Sales and operating profit up at Glamox, but interest rates, currency hit net income

Second quarter revenue jumped 17.2% for Glamox AS as the marine sector showed particularly strong growth. But a weak Norwegian krone combined with factors including high interest rates paid to bondholders turned an operating profit gain into a net loss for the Oslo lighting company.

In the quarter ending June 30, sales rose to NOK (Norwegian kroner) 1.07 billion ($99.3 million) from NOK 909 million in the same quarter a year ago, as reported by holding company GLX Holdings AS, for which Glamox AS comprises almost all the revenues.

The increase came from a mix of sales volume and price increases, Glamox CEO Astrid Simonsen Joos told LEDs Magazine.

“We maintained the growth trend of previous quarters, executing well against our strategy to grow the business,”  Simonsen Joos said. “Despite continued macroeconomic uncertainty, both our segments, Professional Building Solutions (PBS) and Marine, Offshore & Wind (MOW), performed strongly.”

Vibrant activity in MOW division led to a 39.4% surge in sales to NOK 282 million ($26.3 million), up from last year’s NOK 202 million. MOW is the smaller but fastest growing of the two Glamox divisions as the company outfits offshore wind operations and commercial fleets with LED lighting. MOW’s share of overall revenue continued its steady climb, hitting around 26%, up from 25% last quarter, as it heads toward a company forecast of roughly 30%.

Sales grew on land too, driven by LED retrofits in commercial buildings and by the European Union’s ban on fluorescent lighting. Compared to MOW, the increase in Glamox’s PBS division was a more modest 10.2%, to NOK 778 million ($72.6 million), up from NOK 706 million in the second quarter of 2022.

MOW was by far the most profitable of the two groups. While PBS reported a decline, MOW’s adjusted EBITDA more than doubled, to NOK 41 million ($3.8 million) from NOK 20 million a year ago. PBS adjusted EBITDA fell by 11.1%, to NOK 85 million ($7.9 million) from NOK 96 million in the same quarter last year.

Corporate-adjusted EBITDA rose 9.5% to NOK 143 million ($13.4 million) from NOK 131 million. Adjusted operating profit registered a gain of the same order at 8.7%, to NOK 74 million ($6.9 million) from NOK 68 million. 

Ultimately, the bottom line did not hold up. Glamox reported an after -tax loss of NOK 22.4 million ($2.1 million) — larger than the NOK 16.1 million loss in 2022’s second quarter.

Simonsen Joos told LEDs that rising interest rates, a weak krone, and other factors pulled down the results.

Norway’s three-month NIBOR interbank loan rate has swelled. It was 4.51% in June, up from 1.71% in June a year ago. The costlier terms have impacted the company in multiple ways. In a primary example, Glamox refinanced with its bondholders in February, agreeing to pay the three-month NIBOR — now at the much higher rate — plus 6.75% per annum, up from the previous 5.25%.  Bondholders play a significant role in financing the company. Glamox is privately held but lists on the Oslo Stock Exchange because of the bond trading.

The company also took an NOK 9 million ($844,000) hit from “special items,” some of which included costs related to restructuring and the integration of ERP software, as well the reclassification of some profit and loss items.

“There are some financial dynamics that we need to cope with,” Simonsen Joos told LEDs.

The company was able to offset some of the negative impact through price increases and efficiency measures, both of which will continue, she noted.

The Glamox boss summed up the quarter and the outlook in a statement she included in the company’s second-quarter report. “During the quarter, we saw supply chain disturbances largely dissipate, but inflation continued to put pressure on our costs,” Simonsen Joos wrote. “Going forward, we expect a greater degree of normality returning to the supply chain which should positively affect inventory levels in the second half of the year. As in the previous quarter, the view on the long-term outlook for the markets we serve is still positive.

“However, high inflation and increasing interest rates are casting uncertainty in the markets in which we operate, particularly in the professional buildings market," she continued. "Nevertheless, demand for energy-efficient lighting solutions, due to continued high energy prices and environmental regulations, is driving increased demand for our products. Meanwhile, we remain well-positioned to address high-growth markets such as wireless connected lighting, offshore wind, and human-centric lighting.”

Glamox is taking measures to boost its IoT lighting and human-centric lighting offerings. LEDs will report on these in a separate article.

MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).

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