Good morning, everyone, and welcome to the GARO Year-End Report for 2019. My name is Seb, and I'll be the operator for your call today. If you would like to ask a question at the end of the session, you may do so by pressing star one on your telephone keypad. I will now hand over to Patrik Andersson, CEO, to begin the call. Please go ahead, Patrik.
Thank you. Hi, and welcome, everyone, to the presentation of GARO's fourth quarter and full year 2019. My name is Patrik Andersson, and I'm the CEO of GARO. With me today, I have Helena Claesson, our CFO, to present the financial performance. Next slide, please. I will start with a short introduction of the company. GARO develops and manufactures innovative products and turnkey solutions for the electrical installation markets. We divide our business into two business areas, Sweden, which consists our Swedish operations, and other markets, which cover our business in Norway, Ireland, Finland, Poland, and our newly established office in the U.K. We have production in three sites located in Gnosjö in Sweden, where we also have our head office, Värnamo in Sweden, and Szczecin in Poland.
During the last years, we have invested more of our capacity in Poland, where we today have a very modern and efficient production site. We are approximately about 420 people in the group. Next slide, please. Product areas. Our business consists of four product areas, and this slide, you can see the different product area shares of the total sales for the full year 2019. Our largest product area is electrical distribution products, which contributes to almost half of our revenues. Here we had a strong development in 2019 with market share gains. And for the first time, we can now see how our fastest-growing product area, E-mobility, has overtaken project sales and is now our second largest product area, with 23% of the total sales, and slightly higher than project business, with 21% of the total sales.
Temporary power constitutes 7% of the business. Next slide, please. Operational highlights in 2019. It's pleasing that our base electrical distribution products continue to take market shares in all markets. E-mobility continued to expand in all markets and all charging products, and we grow with 43% in 2019, and 21% in the fourth quarter. We have invested in sales organization and market activities during the year to strengthen our position in E-mobility in all markets. Focus on new markets has also been important, and therefore, we have established subsidiary in the U.K. during the fourth quarter, which is one of the largest and fastest growing markets for E-mobility. As I mentioned in the third quarter presentation, we have signed agreements with OKQ8 and Vattenfall for deliveries of charging products within Europe.
Next slide, please. Financial highlights. Our net sales for the fourth quarter increased by 4%, driven by continued growth in E-mobility, mainly in Sweden. Our operating margin in the fourth quarter amounted to 12.9%, which was lower than the same period last year. The operating result in the quarter was affected by continued investments in market activities within E-mobility, but also due to establishment of new subsidiary in U.K. Sales for the full year was up by 12%, driven by strong growth within E-mobility and our base electrical distribution products. With an overall growth of 9% in electrical distribution products, we were more and less growing twice as fast as the underlying markets. Our operational margin amounted to 11.2%, which is above our financial long-term targets of 10%.
Cash flow from operating activities was strong for the full year, thanks to a stable EBITDA and less need of working capital compared to last year. The board of directors proposed a dividend per share of SEK 4.2 for the year, which represents 49% of the net result, and in line with our distribution policy, taking a dividend of 50% of the net result. Now I would like to present some of the product launches we have made during 2019 and the beginning of this year. Next slide, please. During 2019, we launched new products in the product area, temporary power, portable heating, and drying fans. With these launches, our product offer to the construction sector is complete. Both of these products are unique of their kind, since we use software to provide efficient energy use.
This is also a part of GARO's digitalization strategy. We also launched a new cable cabinet. This will be used in the product area project business, but it will also be important for the E-mobility area to power supply the E-mobility solutions. The casing is made of the environmentally friendly material, and should also be seen as a part of our work for more sustainable society. In the beginning of 2020, we launched the new wall box with two outlets, that we call the Twin box. This product make our E-mobility range even more complete, and it's possible to charge two cars at the same time. Next slide, please.
During 2019, we also developed our new software solution, G-Cloud, which is a subscription-based software solution, for example, for apartment buildings, working places, enabling to measure individual and to control the total energy consumption. This means that GARO could offer complete solution of hardware and software for this segment. Next slide, please. We are happy to announce that we, this morning, launched our fast charger, fully developed in-house and intended for the European market. GARO Fast Charger stands out in terms of user-friendliness, reliability, and durability. The design of the fast chargers has the same form as the wall box and the charging stations to fit into the GARO charging range. This will give the customer a complete solution.
