Report on the first quarter of 2023
for ROCKWOOL A/S
Release no. 07 – 2023
to Nasdaq Copenhagen
Earnings call
ROCKWOOL Group will host an earnings call on 11 May 2023 at 11.00 CEST. The call will be transmitted live on
www.rockwool.com.
1/13
10 May 2023
Satisfactory first quarter earnings in a difficult market with low
construction activity
Highlights
▪ Sales in Q1 2023 reached 866 MEUR, a decrease of
seven percent in local currencies and six percent in
reported figures compared to last year, driven by lower
demand in most markets.
▪ EBITDA in Q1 2023 reached 164 MEUR, an increase of
six percent in reported figures compared to Q1 2022. The
EBITDA margin was 18.9 percent, up 2.1 percentage
points from last year. The lower volume was partly offset
by higher sales price in a quarter with moderate inflation.
▪ EBIT increased two percent to 104 MEUR in Q1 2023, with
a 12.0 percent EBIT margin, up 1.0 percentage point from
Q1 2022. EBIT included a 13 MEUR donation to the
Foundation for Ukrainian Reconstruction. Excluding this
donation, EBIT margin was 13.5 percent.
▪ Investments reached 77 MEUR in the first quarter of 2023,
an increase of 7 MEUR compared to Q1 2022.
▪ Annualised return on invested capital reached 16 percent
down from 18 percent in Q1 2022.
▪ In February 2023, the Group announced its intention to
further expand its local capacity in Romania with the
construction of a new stone wool insulation manufacturing
line based on electrical melting technology.
▪ Shareholders may from 10 May 2023 until 26 May 2023
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 2023
▪ Sales decline of up to 10 percent in local currencies.
▪ EBIT margin around 10 percent, changed from previously
between 8-10 percent.
▪ Investment level around 400 MEUR excluding
acquisitions.
“As expected, the negative trend we experienced in
the end of last year continued into the first quarter, with
low construction activity – broadly in the residential
sector and more selectively in the commercial area.
Sales declined seven percent relative to record
volumes in Q1 last year. I am pleased with the margin
recovery and overall financial performance.
We have adjusted our production capacity to meet
evolving market demand conditions. We continue to
see a degree of instability and unpredictability in the
market, and it is important for us to safeguard market
share.
The positive EU legislative trends continue, with a
clear focus on energy efficiency and security of supply,
though until now, we have not seen this translate into
an increase in market activity”.
CEO Jens Birgersson
2/13
Main figures / key figures for the Group
Unaudited
Audited
Q1 2023
Q1 2022
FY 2022
Income statement items in MEUR
Net sales
866
924
3 907
EBITDA
164
155
638
Amortisation, depreciation and write-downs
60
53
236
EBIT
104
102
402
Profit before tax
106
83
358
Profit for the period
78
63
273
Balance sheet items in MEUR
Non-current assets
2 311
2 156
2 301
Current assets
1 295
1 184
1 127
Total assets
3 606
3 340
3 428
Equity
2 616
2 455
2 580
Non-current liabilities
216
184
206
Current liabilities
774
701
642
Net interest-bearing cash / (debt)
-50
-1
-23
Net working capital
510
415
441
Invested capital
2 671
2 435
2 596
Cash flow items in MEUR
Cash flow from operating activities
65
2
394
Cash flow from investing activities
77
70
334
Free cash flow
-12
-68
60
Others
Number of full-time employees (end of period)
12 033
12 246
12 197
Ratios
EBITDA margin
18.9%
16.8%
16.3%
EBIT margin
12.0%
11.0%
10.3%
ROIC (rolling 4 quarters)
15.8%
18.1%
16.4%
Return on equity (rolling 4 quarters)
11.4%
12.8%
11.0%
Equity ratio
72.6%
73.5%
75.3%
Stock market information (DKK)
Earnings per share
27
22
93
Cash flow per share
23
1
136
Book value per share
901
845
887
Share capital (million)
216
216
216
Price per A share
1 673
2 246
1 636
Price per B share
1 677
2 260
1 637
Market cap (million)
36 112
48 565
35 311
Number of own shares
62 857
61 228
47 857
For definition of key figures and ratios see page 87 in the ROCKWOOL Group Annual Report 2022 available on our website: www.rockwool.com/.
3/13
Management report for the period
1 January to 31 March 2023
General update
Rising interest rates, high inflation especially in Europe and North America, and
higher building costs have reduced construction activity in most markets. This
has resulted in a decrease in new-build demand in both the residential and
commercial building sectors.
The decrease in demand has resulted in a lower capacity utilisation, which in
turn led to capacity adjustments at the end of 2022 and continuously throughout
the first quarter.
