Report on the first nine months of 2022
for ROCKWOOL A/S
Release no. 13 – 2022
to Nasdaq Copenhagen
Earnings call
ROCKWOOL Group will host an earnings call on 24 November 2022 at 11.00 CET. The call will be transmitted live on
1/14
Strong sales performance in a Q3 impacted by extraordinary surge in
energy prices.
Highlights
Sales in the first nine months of 2022 reached 2952
MEUR, an increase of 27 percent in local currencies and
31 percent in reported figures compared to last year.
Sales in Q3 2022 amounted to 1010 MEUR, an increase
of 21 percent in local currencies compared to Q3 2021.
EBITDA in the first nine months of 2022 reached 473
MEUR, up four percent, with a 16.0 percent EBITDA
margin.
EBITDA in Q3 2022 reached 131 MEUR, a decrease of
17 percent, due to a surge in energy prices particularly
in July and August that had not been fully priced in.
EBITDA margin at 13.0 percent was down 6.7
percentage points from last year.
EBIT in the first nine months of 2022 ended at 301
MEUR, with a 10.2 percent EBIT margin, down 3.4
percentage points from same period in 2021.
EBIT in Q3 2022 ended at 68 MEUR with a 6.8 percent
EBIT margin, down 6.4 percentage points from Q3 2021.
With an ease in energy prices and additional sales price
increases, EBIT margin recovered in September and
October.
Confluence of global climate change and energy
independence concerns is creating favourable policy
environment for energy efficiency and building
renovation.
Shareholders may from 23 November 2022 until 7
December 2022 request conversion of A shares to B
shares. For further information please refer to
https://www.rockwool.com/group/about-
us/investors/conversion-shares/.
Outlook 2022
Growth in net sales of 20-25 percent in local currencies.
EBIT margin between 10 and 12 percent.
Investment level around 330 MEUR excluding
acquisitions, changed from previously around 375 MEUR.
“We are pleased with our Q3 top-line sales performance
that grew more than 20 percent in a market that continued
to deteriorate. Earnings declined due to an unprecedented
surge in energy costs of almost 200 MEUR over the same
quarter last year that we were not able to offset with such
short notice. July and August were especially challenging in
relation to gas and electricity pricing, though margins are
now recovering. We see continued, broad-based
inflationary pressures, with some geographies hit harder
than others. We therefore plan further price increases on
average of 7-10 percent in the first quarter of 2023 to
compensate for additional input cost pressure.
Looking further ahead, the policy environment for energy
efficiency and building renovation is increasingly positive,
though it will still take time for that to flow through to the
market”.
CEO Jens Birgersson
2/14
Main figures / key figures for the Group
Unaudited Audited
Q3 2022
Q3 2021
YTD
Q3 2022
YTD
Q3 2021
FY 2021
Income statement items in MEUR
Net sales 1 010
797
2 952
2 246
3 088
EBITDA 131
157
473
456
602
Amortisation, depreciation and write-downs 63
52
172
150
201
EBIT 68
105
301
306
401
Profit before tax 63
103
232
300
393
Profit for the period 45
79
170
231
303
Balance sheet items in MEUR
Non-current assets
2 321
2 051
2 129
Current assets
1 253
927
951
Total assets
3 574
2 978
3 080
Equity
2 628
2 275
2 394
Non-current liabilities
207
185
163
Current liabilities
739
518
523
Net interest-bearing cash / (debt)
-42
98
76
Net working capital
461
298
306
Invested capital
2 647
2 176
2 294
Cash flow items in MEUR
Cash flow from operating activities 145
167
252
341
426
Cash flow from investing activities 86
74
241
225
310
Free cash flow 59
93
11
116
116
Others
Number of full-time employees (end of period)
12 399
11 844
11 968
Ratios
EBITDA margin 13.0%
19.7%
16.0%
20.3%
19.5%
EBIT margin 6.8%
13.2%
10.2%
13.6%
13.0%
ROIC (rolling 4 quarters)
16.4%
19.7%
18.8%
Return on equity (rolling 4 quarters)
9.9%
14.1%
13.5%
Equity ratio
73.5%
76.3%
77.7%
Stock market information (DKK)
Earnings per share 16
27
59
79
104
Cash flow per share 50
58
87
118
147
Book value per share
904
781
823
Share capital (million)
216
216
216
Price per A share
1 189
2 349
2 379
Price per B share
1 191
2 753
2 859
Market cap (million)
25 665
54 860
56 295
Number of own shares
52 057
56 228
56 228
For definition of key figures and ratios see page 97 in the ROCKWOOL Group Annual Report 2021 available on our website:
www.rockwool.com/group/.
