Nobina interim report 1 June 2020–31 August 2020
Active management has yielded results
The corona pandemic continues to affect Nobina’s markets with lower travel volumes as a result, although a continued recovery has been noted. As previously announced Nobina was able to improve earnings during the second quarter compared with the same period last year through increased cost controls, efficiencies, rapid adjustment and also retroactive revenues of SEK 27 million. The retroactive revenues are driven by the company reaching agreement with a number of PTA’s on the effects of the pandemic on incentive revenue contracts. In addition, the subsidiary Samtrans Omsorgsresor has adjusted its operating model to be able to meet societies need for mobile test stations for Covid-19. Finally, positive effects from contract migration in Norway and Finland also contributed to the overall improvement in earnings.
The second quarter
- Net sales amounted to SEK 2,564 million (2,528), an increase of 1.4 percent compared to the prior-year quarter, of which +3.4 percent was organic growth offset by –2.0 percent of currency effects.
- EBITA amounted to SEK 190 million (162).
- EBIT amounted to SEK 175 million (156).
- Profit after tax amounted to SEK 114 million (81), and earnings per share totalled SEK 1.29 (0.92) before dilution.
- Cash flow from operations was SEK 483 million (472).
The first half of the year
- Net sales amounted to SEK 5,073 million (5,277), a decrease of 3.9 percent, of which –2.6 percent was organic growth and –1.3 percent derived from currency effects.
- EBITA amounted to SEK 279 million (330).
- EBIT amounted to SEK 245 million (308).
- Profit before tax amounted to SEK 169 million (198).
- Profit after tax amounted to SEK 135 million (157), and earnings per share totalled SEK 1.53 (1.78) before dilution.
- Cash flow from operations was SEK 1,051 million (803).
Significant events during the second quarter
- In the quarter, Nobina started new traffic with a total of 268 buses in Linköping, Sjuhärad, Halland and Vejle due to the contacts secured in spring 2019.
- Nobina secured a new contract, valued at appr. EUR 127 million, from HSL to operate and develop city transport services in Helsinki and Vantaa. The contract extends for a total of seven years with an option to extend for three additional years and involves a total of 68 scheduled buses, of which 58 will operate solely on electricity. Services are scheduled to start in August 2021.
- Nobina has been awarded* a contract by Östgötatrafiken to operate and develop express and regional transport services in Linköping. The contract entails extended collaboration with Östgötatrafiken and is valued at approximately SEK 1.1 billion over 11 years. The services will be launched in December 2021 and involve a total of 49 buses, of which 30 are new double-deckers.
- In August, Nobina was awarded its third contract in a short period of time in Region Norrbotten, when Länstrafiken i Norrbotten entrusted Nobina with developing local transport in Piteå Municipality as well as local coach hire for schools. The contract involves 13 scheduled buses and has a total value of SEK 150 million over the contract period of ten years.
*The award is under appeal and pending decision.
Significant events after the end of the quarter
- The City of Turku has awarded a new contract to Nobina to operate and develop city transport services in the Turku region. The contract is worth more than EUR 71 million over eight years, with an option for two additional years and includes 42 fully electric buses. Traffic is scheduled to start in July 2021.
Statement from the CEO
The second quarter of the fiscal year was again clearly marked by the coronavirus pandemic. The authorities kept recommending people to avoid travel by public transport as much as possible, while expecting traffic volumes to remain at least at previous levels: people who must travel should be able to do so as safely as possible from a contagion perspective. This situation naturally impacts revenue for public transport authorities, and state subsidies offered to mitigate the financial impact still differ significantly between the Nordic countries. Nobina is adjusting to the current, exceptional circumstances while continuing its long-term planning and investment in an expanding, fossil-free critical public transport market.
Despite the pandemic, we noted a positive financial development in our operations during the second quarter. Year-on-year, sales rose marginally and adjusted profit before tax rose to SEK 153 million (107). The renegotiation of incentive agreements mainly contributed to the improved profitability, but contributions also came from increased cost control, efficiencies, contract migration in Norway and Finland and finally from the effects of the adjustment of operations that our subsidiary Samtrans was able to implement.
I am particularly proud of the strong commitment within the organisation to solve the challenges in the wake of the pandemic, and this enabled us to deliver 99.97 percent of our traffic services. The use of steering groups at various levels and decisions based on real-time analysis of passenger flows were some key success factors. Through close dialogue with clients and authorities, we were able to modify timetables, expand traffic whenever necessary and create an understanding among the general public and the business community of the measures needed, for example, to avoid crowding. Moreover, we are happy that our employees currently are as healthy as before the pandemic, in all parts of the company. The fact that we are always ready to do our job enhances our efficiency, and thereby profitability.
Let me return to the important role played by Samtrans during the pandemic. Our subsidiary within special needs transportation in the Stockholm region current runs 104 mobile test stations throughout the country. At the peak of the crisis last spring, Samtrans also acted as an extra transport resource when transferring infected patients between the home and hospital. Samtrans’ swift redeployment of parts of its operations demonstrates the flexibility of our organisation, and was widely appreciated by the community. This infrastructure will help society gain control of the spread of the virus and allows people to get tested in an easy and accessible manner. We believe the use of mobile units for a range of public services may increase in the future. With the Nordic region’s largest bus fleet and operations in many regions, Nobina should be an appealing choice when there is an urgent need for a provider of creative mobile infrastructure solutions.
Travel in society has begun to recover, partly due to the return to school and as more people choose to return to their workplaces. But we are still far from the situation before Covid-19, and we expect a return to normality will take some time, based on the restrictions and recommendations that the authorities still have in place.
The pandemic also meant that several tenders were postponed, including contracts in Stockholm and Skåne, where allocation decisions are now expected this autumn. During the second quarter, we secured new contracts in Sweden and Finland with a total contract value of SEK 2.6 billion. I am pleased to note our new progress in Finland, in Helsinki where we are already market leader but also in Turku, a new region for us with excellent growth opportunities. The two contracts awarded in the country will also help us advance our position in electric power and have made us the largest electric bus operator in the Finnish market. No new contracts were won in Denmark or Norway, though the positive performance in Norway has continued, resulting in a sharp improvement in earnings. This was an effect of continuous improvements and a more favourable contract mix. The pandemic will continue to make its presence felt in our markets and in our business during the coming quarters, but in recent months we have shown that we are properly equipped to emerge successfully from this situation. The swift transition of our operations, with a clear governance structure in all areas, enabled us to offer our passengers efficient and safe services when it was most needed. We have developed new services and business models that demonstrate that, as a large public transport company possessing a high degree of flexibility and adaptability, we can serve as a critical resource in challenging times.
The recent stable and successful development of the business has, of course, further strengthened the company’s financial position. This gives us even better space to quickly and flexibly be able to act in a market where the good long-term growth conditions remain - not least important from a sustainability perspective - and thus be able to continue to create value for all our stakeholders.
President and CEO
This information is such that Nobina AB (publ) is obligated to publish in accordance with the EU Market Abuse Regulation and the Securities Market Act. The information was published, through the agency of the below-mentioned contact persons, on 30 September 2020, at 8:00 a.m.