Nobina interim report 1 March 2020– 31 May 2020
Strong position in a challenging market
During the first quarter, we continued to see negative impact on sales and earnings of last year’s extensive contract migration of some 1,100 buses. In addition, profitability in incentive contracts was adversely affected by a drop in passenger numbers by about 50 percent due to covid-19. Negotiations with some clients, concerning how these contracts can be adapted during the pandemic, are still ongoing while some negotiations have been finalized. We noted a slight recovery in passenger numbers in May and can confirm that Nobina’s stable financial position gives good conditions to further strengthen the market position in the long term.
The first quarter
· Net sales amounted to SEK 2,509 million (2,749), a decrease of 8.7 percent compared to the prior-year quarter, of which –8.1 percent was organic growth and –0.6 percent derived from currency effects.
· EBITA amounted to SEK 89 million (168).
· EBIT amounted to SEK 70 million (152).
· Profit after tax amounted to SEK 21 million (76), and earnings per share totalled SEK 0.24 (0.87) before dilution.
· Cash flow from operations was SEK 568 million (331).
Significant events during the first quarter
- In May, Nobina published its first Green Bond Impact Report containing a presentation of how the company has used the proceeds generated by the green bond and the environmental gains achieved through these investments. We have estimated that these investments will reduce or avoid 8,250 tCO2e per annum and that the investment in 2019/20 enabled 8.5 million passengers to travel by fossil free or electric buses in a year.
- In line with the Board’s proposal, the Annual General Meeting voted not to pay any dividend for the 2019/2020 fiscal year in order to ensure as strong a financial position as possible. A resolution was taken to introduce a performance-based share saving scheme for 60 key employees. Johan Bygge was elected new Chairman of the Board at the same time as Monica Lingegård and Jan Sjöqvist, after 15 years as Chairman of the Board, declined re-election.
Significant events after the end of the quarter
- In June, Nobina started new traffic with a total of 250 buses in Linköping, Sjuhärad and Halland due to the contacts secured in spring 2019.
Statement from the CEO
Nobina’s first quarter has largely coincided with the accelerating spread of the new coronavirus worldwide. As a result of this development, the everyday habits we have taken for granted, such as travelling and meeting in groups, have become much more difficult in most countries. But even in the midst of a pandemic, public transport plays a central role in keeping society functioning. Travel by train, metro and bus has, of course, fallen sharply, but many people must remain mobile and may rely entirely on public transport. One of our key duties during the quarter has therefore been to make our bus journeys extra safe and secure.
In terms of our economic performance, I can confirm that both sales and earnings declined in the first quarter compared with the prior year period. Adjusted profit before tax totalled SEK 50 million (113). Our performance was impacted by the extraordinary situation we find ourselves in, and by the final phase of the extensive contract migration. We expect this migration to have some impact during the second quarter of the fiscal year, given that we, for example, began operating 250 new buses in Linköping, Sjuhärad and Halland in mid-June. From the third quarter, we expect only a slight impact on profitability and sales from the termination and start-up of bus services.
We continue to deliver
Bus travel in the Nordic region has halved since the outbreak of covid-19. This has naturally resulted in a sharp decline in ticket revenue for our clients, and we have been affected within the framework of our incentive contracts where compensation often is linked to the number of boarding passengers. At the same time, there has been a strong desire from society to maintain transport services despite the sharp drop in travel, in order to increase space on buses to reduce the risk of infection. I have noted a general desire among clients in all countries to keep traffic operating. And we have delivered. In fact, our traffic delivery, which was at 99.95 percent in May, remains at high levels despite the challenges. Now that we can see a slight recovery in passenger volumes, discussions are also taking place with several clients to increase the number of departures in order to uphold the level of safety for passengers. This means we must utilise our bus fleet more and, in some cases, even operate extra buses.
Looking at developments in the various markets, I can state that the most challenging market for us was Sweden. This market is where we have most of our incentive contracts and most of our contract migration is also taking place here. Other countries reported an improved profit performance in the quarter. In these countries, the targeted state subsidies to public transport have also effectively mitigated the financial impact of lower ticket revenue for clients. Moreover, we have continued to successfully strengthen the underlying profitability of existing contracts, for example, in Norway, where we now have a contract mix that is far more favourable compared to previously.
Health and well-being in focus
Our focus on health and well-being not only applies to passengers but also to our own organisation. During the pandemic, we naturally have a particular focus on this, and it has been effective. The sick leave figure which rose initially is now in line with, or even lower than, levels from before covid-19. Care of our employees is very important if Nobina is to serve and fulfil its important public service, in all situations. People who can work from home have done so, and we now keep the front entrance doors closed on almost all of our buses. These measures have helped to make Nobina a healthier company in a difficult time. I can see that drivers are playing a heroic role at this time by going to work every day. I would also like to highlight the actions taken by our subsidiary Samtrans. As the market leader in special needs transportation in the Stockholm region, Samtrans has taken a particular responsibility in a region that was deeply afflicted by the pandemic. By quickly redirecting parts of its operations, Samtrans has been responsible for transporting a large number of covid-19 positive patients and provided mobile stations for virus testing. The changes made by Samtrans is one excellent example of the flexibility demonstrated by the entire Group when society is facing major challenges.
Challenges may give rise to opportunities
Flexibility also includes our financial situation. During the quarter, we further strengthened our balance sheet and now have healthy liquidity, in part due to the decision by the AGM to not pay a dividend and also due to new financing. Quite simply, we want to ensure that we have ample resources at our disposal should this challenging situation persist, and we are determined to be at least as strong when we exit this situation as when we entered it. I can also see new business opportunities as we continue to participate in the possible consolidation of the industry. Public transport is an industry of the future and has an important part to play on the journey towards a sustainable society, where fossil-free, flexible and cost-efficient buses have a key role in future developments. Our recently published Green Bond Impact Report presents the environmental benefits provided by the 144 buses we have purchased using funds from the green bond we issued in February 2019. While we continue to take our responsibility in an extraordinary situation, we are also building on our strategy for profitable and sustainable growth, with the Nordic region’s largest bus fleet and approximately 12,000 committed and dedicated employees.
President and CEO
This information is such that Nobina AB (publ) is obligated to publish in accordance with the EU Market Abuse Regulation. The information was published, through the agency of the below-mentioned contact persons, on 26 June 2020, at 8:00 a.m.