3/14
Management report for the period
1 January to 30 September 2022
General update
The sharp increase in electricity and gas prices, especially during July and
August, impacted profitability significantly. During the third quarter, the amount
spent on electricity and gas compared to last year, on an equal volume, was
almost 200 MEUR higher and is the main reason behind the margin erosion.
During the year we have seen high inflation of more than 70 percent on
materials, energy and logistic costs. While sales price increases have
compensated significantly for increased costs, EBITDA margin still declined
four percentage points.
Owing to continued, broad-based inflationary pressures, with some
geographies hit harder than others, we plan further price increases on average
of 7-10 percent in the first quarter of 2023 to compensate for additional input
cost pressure.
EBITDA margin recovered some in September and was back to more
acceptable level in October.
The mild weather and lower seasonal demand on energy have contributed to
keeping the price for electricity and gas stable during September and October,
albeit still at a high level. Based on current cost of energy and planned sales
price increases, we maintain an EBIT margin outlook for the full year between
10 and 12 percent.
Global sales development
During Q3, we saw a weakening of demand in several markets and especially
in North America, where lower demand combined with destocking in the trade
resulted in lower sales. Driven by sales price increases, growth in net sales
continue to be positive and the Insulation segment across Europe delivered
strong sales. Systems segment continued as expected to struggle due to lower
sales in North America and Eastern Europe.
In general, we see that the high inflation and increasing interest rates have an
impact on building activities and we expect a decline in new building for both
residential and non-residential segments.
The focus on energy efficiency in EU has so far not resulted in significant pick-
up in renovation of existing building stock across Europe, although the
regulatory requirements through EU Energy Efficiency Directive and Energy
Performance of Buildings Directive are encouraging and should in due course
together with REPowerEU result in a significant increase in demand for
insulation within renovation.
In the first nine months of 2022, ROCKWOOL Group generated net sales of
2952 MEUR, an increase of 27 percent in local currencies. Currency translation
Group sales
+
27
%
4/14
had a positive impact of four percentage points, which resulted in sales growth
of 31 percent in reported figures.
In Q3 2022, ROCKWOOL Group generated net sales of 1010 MEUR, an
increase of 21 percent in local currencies compared to Q3 2021. Inflation-driven
price increases fuelled the sales growth, as volumes started to decrease.
Volume in the quarter decreased eight percent compared to last year. Currency
translation had a positive impact of six percentage points, which resulted in
sales growth of 27 percent in reported figures.
Regional sales development
In the first nine months of the year, sales in Western Europe amounted to 1725
MEUR, up 28 percent in both local currencies and reported figures. Sales in all
markets increased compared to same period last year. In Q3 2022, sales in
Western Europe amounted to 575 MEUR, up 25 percent in local currencies as
well as in reported figures. Many markets experienced double-digit growth, with
especially Germany, Italy, the United Kingdom, and Nordics contributing to the
sales growth.
In Eastern Europe, sales for the first nine months of 2022 amounted to 631
MEUR, an increase of 52 percent in local currencies and 60 percent in reported
figures. Sales in Q3 2022 amounted to 236 MEUR, up 32 percent in local
currencies and 46 percent in reported figures. Most countries experienced
double-digit sales growth in the quarter, with especially strong performance in
Poland, Hungary, and the Czech Republic.
In the rest of the world, the first nine months of sales amounted to 596 MEUR,
an increase of seven percent in local currencies and 18 percent in reported
figures. In Q3 2022, sales amounted to 199 MEUR, at level with Q3 2021 in
local currencies and up 13 percent in reported figures. Sales in North America
decreased mainly due to market uncertainties leading to customer destocking.
