CEO Speaks

How Covid-19 affects Soltech
In addition to the following about our Chinese operations, Covid-19 pandemic has also affected Swedish operations. In addition to lower revenues, we mainly notice that customer meetings are postponed both on the consumer and on the corporate side, but we do not believe that customers will disappear. Rather, it is about many not wanting or receiving visits. Revenue is lower than we had hoped, but quarter 1, on the other hand, is normally the worst quarter for solar energy due to weather conditions. How this affects us throughout the year is far too early to comment on, however, we expect good growth in 2020 compared with the full year 2019. I base this on our successful acquisition strategy, growth in existing companies and a larger installed base in China that continuously provides revenue. We follow the development daily, plan for tough times but believe in a good development.

The acquisition strategy delivers three new companies
We see it as a real strength message that, despite the Covid-19 pandemic, we have been able to make three acquisitions during the quarter. As owner, we assumed 100 per cent of the shares in Soldags i Sverige AB and 60 per cent of the shares in Merasol AB on 2 January. On March 2, Soltech took ownership of 70 percent of the shares in Takorama AB. These three companies work in the consumer and corporate markets in solar energy and the market for sealing roofs, where solar energy is often added. But the most important thing is that we once again manage to acquire really nice companies with driven and competent leaders and employees. In addition, after the period, we acquired 70 percent of the shares in Fasadsystem in Stenkullen AB with access on 4 May. Fasadsystem will be our key to the growing market for solar energy on facades.

Our business in China
Our business has been affected by the shutdown that took place by Chinese society after the outbreak of Covid-19 in Wuhan. Revenues have also been affected by a retroactive price cut of 5% in electricity from February to June. A larger part of our sales have gone to the network instead of the customer since the factories have been closed, and some closed capacity due to the fact that they are closed. technical reasons at the network companies. We estimate that we have lost approximately 5.5 MSEK in the quarter due to this. We consider these effects to be of a temporary nature. The cost side is the same as usual with a smaller portion of maintenance costs and a larger portion of interest costs and depreciation.

However, what has affected us most is the fact that activity in the financial market ceased completely in February. This has meant that both ASAB’s issuance of green bonds together with Nordea and DNB as well as the planned special listing of the company together with Carnegie and DNB are postponed in the future. This has a negative impact on our growth in China at the moment. It is of great importance to point out that demand for our offer remains high. The management of ASAB, together with our partners, continues to work with these processes and will, as soon as there are more favorable market conditions, complete them so that we can continue to grow our business in China.

Full focus on synergies and expansion
We now have seven subsidiaries in the Swedish operations and aim to be more during the year. There are great synergies to be gained in purchasing, warehousing & logistics, HR, sales, marketing etc. This is something we work hard with and we are starting to see signs that things are going very well. An example is better purchase prices for solar cells and inverters. The most important thing for the future and the result is that we have managed to gather a wonderful bunch of driven, competent and pleasant entrepreneurs who are happy together and who are aiming for the same goal.

We are in the midst of struggling times, but I am confident that we will come out of this situation strengthened and embarrassed to invest even harder in the future.