Financials and outlook
Outlook for 2020
In Q1, Dovre's business suffered relatively little from the weakened market situation caused by the coronavirus, but during Q2 we have seen some impacts mainly in the Project Personnel segment. Due to the restrictions on movement and work enforced by various countries some of our clients have implemented temporary layoffs, early terminations and, in some cases, rate reductions. The additional effect of the recent oil price fluctuations is also impacting the market for consultants in the energy sector. With the majority of Dovre’s sales being in other currencies than the euro, the recent changes in currencies also impact negatively our figures.
Based upon above, Dovre Group hereby changes its earlier outlook for 2020.
New outlook for 2020 (issued on 28 April 2020): The impact of the pandemic, oil price and currencies on Dovre's operations and business environment will depend on the duration and extent of the crisis. Based on the current situation, Dovre’s net sales are expected to be slightly below 2019 and the operating profit is expected to be in line with 2019 excluding non-recurring items and currency effects.
Due to the company's healthy balance sheet and sound business, we still consider Dovre's long-term growth opportunities and prospects to be good.
(Updated April 28, 2020)
Short-term risks and uncertainties
In the Project Personnel business area, the Group’s most significant risks still include the cyclicality of our clients’ business. Market developments in Norway are particularly important for Project Personnel due to the business area’s strong position in the Norwegian market. In addition, expansion to new client segments requires expenditure and includes risks. The business area’s other challenges are maintaining its competitiveness and profitability. Project Personnel business is project-based by nature, thus adding an element of uncertainty to forecasting. From time to time there might be a dependency locally on one major project or client. Dovre Group is responsible for the work performed by its consultants. However, the company has no overall responsibility for project delivery.
In the Consulting business area, general economic uncertainty does not affect as directly the demand for the Group’s services. This is mainly due to the fact that one of our main clients, the Norwegian public sector, aims to invest counter-cyclically. Project delivery involves minor risks due to both clients and the Group’s own personnel such as project delays or loss of key personnel.
Dovre Group holds a minority share in SaraRasa Bioindo Pte. Ltd. (Bioindo), a company producing pellets from wood residue. Bioindo’s production unit is located in Indonesia and is thus exposed to high country risk. Other significant risks include risks relating to commercial agreements, especially feedstock purchase and end-product sale agreements. Dovre Group accounts for the investment as a fair value through profit and loss.
The Group’s reporting currency is euro. The Group’s most important functional currencies are the Norwegian crown, the Canadian dollar, the Singaporean dollar, and the United States dollar. Although the Group’s sales and corresponding expenses are mainly in the same currency, currency fluctuations can affect the Group’s net sales and operating result. Foreign currency denominated assets and liabilities can also result in foreign exchange gains or losses. Foreign exchange risks are hedged, when necessary, centrally in the Group.
(Updated March 6, 2019)
Dovre Group Plc reports on its financial performance in accordance with the International Reporting Standards (IFRS). The accounting principles are presented under the Group Financial Statements in the Annual Report. Link to the Annual Report.