Falck completes financial turnaround

Today, leading emergency response and healthcare company Falck released its financial results for Q3 2019. With improved performance for six consecutive quarters, Falck completes its two-year financial turnaround. The company moves from a state of critical need for turning around its business financially to a phase where stabilising its business and winning new customers take centre stage.

In the third quarter, the efficiency and cost optimisation programme continued to contribute to Falck’s improved financial performance. Profitability was, however, partly offset by funding investments in new business, discontinuation of contracts and continued investments in new technology and processes enhancing Falck’s global operating models.

“Starting up new contracts puts short-term pressure on underlying profitability but increases in importance as Falck focuses on the mid to long term. Several new contracts in the third quarter are a vote of confidence in Falck and our offerings,” said President & CEO Jakob Riis.

In the third quarter, Falck entered into a number of healthcare contracts, among others with the Stockholm County Council, and was awarded contracts with Glasgow and Aberdeen Airports to provide firefighting services from December 2019. In July 2019, Falck went live with its largest US contract so far, providing 911 emergency services to the 1.6 million citizens of the County of Alameda, California.

Financial highlights in Q3 2019 (compared to Q3 2018) were:

• Revenue was DKK 3,403 million (DKK 3,488 million). In fixed currencies, revenue declined by 2.5% compared to Q3 2018. New ambulance contracts in the US, Sweden and the UK contributed positively to revenue whereas divestments and contract pruning in Ambulance and lower activity in Healthcare had a negative impact.
• Reported EBITA was DKK 166 million (DKK 123 million) with an underlying EBITA margin of 4.9% (5.5%). Cost optimisation and efficiency initiatives contributed positively to EBITA but were partly offset by investments in technology and processes enhancing Falck’s global operating models as well as by costs related to start-up and discontinuation of contracts.
• Profit for the period from continuing operations was positive at DKK 46 million (negative at DKK 53 million), primarily driven by improved EBITA and lower net financial items.
• Free cash flow was DKK 116 million (DKK 88 million), impacted positively by IFRS 16 reclassifications, partly offset by start-up costs and working capital build-up related to new contracts in Ambulance.
• Economic profit improved to negative DKK 259 million (negative at DKK 382 million) due to improved EBITA.
• Net interest-bearing debt (including lease liabilities) was reduced from DKK 4,292 million end of Q2 2019 to DKK 4,224 million end of Q3 2019.
• For the full-year 2019, Falck expects a revenue decline of approximately 1% due to divestments, contract pruning and a lower subscription volume. Falck expects to improve its operating profit (EBITA) compared to 2018 (DKK 275 million). 

Over the past two years, Falck has improved its reported EBITA margin from 0% in 2017 to 6.5% year-to-date in 2019. Free cash flow for the nine-month period is positive by DKK 488 million, and the debt level including lease liabilities has improved from DKK 5,421 million in 2017 to DKK 4,224 million.

Jakob Riis said:

“Although we are leaving the turnaround phase, we continue to push for ongoing efficiency and cost optimisation as we see significant potential to further increase our competitiveness. Our ambition is to lead our industry, as we aim to be our customers’ preferred emergency response and healthcare provider. We can only succeed in this if we are a great place to work for our current and future employees. Meeting this ambition will be our guiding star in the years to come.”

Falck’s Q3 interim report is available at www.falck.com.

For further information, please contact Falck’s Communications Department
on tel. +45 7022 0307 or comms@falck.com.