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NNIT A/S: 10/2020 Financial report for the first six months of 2020

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Company announcement 10/2020: Financial report for the first six months of 2020

Revenue decrease of 4.7% and an operating profit margin before special items of 6.0% in the first six months of 2020

Performance highlights for the second quarter of 2020:

  • Revenue decreased by 5.7% in Q2 2020 compared to Q2 2019 due to a 26% decline from the Novo Nordisk Group and a 10% decline within the enterprise segment
  • Revenue from life sciences Denmark and life sciences international increased by 22% and 18% respectively whilst the public segment contributed with a strong growth of 12%. Revenue within the finance segment declined by 3.4% whilst revenue from the enterprise segment declined by 10% mainly due to the phasing out of the Pandora outsourcing contract
  • By the end of Q2 2020, the share of NNIT’s revenue from clients outside the Novo Nordisk Group increased to 75% from 68% in Q2 2019
  • COVID-19 was seen to mainly impact NNIT’s project business in April and May whilst growth returned to more normal levels in June
  • Gross profit margin was 13% in Q2 2020 (13% in Q2 2019). The margin was negatively impacted by the declining business with the Novo Nordisk Group and Pandora and as a result of COVID-19. The negative impact was partly offset by the cost restructuring program. An asset review of the useful lifetime of certain assets had a positive margin impact of 1.0pp for the quarter (+0.4pp for the full year)
  • Operating profit margin before special items decreased to 5.4% in Q2 2020 from 5.9% in Q2 2019. Operating profit margin after special items for the quarter was 3.6%
  • Net profit was DKK 14m in Q2 2020 compared to DKK 34m in Q2 2019 due to restructuring costs of DKK 13m as well as a negative impact from financials
  • Order backlog for 2020 at the beginning of Q3 2020 was DKK 2.507m, a decrease of 8.1% compared to the same time last year, negatively impacted by a large decline of 29% from the Novo Nordisk Group
  • Outlook for 2020:

The guidance for 2020 is maintained:

  • Revenue growth of -4% to -8% in constant currencies
  • Operating profit margin before special items of 6-8% in constant currencies
  • Level of investments (CAPEX) is 5-7% of total revenue

Due to the continued uncertainty regarding the COVID-19 impact on the 2020 activity level there is an increased likelihood that revenue growth and operating profit margin will end in the lower end of the guidance intervals

  • Due to the underlying cash flow generation and the strong financial position of NNIT, the Board of Directors has decided to pay an interim dividend for 2020 of DKK 2.00 per share corresponding to DKK 49.4 million

Per Kogut, CEO at NNIT comments: “I’m satisfied with the financial performance of the quarter which is in line with our expectations despite COVID-19 and declining revenue from the Novo Nordisk Group and Pandora. This is achieved by solid revenue growth within our life science business growing 20%, as well as execution of the cost restructuring program.”

Conference call details
NNIT will host a teleconference August 13, 2020 at 10:30 CET about the financial report for the first six months of 2020. Please visit the NNIT webpage at www.nnit.com to access the teleconference, which can be found under ‘Investors – Events & presentations. Presentation material will be available on the website approximately one hour prior to the start of the presentation.

Conference call details
https://nnit.eventcdn.net/2020h1/

Participant telephone numbers:
Denmark:                                   +45 45 7815 0110
United Kingdom:                       +44 333 300 9269
Sweden:                                      +46 850 558 357
United States:                            +1 646 722 4956

Financial Calendar 2020
August 17, 2020                        Interim dividend ex-dividend date
August 18, 2020                        Interim dividend record day
August 19, 2020                        Interim dividend payment date
October 29, 2020                      Interim report for the first nine months of 2020

Forward-looking statements
This announcement contains forward-looking statements. Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘outlook’, ‘guidance’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance identify forward-looking statements. Statements regarding the future are subject to risks and uncertainties that may result in considerable deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions regarding future events which may prove incorrect.
Please also refer to the overview of risk factors in the ‘risk management’ section on page 29-31 in the Annual Report 2019.

Contacts for further information
Investor relations:                              Media relations:                
Jens Binger                                          Tina Joanne Hindsbo
Head of Investor Relations          NNIT Communications                 
Tel: +45 3079 9222                          Tel: +45 3077 9578                         
jblb@nnit.comtnjh@nnit.com

About NNIT
NNIT A/S is one of Denmark’s leading IT service providers and consultancies. NNIT A/S offers a wide range of IT services and solutions to its customers, primarily in the life sciences sector in Denmark and internationally and to customers in the public, enterprise and finance sectors in Denmark. As of June 30, 2020, NNIT A/S had 3,078 employees. NNIT has approximately 400 clients of which around 150 are located outside Denmark. Some 25% are international life sciences clients. For more information please visit www.nnit.com.

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