Energy costs have come down during the quarter, offset by increasing prices on
other input costs. Many markets are affected by the lower demand and tough
competition. Sales prices have remained stable compared to year-end 2022,
however we are diligently monitoring this to safeguard our volume market
share.
Global sales development
In Q1 2023, ROCKWOOL Group generated net sales of 866 MEUR, a
decrease of seven percent in local currencies compared to Q1 2022. Currency
translation had a positive impact of one percentage point, meaning that the
decrease in sales was six percent measured in reported figures. The decrease
was driven by lower volume, which was partly offset by higher sales prices
compared to the record high first quarter last year.
The focus on energy efficiency in the 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
result in an increase in demand for insulation within energy efficiency
renovation.
Regional sales development
In the first quarter of 2023, sales in Western Europe amounted to 528 MEUR,
down four percent in local currencies and five percent in reported figures. In
most markets sales decreased compared to the same period last year. On the
upside, the United Kingdom, France and Spain had a good quarter with
increased sales compared to the same quarter last year.
In Eastern Europe, sales for the first quarter of 2023 amounted to 138 MEUR, a
decrease of 27 percent in local currencies and 22 percent in reported figures.
The decrease was driven by Poland and Russia, though sales decreased in
most countries compared to the same quarter last year.
In the rest of the world, first quarter sales amounted to 200 MEUR, an increase
of four percent in local currencies and five percent in reported figures. Most of
the increase in sales came from North America. Sales also increased in some
markets in Asia.
Group sales
-7%
Sales in Western Europe
-4%
Sales in Eastern Europe
-27%
Sales in rest of the world
+4%
4/13
Regional sales
MEUR
Group profitability
In Q1 2023, EBITDA increased six percent to 164 MEUR resulting in an
EBITDA margin of 18.9 percent compared to 16.8 percent for the same period
last year. The margin recovery was driven by the higher sales prices
implemented during 2022 and stabilising input costs. Cost for energy decreased
during the quarter but was offset by increasing prices for other input costs.
EBIT for the first quarter of 2023 increased two percent, reaching 104 MEUR,
corresponding to an EBIT margin of 12.0 percent compared to 11.0 percent for
the same period last year. The result for Q1 2023 includes a donation to the
Foundation for Ukrainian Reconstruction of 13.4 MEUR. Excluding this
donation, the first quarter EBIT margin was 13.5 percent, an increase of 2.5
percentage points compared to last year.
EBIT & EBIT margin
MEUR
Net financial items ended positive at 2 MEUR for Q1 2023. Since March 2022
the foreign currency exposure on the intercompany balance between
557
528
178
138
189
200
0
200
400
600
800
1 000
Q1 2022 Q1 2023
Western Europe Eastern Europe and Russia North America, Asia and others
EBITDA
+6%
EBIT margin
+1.0%-points
90
111
105
95
102
131
68
101
104
0
20
40
60
80
100
120
140
Q1 Q2 Q3 Q4
2021 2022 2023
13.3%
11.2%
11.0%
12.9%
10.5%
21%
19%
60%
61%
16%
23%
6.8%
14.3%
12.0%
13.2%
5/13
ROCKWOOL A/S and our subsidiary in Russia has not been hedged.
Consequently we have recorded an unrealised exchange rate gain of 7 MEUR
during Q1 2023, partly recovering last year’s unrealised exchange rate loss of
34 MEUR.
The effective tax rate was 26 percent for Q1 2023, up two percentage points
from the same period last year and up 2.3 percentage points from full year
2022. The increase is driven by the non-deductible donation to the Foundation
for Ukrainian Reconstruction.
Net profit for the first quarter of 2023 amounted to 78 MEUR, which is 15 MEUR
higher than in the same period last year.
Balance sheet
Net working capital ended the first quarter at 510 MEUR, an increase of 69
MEUR compared to year-end 2022 and 95 MEUR compared to Q1 2022. The
increase was driven by planned seasonal inventory compared to last year
where the record sales did not allow for inventory build-up. Lower commercial
creditors from the lower production activity also contributed to the net working
capital increase. This was partly offset by lower trade receivables from the
lower sales. The net working capital ratio ended at 13.3 percent, 0.9 percentage
points higher than the same period last year.
Due to higher invested capital and lower four quarter rolling EBIT, annualised
return on invested capital ended at 15.8 percent compared to 18.1 percent for
the same period last year.
At the end of Q1 2023, total assets amounted to 3606 MEUR, an increase of
178 MEUR compared to year-end 2022 and 266 MEUR compared to Q1 2022.
The increase is mainly related to ongoing investments combined with increased
inventories due to planned seasonal inventory and higher cash balances.
At the end of the period, the equity ratio remained solid at 73 percent.