Regional sales
MEUR
1 344
1 725
395
631
507
596
0
400
800
1 200
1 600
2 000
2 400
2 800
3 200
YTD Q3 2021 YTD Q3 2022
Western Europe Eastern Europe and Russia North America, Asia and others
Sales in Western Europe
+28%
Sales in Eastern Europe
+
52
%
Sales in rest of the world
+
7
%
22%
1
8
%
60%
59%
21%
2
0
%
5/14
Group profitability
During the first nine months of the year, EBITDA increased four percent to 473
MEUR resulting in an EBITDA margin of 16.0 percent compared to 20.3 percent
for the same period last year. The high inflation in the cost of energy during late
summer was the main reason behind the decline in EBITDA margin. Product
and segment mix also impacted margins negatively.
In Q3 2022, EBITDA reached 131 MEUR a decrease of 17 percent compared
to Q3 2021. The aggregated price increase in Q3 was close to 30 percent
compared to the same period last year. Input costs in August compared to July
increased 40 percent, which comes on top of an already high increase in July.
The unexpected high inflation during a normally low energy demand period
during July and August was not factored into our pricing plans, which meant we
had limited off-setting actions and margins ended disappointingly low in the
quarter. Also, low volumes impacted cost leverage and thereby lowered the
contribution profit.
EBIT for the first nine months of 2022 decreased two percent, reaching 301
MEUR, corresponding to an EBIT margin of 10.2 percent compared to 13.6
percent for the same period last year. In Q3 2022, EBIT amounted to 68 MEUR
with an EBIT margin of 6.8 percent. EBIT was, in addition to the decline in
EBITDA, impacted by higher depreciation primarily from the new production
facilities in the United States and Poland.
EBIT & EBIT margin
MEUR
Since March 2022 the foreign currency exposure on the intercompany balance
between ROCKWOOL A/S and our subsidiary in Russia has not been hedged
and consequently we have recorded an unrealised exchange loss of 57 MEUR
end of Q3 2022.
The effective tax rate was 26.8 percent for the first nine months of 2022, up 3.8
percentage points from both Q3 and full year 2021. The increase is caused by
the unrealised exchange loss.
Net profit for the first nine months of 2022 amounted to 170 MEUR, which is 61
MEUR lower than in the same period last year.
EBITDA
+
3.8
%
EBIT margin
-
3
.
4
%
-
points
80
58
100 100
90
111
105
95
102
131
68
0
20
40
60
80
100
120
140
Q1 Q2 Q3 Q4
2020 2021 2022
12.3%
14.3%
13.3%
14.3%
11.2%
13.2%
10.0%
11.0%
14.9%
12.9%
6.8%
6/14
Balance sheet
Net working capital ended the first nine months at 461 MEUR, an increase of
155 MEUR compared to year-end 2021 and 163 MEUR compared to Q3 2021.
The increase is mainly reflecting higher inventory values due to higher
purchase costs and increased trade receivables, partly offset by higher
payables. The net working capital ratio ended at 12.2 percent, 2.1 percentage
points higher than last year.
Due to higher invested capital and lower EBIT, annualised return on invested
capital ended at 16.4 percent compared to 19.7 percent for the same period last
year.
At the end of Q3 2022, total assets amounted to 3574 MEUR, an increase of
494 MEUR compared to year-end 2021 and 596 MEUR compared to Q3 2021.
The increase is mainly related to ongoing investments combined with increased
inventories and trade receivables due to sales growth and increased sales
prices, as well as increased exchange rates of the U.S. and Canadian dollars
and Russian rouble.
At the end of the period, the equity ratio remained solid at 74 percent.
Cash Flow
For the first nine months of 2022 cash flow from operations before financial
items and tax was 339 MEUR, down 48 MEUR from the same period last year.
Change in net working capital had a negative impact on cash flow of 133 MEUR
during the year, primarily related to higher inventory values from increased
input prices and higher trade receivables due to sales growth.
Cash flow from operating activities amounted to 252 MEUR for the first nine
months of 2022, as operations continued to bring solid cash flow despite a
negative impact from net working capital and higher tax payments in 2022.
Capital expenditure excluding acquisitions during the first nine months of 2022
was 240 MEUR compared to 218 MEUR in the same period last year. The
relocation of the factory in China, the new Rockfon line in Poland, the additional
Grodan capacity in Toronto, and the sustainability investment for a conversion
to electrical melter in Flumroc (Switzerland), were the largest individual projects
in the first nine months of 2022.
