K. Nissen International A/S

Management’s review

History and recent developmentsNissens was established in 1921 by Mr. Julius Nissen and opened its first international offices in Finland and Sweden in 1977. In 2005, the Nissens Group established its first international factory in Slovakia, and another factory was established in 2010 in Tianjin, China. Since 2013, the Nissens Group has gradually expanded its manufacturing facilities across Slovakia, China, and the Czech Republic. Production facilities in Tianjin and Czech Republic were a part of the Nissens Cooling Solutions division.In June 2017, AX V Nissens ApS acquired the entire share capital of K. Nissen International A/S from Advanced Cooling A/S.In December 2020 and February 2021, the division holding company NA International A/S acquired four European companies of the AVA group from Enterex to further strengthen the market presence of the Automotive business unit.In November 2021, NCS International A/S (the Nissens Cooling Solutions division) was divested to NCS International Holding ApS - a subsidiary under A.P. Møller Holding A/S.Automotive Business UnitNissens is specialized in the production and supply of products within engine cooling, climate systems and engine efficiency. As an automotive aftermarket leading company of most essential thermal system components, Nissens has a broad product portfolio coverage covering above 95% of the European car park including, inter alia, radiators, condensers, compressors, intercoolers, turbos and EGR valves. The product range covers products from the common to the more special parts of the European, Asian and American vehicle aftermarkets.After the acquisition of the AVA Group, Nissens is marketed under the Nissens, AVA and Highway brands.Financial reviewProductsNissens offers products within three existing categories: climate cooling, engine cooling and efficiency. Condensers, compressors, blowers, receiver dryers, evaporators, heaters, expansion valves, pressure sensors and fans are products offered within the climate category; radiators, oil coolers, fan clutches, water pumps, expansion tanks, temperature sensors and fans are products offered within the engine cooling product category. The efficiency category covers products such as turbos, EGR valves, oil feed pipes and intercoolers.Financial reviewNissens GroupThe consolidated financial statements for the continued operation for the financial year 1 May 2022 – 30 April 2023 show Profit before net financials of 79.7 MDKK (2021/2022: 121.0 MDKK) and profit before tax of continued activities of 71.9 MDKK (2021/2022: 108.8 MDKK). Revenue at 1,730 MDKK (2021/2022: 1,584 MDKK) is above expectation expressed in the annual report 2021/2022 whereas EBITDA does not meet expectations due to reasons explained below.Nissens has faced fierce challenges during 2022/23 with the war in Ukraine, additional COVID-19 lockdowns and restrictions in China, major supply chain disruptions, and high inflation. By extraordinary efforts and by taking measures to maintain a high delivery performance during the period, Nissens grew revenue by 9% attributable to volume growth in all brands as well as price increases implemented to compensate for high-cost inflation.Nissens suspended all business activities in Russia and Belarus in February 2022, and although the invasion of Ukraine led to short-term market decline, Nissens continued the activities in Ukraine and remained present in the market. Nissens is therefore satisfied with the fact that 2022/23 became the best year for Nissens in Ukraine.The significant political and economic turmoil caused by the war in Ukraine, turbulence in global supply chain and rapidly increasing cost levels on products, freight and energy have had an unfavourable impact on Nissens’ result. Despite the fact that Nissens delivered revenue growth, and although Nissens raised sales prices to customers by passing on part of the cost increases, this did not fully compensate for the increased operating costs. In addition, the closing of activities in Russia and Belarus has had a negative impact on earnings. The dramatic increase in freight rates and consequences of the war in Ukraine have had a combined unfavourable impact of more than 75 MDKK. EBITDA was reduced by 28% to 97.8 MDKK.With an equity of 403 MDKK (2021/2022: 346 MDKK), the Group has an equity ratio of 36.2% (2021/2022: 35.0%). The cash flow statement shows a cash flow of 9 MDKK (2021/2022: negative 214 MDKK) for the year. The improvement in cash flow is related to the refinancing of the Group in previous fiscal year.Cash flow from operations amounts to negative 10 MDKK (2021/2022: 30 MDKK). The reduction in cash flow is driven by discontinued operations in Russia and Belarus, supply chain disruptions, unfavourable currency development and increased cost prices.The cash balance at the end of the year is -46 MDKK (2020/2021: -54 MDKK) and with an unused credit facility of 74 MDKK, the company considers the current credit facilities sufficient.The circumstances with extraordinary costs are being remedied, and we see progress in development of new markets. Thus, Nissens has a positive view of the development of the financial results.Given the supply chain disruptions and market conditions, the Management considers the results as satisfactory.