.70 2.73 2.62 2.44 2.78 2.40 4.59 3.43 3.70 3.81

Net IB debt / share 44.7 0.6 1.5 1.4 1.2 0.6 2.3 1.1 0.8 0.5

Share price na 1.72 2.63 2.52 2.01 2.62 3.76 4.05 4.05 4.05

Market cap. (m) na 166 254 275 251 435 829 1,380 1,380 1,380

Valuation 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

P/E na -6.9 -24.0 -9.5 -69.8 17.3 6.5 7.3 9.9 17.7

EV/sales na 0.32 0.58 0.49 0.43 0.44 0.66 0.52 0.50 0.50

EV/EBITDA na 9.7 13.8 39.6 8.7 6.5 6.5 5.3 6.0 8.3

EV/EBITA na -11.6 -55.7 -14.7 165.5 14.4 8.4 7.0 8.9 15.7

EV/EBIT na -11.6 -55.7 -14.7 165.5 14.4 8.4 7.0 8.9 15.7

Dividend yield (%) na 0 0 0 0 0 1.3 2.3 3.4 3.0

FCF yield (%) na 87.9 -35.6 12.6 5.9 3.8 -20.5 11.1 12.8 8.4

P/BVPS na 0.63 1.00 1.03 0.72 1.09 0.82 1.18 1.09 1.06

P/BVPS Adj na 0.63 1.00 1.03 0.72 1.09 0.82 1.18 1.09 1.06

P/E Adj na -2.2 -16.0 -102.0 -37.0 18.2 6.2 7.3 9.9 17.7

EV/EBITDA Adj na -8.3 16.9 11.6 9.4 6.6 6.3 5.3 6.0 8.3

EV/EBITA Adj na -3.2 -32.1 -134.9 -496.6 14.9 8.1 7.0 8.9 15.7

EV/EBIT Adj na -3.2 -32.1 -134.9 -496.6 14.9 8.1 7.0 8.9 15.7

EV/cap. employed na 0.7 1.0 1.0 0.8 1.1 0.9 1.1 1.1 1.1

Investment ratios 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Capex/sales 0.5 -16.8 6.1 0.6 -5.3 7.8 18.3 2.6 2.7 2.8

Capex/depreciation 10.7 -275.1 118.0 13.2 -112.5 210.4 801.7 104.8 100.0 100.0

Capex tangibles/tangible fixed assets 1.4 -53.0 18.2 2.2 -19.4 36.1 47.6 11.2 11.2 11.2

Capex intangibles/definite intangibles nm nm nm nm nm nm nm nm nm nm

Depreciation on intangibles/definite intangibles nm nm nm nm nm nm nm nm nm nm

Depreciation on tangibles/tangibles 12.8 19.3 15.5 16.4 17.2 17.2 5.9 10.7 11.2 11.2

Bergs Timber


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Bergs Timber


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Bergs Timber

Bergs Timber


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Bergs Timber

Documents

Bergs Timber - Introduce · The “old” Bergs Timber had an EBIT of SEK 31m (up from SEK 8m y-o-y). Higher lumber prices more than made up for higher input costs and lower sales