Free cash flow for the first nine months of 2022 amounted to 11 MEUR, down
105 MEUR compared to the same period last year. In Q3 2022, free cash flow
amounted to 59 MEUR, a decrease of 34 MEUR compared to same period last
year related to higher tax payments and investments.
Cash flow from financing was 26 MEUR in the first nine months of 2022
compared to negative 139 MEUR same period last year. In 2022, drawings on
credit facilities offset the payment of dividends.
ROIC
-
3
.
3
%
-
points
Operational cash flow before
financial items and tax
-
48 MEUR
Free cash flow
-
105 MEUR
7/14
The Group’s financial situation remains solid with a low net interest-bearing
debt of 42 MEUR and unused credit facilities of 475 MEUR at the end of Q3
2022.
Business segments
Sales per business
MEUR
Key figures Insulation segment
MEUR
Q3 2022
Q3 2021
YTD
Q3 2022
YTD
Q3 2021
External net sales 796
604
2 327
1 670
EBIT 52
78
241
206
EBIT margin 5.8%
11.2%
9.2%
10.7%
Insulation segment sales for the first nine months of 2022 reached 2327 MEUR,
which is an increase of 35 percent in local currencies and 39 percent in
reported figures. In Q3 2022, sales reached 796 MEUR, which is an increase of
25 percent in local currencies and 32 percent in reported figures compared to
Q3 last year. The Q3 growth was driven by sales price increases in all main
markets.
Insulation segment EBIT for the first nine months of 2022 reached 241 MEUR
with an EBIT margin of 9.2 percent, a decrease of 1.5 percentage points
compared to the same period last year. In Q3 2022, EBIT decreased by 26
MEUR to 52 MEUR. The EBIT margin ended at 5.8 percent, 5.4 percentage
points below last year due to the extraordinary surge in energy costs.
483
498
724
438
568
807
502
604
796
491
621
1
166
173
200
145
210
211
168
193
214
209
221
1
0
100
200
300
400
500
600
700
800
900
1 000
1 100
Q1 Q2 Q3 Q4
Insulation sales
+
35
%
Insulation EBIT margin
-
1.5
%
-
points
Systems
Insulation
649
671
670
924
583
778
1
018
7
97
700
842
1 010
8/14
EBIT per business
MEUR
Key figures Systems segment
MEUR
Q3 2022
Q3 2021
YTD
Q3 2022
YTD
Q3 2021
External net sales 214
193
625
576
EBIT 16
27
60
100
EBIT margin 7.7%
14.4%
9.7%
17.4%
Systems segment sales for the first nine months of 2022 amounted to 625
MEUR, which is an increase of five percent in local currencies and eight
percent in reported figures. In Q3 2022, sales amounted to 214 MEUR, which is
an increase of six percent in local currencies and 11 percent in reported figures
compared to Q3 2021. Rockfon and Rockpanel performed well, while Grodan
sales were still negatively impacted by lower sales in North America.
Systems segment EBIT was 60 MEUR in the first nine months of 2022, a
decrease of 40 percent and an EBIT margin of 9.7 percent, a decrease of 7.7
percentage points compared to the same period last year. In Q3 2022, EBIT
amounted to 16 MEUR with an EBIT margin of 7.7 percent, down 6.7
percentage points. The lower margin relates mainly to impact from a negative
product mix and inflationary pressures.
Conversion of shares
In accordance with ROCKWOOL’s articles of association, shareholders may
from 23 November 2022 (as per this announcement) until 7 December 2022
request conversion of A shares to B shares. Further information on how to
submit a conversion request and on the terms and conditions can be found on
the company’s website:
https://www.rockwool.com/group/about-us/investors/conversion-shares/.
56
59
79
40
69
110
76
78
52
64
69
0.1
24
31
23
18
42
21
24
27
16
36 26
0.1
0
20
40
60
80
100
120
140
Q1 Q2 Q3 Q4
Systems sales
+
5
%
Systems EBIT margin
-
7.7
%
-
points
Systems
Insulation
80
90
102
58
111
100
105
100
95
131
68
9/14
Outlook for the full year 2022
While demand is softening, we still expect a positive growth in net sales driven
by higher prices. The forecast for full-year sales growth in local currencies
remains in the 20 to 25 percent range.