GARO Fast Charger is equipped with both the CHAdeMO and CCS charging cable, meaning it can be used by all electrical cars in the market. The casing is made of the environmentally friendly material, Magnelis, which is the same material that we are using in our new cable cabinet, that I mentioned before. With this new product, we broaden the GARO range of charging products, and can meet the demand for fast charging, which is important when the numbers of electrical cars is growing fast, and will do the coming years. And now over to Helena for financial performance. Next slide, please.
Thank you, Patrik, and I would like to start with some financial highlights for the Q4, and also for the full year 2019. Overall, we've had a great 2019, with a sales growth of 12%, and we passed SEK 1 billion for total sales for the full year. Also, with sales of SEK 278 million in the fourth quarter, this is our strongest quarter so far, giving us a margin of 4%, so a growth of 4%. Operating profits in the quarter amounted to almost SEK 36 million, giving us a margin of 12.9% to be compared with 14% in 2018. The operating result was, among others, negatively affected by costs related to the establishment of our new subsidiary in U.K.
Despite higher sales, the operating profit for the full year was more or less in line with the full year 2018, and this is explained by investments in marketing activities, organization, and product development throughout the year, as mentioned earlier. Net income for the full year increased to SEK 85.7 million, as a result of stronger financial net results compared to last year, and it gives us an earnings per share of 8.57 SEK. Next slide, please. Now, looking into the net sales by product areas. In electrical distribution products, we grew strongly in 2019, but we had a weaker fourth quarter. We saw an unexpected dip in sales in November, but then again, December was a better month.
Also, the warm winter we've had so far has had a negative effect on the sales of car heaters in Sweden and Finland. Project business was in line with last year's number, and stable. Temporary power was slightly below last year's sales, but then we had a peak of sales now in the fourth quarter. Looking into E-mobility, we grew with 43% for the full year 2019, and with 21% in the fourth quarter. The weaker growth in the fourth quarter is partly explained by less number of DC chargers being sold, compared to the same quarter last year. With less but larger orders within DC sales, we might see some volatility in between the quarters going forward. Next slide, please. Now, looking into the separate segments, we're starting with GARO Sweden.
In the segment Sweden, net sales amounted to SEK 288 million in the quarter, which is an increase of 6%.... giving us a growth of 11% for the full year. The underlying market in which GARO Group operates was slightly down in the fourth quarter and grew with approximately 3% for the full year. This means that GARO is continuing to take market shares. The growth in the fourth quarter was mainly driven by stronger growth within E-mobility. Operating profits amounted to almost SEK 24 million, giving us a margin of 12.7% in the quarter, and 10.5% for the full year. The lower operating margin is a result of the investment in higher market presence and product development. Next slide, please.
Looking into the segment Other Markets, the sales in other markets was up with 12% for the full year, but slightly down with 2% for the fourth quarter, where particularly again, the month November was an unexpectedly weak month, giving us a weaker quarter. For the full year, we had a solid growth in electrical distribution products and a strong growth within E-mobility. Again, even if the growth within E-mobility in the fourth quarter was lower, due to less DC chargers being sold compared to the same quarter last year. Operating profit for the full year increased with 10% in 2019, but was a little bit lower in the last quarter, explained by costs relating to the establishment of our new subsidiary in U.K. Next slide, please.
Looking into cash flow and balance sheet, we've had a strong cash flow, both in the quarter and for the full year, driven by a lower capital requirement. During the year, we have been investing about SEK 33 million, where almost half of this is related to investments in product development. Also, in the fourth quarter, GARO AB acquired the remaining 5% of the shares in GARO Elflex. Net debt per December amounted to SEK 45.6 million, and is in line with last year. However, if we adjust for the new IFRS 16 regulations, the net debt amounted to SEK 3.7 million. Now back to you, Patrik. Next slide, please.
Thank you, Helena. Strong growth and development opportunities. Our strategy remains the same. The main driver of the growth will be organic growth. A successful product development has been and will be the key to this growth, which I showed you some examples of product areas or companies with an edge. Example of this is 2017, when we acquired WEB-EL, bringing new and additional R&D knowledge into our company. It can also be acquisitions of other Nordic electrical companies in order to strengthen our market position, such as the acquisition of Emedius in 2017. We are also looking for new geographical markets with a focus mainly on the northern part of Europe. Next slide, please. Outlook. We see a strong trend for the E-mobility product area with further expansion of the charging infrastructure in all markets.
