Financial performance improved for the seventh consecutive quarter with revenue growth of 2.4% and an improvement in reported operating profit of DKK 100 million.
Falck’s efficiency programme continued to improve profitability and strengthen the business. The improvement in profitability allowed for continued investment in new technologies and processes to enhance Falck’s global operating models, as well as the funding of start-up costs related to new contracts.
New ambulance contracts in the US and the UK drove revenue growth up while adding pressure on operating profit and free cash flow.
“We are investing in significant new business. The start-up costs related to this new business put short-term pressure on our profitability but are a prerequisite and an important step towards stabilising our top line. We are proud to be serving another 1.6 million Californians with high-quality 911 emergency medical services in Alameda County in the US. Half a year into our contract period, we are meeting the agreed response time level and are improving profitability month-by-month,” said President & CEO Jakob Riis.
Financial highlights in Q4 2019 (compared to Q4 2018) were:
- Revenue was DKK 3,448 million (DKK 3,382 million). In fixed currencies, revenue increased by 2.4% compared to Q4 2018. New ambulance contracts in the US, Sweden and the UK more than offset the impact from the loss of customers in our subscription portfolio, contract pruning and divestment of non-core business.
- Reported operating profit (EBITA) was DKK 34 million (negative DKK 66 million) with an underlying EBITA margin of 1.0% (3.8%). Falck’s cost optimisation and efficiency programme reached DKK 660 million in annual value. In the quarter, the programme was partly offset by investments in technology and processes to enhance Falck’s global opera-ting models, as well as by costs related to the start-up and discontinuation of contracts.
- Profit for the period from continuing operations was negative at DKK 600 million (negative DKK 304 million). Improved EBITA and lower financial expenses did not fully offset a goodwill impairment of DKK 450 million.
- Free cash flow was DKK 330 million (DKK 396 million). Impact from improved EBITA was offset by the build-up of working capital related to new contracts in Ambulance.
- For the full-year 2020, the expectation is to further improve Falck’s operating profit (EBITA) from DKK 729 million. Revenue is expected to be in the range of DKK 13.2 – 13.8 bn. in fixed currencies.
|DKK million||Q4 2019||Q4 2018||2019||2018|
|Underlying EBITA margin (%)||1.0||3.8||4.8||4.6|
REPORTED OPERATING PROFIT IMPROVED BY DKK 490 MILLION FOR THE FULL YEAR
Over the past year, Falck has improved its reported EBITA by DKK 490 million on a largely flat revenue.
Free cash flow for the year was positive at DKK 1,068 million, and the net interest-bearing debt to EBITDA factor improved to 2.46 (3.33). Economic profit improved by DKK 21 million to negative DKK 288 million (negative DKK 309 million).
Jakob Riis said:
“We completed our financial turn-around in late 2019. Quality of earnings have improved, with adjustments from non-recurring items to operating profit being insignificant compared to the previous year. A reported operating profit for the year of DKK 729 million and a debt factor of 2.46 confirm the successful completion of our turnaround. This is something that we take great pride in.
We will continue our drive for efficiency, but customers and employees are now taking centre stage. We will focus on reinforcing our market leadership by winning new contracts, being a great place to work and enhancing the way we operate. We are stabilising our business, and positioning Falck for future growth.”
For further information, please contact Falck’s Communications Department
on tel. +45 7022 0307 or firstname.lastname@example.org