With current performance, supported by the recent months’ sales price
increases and with the present level of energy prices, we expect the full-year
EBIT margin to be in the lower range of the current outlook of between 10 and
12 percent.
Due to delays in starting up construction of the new factory in France, we now
expect the full year investment level to be around 330 MEUR, changed from
previously around 375 MEUR.
2022 outlook overview
9 February 2022 18 May 2022 18 August 2022 24 August 2022 23 November 2022
Net sales
in local currencies
Sales growth of
15-20 percent
Sales growth of
20-25 percent
Sales growth of
20-25 percent
Sales growth of
20-25 percent
Sales growth of
20-25 percent
EBIT margin Around 13 percent Around 13 percent
Between 10-12
percent
Between 10-12
percent
Between 10-12
percent
Investments excluding
acquisitions
Around 500 MEUR Around 425 MEUR Around 375 MEUR Around 375 MEUR Around 330 MEUR
Further information:
Kim Junge Andersen, Chief Financial Officer
+45 46 56 03 00
At ROCKWOOL Group, we are committed to enriching the lives of everyone who
experiences our products. Our expertise is perfectly suited to tackle many of today’s
biggest sustainability and development challenges, from energy consumption to noise
pollution and water scarcity to flooding. Our range of products reflects the diversity of the
world’s needs, supporting our stakeholders in reducing their own carbon footprint along
the way.
Stone wool is a versatile material and forms the basis of all our businesses. With 12 400
passionate colleagues in 40 countries, we are the world leader in stone wool solutions,
from building insulation to acoustic ceilings, external cladding systems to horticultural
solutions, engineered fibres for industrial use to insulation for the process industry and
marine & offshore.
10/14
Management statement
23 November 2022
Registered Directors
Board of Directors
11/14
Income statement
Unaudited Audited
MEUR
Q3 2022
Q3 2021
YTD
Q3 2022
YTD
Q3 2021
FY 2021
Net sales 1 010
Other operating income 3
Operating income 1 013
Raw material costs and production material costs
Delivery costs and indirect costs
Other external costs
Personnel costs
Operating costs 882
EBITDA 131
Amortisation, depreciation and write-downs 63
EBIT 68
Income from investments in associated companies -
Financial items -5
-2
-69
-6
-9
Profit before tax 63
Tax on profit for the period 18
Profit for the period 45
Profit for the period attributable to:
Non-controlling interests -
Shareholders of ROCKWOOL A/S 45
Earnings per share of 10 DKK (1.3 EUR) 2.1
Diluted earnings per share of 10 DKK (1.3 EUR) 2.1
Statement of comprehensive income
Unaudited Audited
MEUR
Q3 2022
Q3 2021
YTD
Q3 2022
YTD
Q3 2021
FY 2021
Profit for the period 45
Items that will not be reclassified to income statement:
Actuarial gains and losses of pension obligations -
Tax on other comprehensive income -
-2
Items that may be subsequently reclassified to income statement:
Currency adjustment from translation of entities 5
Hedging instruments, value adjustments 5
Tax on other comprehensive income -
-1
-1
Other comprehensive income 10
Comprehensive income for the period 55
Comprehensive income for the period attributable to:
Non-controlling interests -
-1
Shareholders of ROCKWOOL A/S 55
12/14
Business segments and sales reporting
Unaudited
YTD Q3 Insulation segment Systems segment Eliminations ROCKWOOL Group
MEUR 2022
2021
2022
2021
2022
2021
2022
2021
External net sales 2 327
1 670
625
576
-
-
2 952
2 246
Internal net sales 306
249
-
-
-306
-249
-
-
EBIT 241
206
60
100
-
-
301
306
EBIT margin
9.2%
10.7%
9.7%
17.4%
10.2%
13.6%
Goods transferred at a point in time
2 327
1 670
625
576
2 952
2 246
Geographical split of net sales
Unaudited Audited
MEUR
Q3 2022
Q3 2021
YTD
Q3 2022
YTD
Q3 2021
FY 2021
Western Europe
575
459
1 725
1 344
1 834
Eastern Europe and Russia
236
161
631
395
562
North America, Asia and others
199
177
596
507
692
Total net sales
1 010
797
2 952
2 246
3 088
Balance sheet
(condensed) Unaudited Audited
MEUR Q3 2022
Q3 2021
FY 2021
Assets
Intangible assets 175
Tangible assets 2 027
Right-of-use assets 58