Demand for construction-related products in Sweden remains favorable, but is expected to slow in 2020, in line with fewer construction starts. However, the important renovation sector has been deemed stable. The trend in other markets served by GARO is expected to remain favorable. So all in all, GARO has a positive view of the market condition, mainly driven by the continued expansion of charging infrastructure. Thank you, and we are ready for questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad now. If you change your mind and wish to remove your question, please press star two. The first question comes from Kenneth Toll from Carnegie. Please go ahead, Kenneth.
Yeah. Thank you. First, a question on the new fast chargers. So before you had a cooperation with another company, so you used their technology, basically, and now you have your own. What advantages do you get by having your own product? That's the first question. The second one is, do you expect any disruptions in deliveries or demand while you change from the external supplier to your own product? And finally, what kind of growth prospects do you see by having your own fast charger?
Why we develop an own fast charger, it's of course to have our own GARO charging family with the wall box charging station and this fast charger, that you have the same design and same look, and we can give a complete solution for the customer. We can also manage the software differently. We could how you run the charger, so to say, we in a user-friendliness way, and so that's of course why we develop this product, so to say.
Any disruptions while making the change?
No.
Great.
We will continue our cooperation with our suppliers, so that will not be a problem at all.
Okay, great. And then one question then on, on the frame agreements you have with Vattenfall, OKQ8.
Yes.
Have you started to see any deliveries under those frame agreements, or is that more towards well, 2020?
We have quite small orders, so that's more for 2020 and 2021. That's correct, Kenneth.
Okay. So not, not much in 2019?
No.
Well, okay, good. And when you have these kind of larger framework agreements, do you manage to, excuse me, do you manage to get the same kind of EBIT margins there than if you sell through other distribution channels?
Of course, when you have big contracts, you have to give away something, that's the way. So, big contracts, you have to give some margin.
Yeah, but you get higher volumes.
Yes, of course.
Yeah. Okay. Thank you very much.
Thank you.
Next question comes from Edvard Hagman, from ABG Sundal Collier. Please go ahead.
Hi, good morning.
Good morning.
I was wondering about the E-mobility. Do you experience any slowdown in terms of growth for fast and public chargers? Or is it only the calendar effects in DC chargers that has affected the figures?
We can see the calendar effect, because this is a big tender, as we said, and it could depends when you should deliver these type of orders, and it's often quite big orders. So, it's a calendar effect, I would say. And of course, the fast chargers demand will increase during the years when it will be more fully electric cars and less hybrids, so to say.
Okay, thank you. How is the E-mobility competition looking in your other markets outside the Nordics?
Of course, it's tough, mostly on the simple wall boxes, so to say, of course, a lot of competition. But as we have said before, we think it's quite important to have the full range with the wall box, with the charging station, and now the fast charger, so we can give the customer a complete solution. So it's not so many players having all that range, but of course, we have a lot of competition in the different segments, so to say.
All right. Could you maybe shed some light on the coming quarters regarding growth and profitability across the segments?
No, I can't give you any forecast on the coming quarters. Sorry for that.
Okay, thank you.
As a reminder, for any further questions, please press star one on your telephone keypad. We just have another question registered from Kenneth Toll. Please go ahead. Hi, Kenneth, your line is open.
Sorry, I forgot to unmute. Well, you discussed in the outlook statement that construction activities are on the new build side, slowing a little bit in Sweden. But in the first quarter, there have been a very favorable weather, with very little snow and ice, and so on. So construction activities should have had a good start in Q1. So my question is then, have you seen sort of a slowdown in early 2020?
The construction. If we, if you look at the construction starts, we haven't seen any slowdown, in the beginning of the years. But, but of course, we, we can't talk about our performance in the, in the, in the first quarter. But if you look to the construction starts, that haven't slowed down in the, in the beginning of the year, no, it hasn't.
Okay, great. Thank you.
As we currently have no further questions on the call, I will hand it back to you, Patrik.
Thank you, and thank you everyone for listening.