Close

H1 2017 results affected by substantial impairment losses

Revenue increased by DKK 32 million in the first six months of 2017 to DKK 8,058 million (DKK 8,026 million in the first six months of 2016). Operating profit (EBITA) showed a negative DKK 51 million
(DKK 393 million in the first six months of 2016) following substantial impairment losses on
receivables in North America and write-downs on customer-oriented IT systems in Assistance in
Denmark.

• The first six months showed a negative operating profit margin of -0.6% compared to 4.9% for
the first six months of 2016.
• The return on invested capital (ROIC) amounted to 5.8% compared to 11.7% in the prior-year
period.
• Revenue for the full year is expected to be at the same level as in 2016, and a positive
operating profit is also expected. 2016 showed an operating profit of DKK 792 million.
• A strengthening of Falck’s capital base is planned before the end of 2017 when the current
strategic process has been completed.

President and CEO Jakob Riis says:
”The H1 2017 results are not satisfactory. We must increase our profitability considerably and ensure
stable revenue growth going forward. We are in the process of systematically examining the business and are expecting to complete our analysis and the strategy process sometime during the autumn of 2017.

Since taking office, I have spent my time at Falck going around visiting our different divisions and
getting to know and understand the business. Falck is a company with unique strengths, dedicated employees and fantastic growth potential. But our business is commercially complex and we need to simplify and gain efficiencies over the next 12-18 months. It is crucial for us to establish a strong foundation for a sound and robust business so that we can invest in the innovation and new technologies which will form the basis of a profitable growth in future.”

20% of our revenue in Emergency is from the US business, and Falck therefore has exposure to the
developments in the US healthcare system. The market is undergoing huge changes these years and particularly the US payer environment has become more challenging. In this connection,
management has analysed Falck’s accounts receivables in Q2 and reassessed the valuation of those receivables to the effect that they have been written down by DKK 282 million.

Similarly, management has tested the carrying amount of a new customer management system in
Assistance, which has turned out to be DKK 100 million more expensive to develop than initially
assumed. The value has been written down by those DKK 100 million.
​The first half of 2017 confirmed the growth potential of three healthcare-related areas:
Emergency, Healthcare and Global Assistance:

▪ Emergency was awarded a new contract with Los Angeles County in the month of June, starting
1 July 2017. The contract will increase the number of ambulances in Los Angeles by 55, which
means that the total number is now 157 ambulances.
▪ In Nordic Healthcare, growth has taken place in particular within diagnostics and
treatments relating to private healthcare insurance as well as preventive healthcare
programmes for companies.
▪ Global Assistance grew through new contracts with companies wanting to ensure that their
employees and customers will have the necessary assistance if they fall sick while abroad.

Within Assistance and Safety Service Falck is in the process of adapting to the future market
conditions:

▪ Assistance is affected by the changes taking place in the automobile market towards fewer
private roadside assistance subscriptions, an increasing number of shared cars and roadside
assistance programmes offered by car manufacturers.
▪ The still low level of activity in the oil and gas industry in the offshore market affects the need for training within Safety Services.

On 1 May 2017, Jakob Riis joined Falck as President and CEO and on 1 September 2017 Tor Magne Lønnum will take up the position as our new CFO and member of the Executive Management Board.

com.PNG



​​Polititorvet

DK-1780 Copenhagen V
Tel.: +45 70 33 33 11

Fax.: +45 33 15 29 57 

contact@falck.com

 

CBR: 16271241

 

Linkedin-Follow-us.png