Other financial assets 12
Deferred tax assets 49
Non-current assets 2 321
Inventories 467
Receivables 576
Cash 210
Current assets 1 253
Total assets 3 574
Equity and liabilities
Share capital
Currency translation adjustments 25
-163
-134
Proposed dividend -
Retained earnings 2 568
Hedging 6
-1
-1
Non-controlling interests -
Total equity 2 628
Non-current liabilities 207
Current liabilities 739
Total liabilities 946
Total equity and liabilities 3 574
13/14
Cash flow statement
(condensed) Unaudited Audited
MEUR
Q3 2022
Q3 2021
YTD
Q3 2022
YTD
Q3 2021
FY 2021
EBIT
Adjustments for amortisation, depreciation and write-downs
Adjustments of non-cash operating items
-1
-5
Changes in net working capital
-133
-72
-82
Cash flow from operations before financial items and tax 185
Cash flow from operating activities 145
Cash flow from investing activities excluding acquisitions -85
-68
-240
-218
-302
Business acquisitions, net of cash -1
-6
-1
-7
-8
Free cash flow 59
Cash flow from financing activities -106
-44
-139
-194
Net cash flow -47
-23
-78
Cash available – beginning of period
Exchange rate adjustments on cash available
-16
-3
-8
-2
Cash available – end of period 194
Unutilised, committed credit facilities
Statement of changes in the equity
Unaudited
Shareholders of ROCKWOOL A/S
MEUR
Share
capital
C
urrency
translation
adjustments
Proposed
dividend
Retained
earnings
Hedging
Total
Non-
controlling
interests
Total
equity
Equity 1 January 2022 29
-134
-1
-
Profit for the period
Other comprehensive income
Comprehensive income for the period -
Purchase of own shares
-2
-2
-2
Expensed value of Restricted Share Units issued
Dividend paid
-102
-101
-101
Equity 30 September 2022 29
Equity 1 January 2021 29
-212
-1
Profit for the period
Other comprehensive income
-1
Comprehensive income for the period -
-1
Share buy-back programme
-3
-3
-3
Purchase of own shares
-3
-3
-3
Sale of own shares
Expensed value of Restricted Share Units issued
Dividend paid
-94
-92
-92
Equity 30 September 2021 29
-163
-1
14/14
Main figures in DKK million
Unaudited Audited
MDKK
Q3 2022
Q3 2021
YTD
Q3 2022
YTD
Q3 2021
FY 2021
Net sales 7 513
5 931
21 960
16 706
22 966
Amortisation, depreciation and write-downs 466
382
1 280
1 114
1 493
EBIT 508
786
2 243
2 280
2 979
Profit before tax 470
773
1 727
2 233
2 923
Profit for the period 334
592
1 264
1 719
2 251
Total assets
26 581
22 146
22 902
Equity
19 544
16 914
17 803
Cash flow from operating activities 1 078
1 239
1 872
2 537
3 166
Cash flow from investing activities 639
550
1 793
1 675
2 306
Exchange rate 7.44
7.44
7.44
7.44
7.44
Accounting policies
This unaudited interim report has been prepared in accordance with IAS 34 and additional Danish regulations for the
presentation of quarterly interim reports by listed companies. The interim report has been prepared in accordance with the
accounting policies set out in the Annual Report for 2021 with no significant changes.
Significant accounting estimates and assumptions
In preparing this interim report Management has made various accounting estimates and assumptions that may significantly
influence the amounts recognised in the Consolidated Financial Statement and related information at the reporting date. The
accounting estimates and assumptions which Management considers to be material for the preparation and understanding
of the interim report are stated in Note 1.1 in the Annual Report 2021 and primarily relates to impairment testing, expected
lifetime for tangible assets, deferred tax assets and uncertain tax positions and pension obligations.
Disclaimer
The statements on the future in this report, including expected sales and earnings, are associated with risks and
uncertainties and may be affected by factors influencing the activities of the Group, e.g. the global economic environment,
including interest and exchange rate developments, the raw material situation, production and distribution-related issues,
breach of contract or unexpected termination of contract, price reductions due to market-driven price reductions, market
acceptance of new products, launches of competitive products and other unforeseen factors.