Cash Flow
Cash flow from operations before financial items and tax amounted to 87
MEUR for the first quarter of 2023, compared to 38 MEUR in the same period
last year. Operations continued to generate solid cash flow, and the negative
impact from net working capital was lower than in 2022.
In Q1 2023, capital expenditure excluding acquisitions was 77 MEUR compared
to 70 MEUR in the same period last year. The sustainability investment for
conversion to electrical melter in Flumroc (Switzerland), additional production
capacity in Bohumin (Czech Republic), new Rockpanel capacity in Roermond
(Netherlands) and the additional Grodan capacity in Toronto (Canada) were the
largest individual projects.
Free cash flow was -12 MEUR in Q1 2023 compared to -68 MEUR in the same
period last year.
ROIC
-2.3%-points
Operational cash flow before
financial items and tax
+49 MEUR
Free cash flow
+56 MEUR
6/13
Cash flow from financing was 139 MEUR, at level with the same period last
year, and mainly due to drawings on our credit facilities.
The Group’s financial situation remains solid with a relatively small net interest-
bearing debt of 50 MEUR and unused credit facilities of 350 MEUR.
Business segments
Sales per business
MEUR
Key figures Insulation segment
MEUR
Q1 2023
Q1 2022
External net sales
664
724
EBIT
79
79
EBIT margin
10.4%
9.5%
In Q1 2023, Insulation segment sales reached 664 MEUR, which is a decrease
of nine percent in local currencies and eight percent in reported figures
compared to first quarter last year. The decrease was mainly related to lower
volume especially in Eastern Europe.
EBIT in the Insulation segment was 79 MEUR resulting in an EBIT margin of
10.4 percent in Q1 2023. Based on our commitment to support reconstruction
activities in Ukraine, a donation of 13.4 MEUR to the Foundation for Ukrainian
Reconstruction was recognised in the Insulation segment. Excluding this
donation, EBIT margin in Q1 2023 was 12.1 percent, up 2.6 percentage points
compared to Q1 2022.
498
724
664
568
807
604
796
621
707
173
200
202
210
211
193
214
221
248
0
200
400
600
800
1 000
1 200
Q1 Q2 Q3 Q4
924
Insulation sales
-9%
Insulation EBIT margin
+0.9%-points
Systems
Insulation
671
866
778
1 018
797
842
955
1 010
7/13
EBIT per business
MEUR
Key figures Systems segment
MEUR
Q1 2023
Q1 2022
External net sales
202
200
EBIT
25
23
EBIT margin
12.4%
11.6%
Systems segment sales amounted to 202 MEUR in Q1 2023, which is an
increase of four percent in local currencies and one percent in reported figures
compared to Q1 2022. Rockfon performed well in the quarter. Grodan sales
were at the same level as last year, while Rockpanel and Lapinus sales
decreased.
Systems segment generated an EBIT of 25 MEUR, which is 2 MEUR or eight
percent above last year. The EBIT margin was 12.4 percent, up 0.8 percentage
points compared to Q1 2022.
Conversion of shares
In accordance with ROCKWOOL’s articles of association, shareholders may
from 10 May 2023 (as per this announcement) until 26 May 2023 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/.
59
79 79
69
110
78
52
69
71
31
23
25
42
21
27
16
26
30
0
20
40
60
80
100
120
140
Q1 Q2 Q3 Q4
Systems sales
+4%
Systems EBIT margin
+0.8%-points
Systems
Insulation
90
102
104
90
111
105
95
101
131
68
8/13
Outlook for the full year 2023
We still expect a sales decline of up to 10 percent.
We now expect EBIT margin to be around 10 percent, changed from previously
between 8-10 percent.
We still expect the investments excluding acquisitions to amount to around 400
MEUR.
2023 outlook overview
8 February 2023
10 May 2023
Net sales
in local currencies
Sales decline of
up to 10 percent
Sales decline of
up to 10 percent
EBIT margin
Between 8-10 percent
Around 10 percent
Investments excluding acquisitions
Around 400 MEUR
Around 400 MEUR
Further information:
Kim Junge Andersen, Chief Financial Officer
ROCKWOOL A/S
+45 46 56 03 00
At ROCKWOOL Group, we are committed to enriching the lives of everyone who
experiences our products and services. We help our customers and communities tackle
many of today’s biggest sustainability and development challenges, from energy
consumption and noise pollution to fire resilience, water scarcity and flooding. Our
product range reflects the diversity of the world’s needs, while supporting our
stakeholders in reducing their own carbon footprint.
Stone wool is a natural, fully recyclable, versatile material that forms the basis of all our
businesses. With approximately 12 000 dedicated colleagues in 40 countries and sales
in more than 120, we are the world leader in stone wool products, 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.
