Nobia Earnings Warning – Savings Program begins – Stock is down on the news

According to Infront’s fourth-quarter estimates, which were compiled after the third-quarter report, and published in early November, an operating profit of SEK 158 million was expected. The estimate did not include any items affecting the comparison.

In the fourth quarter of 2022, organic growth was “a few percent” supported by higher prices. After the announcement, the stock fell about 15 percent on Friday afternoon.

The company also decided to launch a cost-cutting programme, including the reorganization of part of its UK operations.

“The program aims to generate annual savings of more than SEK 300 million, with noticeable impact in the second quarter of 2023 and with full effect in the second quarter of 2024. The program includes potential layoffs of 500 employees,” the company wrote.

Certain functions will be reduced in the Nordic countries and at group level to save costs and support performance improvements.

The costs, which are reported as items affecting comparability, will be included in the fourth quarter of 2022 in the amount of SEK 156 million and in the first quarter of 2023 to approximately SEK 300 million.

Of the total cost, SEK 143 million refers to items that do not affect cash flow.

The first quarter of 2023 provisions refer to the forward-looking cost-cutting program, while the fourth quarter of 2022 provisions refer to actions that have already begun.

The program includes part of the costs related to moving to the factory being built in Jönköping. As previously reported about the investment in the new Jönköping plant, costs related to the relocation will be borne by Nobia.

“We are grappling with many areas to achieve significant and sustainable margin improvements. Unfortunately, some of the necessary actions will result in layoffs. In the UK, the proposed changes will make us an even better business partner for our clients and deliver an improved level of profitability,” says CEO John Senturn at Suspension.