9/13
Management statement
10 May 2023
Registered Directors
Board of Directors
10/13
Income statement
Unaudited
Audited
MEUR
Q1 2023
Q1 2022
FY 2022
Net sales
Other operating income
Operating income
Raw material costs and production material costs
Delivery costs and indirect costs
Other external costs
Personnel costs
Operating costs
EBITDA
Amortisation, depreciation and write-downs
EBIT
Income from investments in associated companies
Financial items
-19
-45
Profit before tax
Tax on profit for the period
Profit for the period
EUR
Earnings per share of 10 DKK (1.3 EUR)
Diluted earnings per share of 10 DKK (1.3 EUR)
Statement of comprehensive income
Unaudited
Audited
MEUR
Q1 2023
Q1 2022
FY 2022
Profit for the period
Items that will not be reclassified to income statement:
Actuarial gains and losses of pension obligations
Tax on other comprehensive income
-4
Items that may be subsequently reclassified to income statement:
Currency adjustment from translation of entities
-43
Hedging instruments, value adjustments
Tax on other comprehensive income
-1
Other comprehensive income
-39
Comprehensive income for the period
11/13
Business segments and sales reporting
Unaudited
Q1
Insulation segment
Systems segment
Eliminations
ROCKWOOL Group
MEUR
2023
2022
2023
2022
2023
2022
2023
2022
External net sales
664
724
202
200
-
-
866
924
Internal net sales
95
101
-
-
-95
-101
-
-
EBIT
79
79
25
23
-
-
104
102
EBIT margin
10.4%
9.5%
12.4%
11.6%
12.0%
11.0%
Goods transferred at a point in time
664
724
202
200
866
924
Geographical split of net sales
Unaudited
Audited
MEUR
Q1 2023
Q1 2022
FY 2022
Western Europe
528
557
2 290
Eastern Europe and Russia
138
178
813
North America, Asia and others
200
189
804
Total net sales
866
924
3 907
Balance sheet
(condensed)
Unaudited
Audited
MEUR
Q1 2023
Q1 2022
FY 2022
Assets
Intangible assets
Tangible assets
Right-of-use assets
Other financial assets
Deferred tax assets
Non-current assets
Inventories
Receivables
Cash
Current assets
Total assets
Equity and liabilities
Share capital
Currency translation adjustments
-160
-134
-117
Proposed dividend
Retained earnings
Hedging
-1
-1
Total equity
Non-current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
12/13
Cash flow statement
(condensed)
Unaudited
Audited
MEUR
Q1 2023
Q1 2022
FY 2022
EBIT
Adjustments for amortisation, depreciation and write-downs
Adjustments of non-cash operating items
-5
-3
Changes in net working capital
-72
-114
-148
Cash flow from operations before financial items and tax
Cash flow from operating activities
Cash flow from investing activities excluding acquisitions
-77
-70
-333
Business acquisitions, net of cash
-1
Free cash flow
-12
-68
Cash flow from financing activities
-14
Net cash flow
Cash available – beginning of period
Exchange rate adjustments on cash available
-3
-5
-9
Cash available – end of period
Unutilised, committed credit facilities
Statement of changes in the equity
Unaudited
Shareholders of ROCKWOOL A/S
MEUR
Share
capital
Currency
translation
adjustments
Proposed
dividend
Retained
earnings
Hedging
Total
equity
Equity 1 January 2023
-117
-1
Profit for the period
Other comprehensive income
-43
-39
Comprehensive income for the period
-43
Purchase of own shares
-3
-3
Equity 31 March 2023
-160
Equity 1 January 2022
-134
-1
Profit for the period
Comprehensive income for the period
Purchase of own shares
-2
-2
Equity 31 March 2022
-134
-1
13/13
Main figures in DKK million
Unaudited
Audited
MDKK
Q1 2023
Q1 2022
FY 2022
Net sales
6 447
6 873
29 068
Amortisation, depreciation and write-downs
448
398
1 760
EBIT
772
757
2 988
Profit before tax
786
613
2 664
Profit for the period
582
466
2 031
Total assets
26 856
24 841
25 493
Equity
19 486
18 261
19 186
Cash flow from operating activities
485
18
2 929
Cash flow from investing activities
574
523
2 481
Exchange rate
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 2022 with no significant changes.
Significant accounting estimates and assumptions
In preparing this interim report Management has made various accounting estimates and judgements that may significantly
influence the amounts recognised in the Consolidated Financial Statement and related information at the reporting date. The
accounting estimates and judgements 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 2022 and primarily relates to impairment testing, expected
lifetime for tangible assets, deferred tax assets and uncertain tax positions.
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.
ROCKWOOL A/S
Denmark
Tel: (+45) 46 56 03 00
CVR number: 54879415
Report date: 2023-05-10