Interim report and Year-End report 2019

Fourth quarter 2019
•    Order intake rose 8% to SEK 4,752 million (4,403). Comparable units decreased by 1%.
•    Net sales rose 9% to SEK 4,863 million (4,446). Comparable units were unchanged. 
•    EBITA increased by 11% to SEK 631 million (568), corresponding to an EBITA margin of 13.0% (12.8%).
•    Profit for the quarter rose 8% to SEK 399 million (369), and earnings per share were SEK 3.29 (3.05).
•    Cash flow from operating activities totalled SEK 732 million (594).

1 January – 31 December 2019
•    Order intake rose 9% to SEK 18,653 million (17,073). Comparable units increased by 2%.
•    Net sales rose 9% to SEK 18,411 million (16,848). Comparable units increased by 2%.
•    EBITA increased by 12% to SEK 2,330 million (2,087), corresponding to an EBITA margin of 12.7% (12.4%).
•    Profit for the year rose 8% to SEK 1,483 million (1,368) and earnings per share were SEK 12.26 (11.31).
•    Cash flow from operating activities totalled SEK 1,922 million (1,360).
•    The Board of Directors proposes a dividend of SEK 4.75 (4.50) per share for 2019. The dividend corresponds to a dividend payout ratio of 39%. The Board of Directors has decided to revise the financial target for dividends such that the dividend payout ratio shall be in the range of 30% to 50% of net profit.

CEO’s message
Indutrade summarizes 2019 as a successful year, with a strong result for the fourth quarter. In a time of fluctuating and more challenging market conditions, we have been able to continue generating sustainable, profitable growth by developing and acquiring stable, profitable companies in selected niches. Sales amounted to SEK 18.4 billion, with growth of 9% during the year and a record-high EBITA margin of 12.7% for the full year 2019.

Fourth quarter
The market situation during the fourth quarter of 2019 was relatively stable. On the whole, demand remained high, yet with variations between companies, product segments and countries. Order intake increased by 8%, of which -1% was organic, compared to the same period last year. For many of our companies, particularly in the marine and medical technology segments, performance remained strong. However, the weaker economic situation for industrial companies in Europe affected the majority of our business areas and organic order intake was somewhat lower than before. For example, the slowdown in Germany affected the DACH business area to a greater extent than before and the situation in the Finnish market remained challenging.
 
Sales increased by 9% during the quarter and amounted to SEK 4.9 billion. Comparable units were unchanged. Performance was strongest for the Benelux business area, and for our flow technology companies in the Flow Technology business area. Both order intake and invoicing associated with valves for power generation improved during the quarter, which fuelled growth in the Benelux business area.

In the UK, economic and political uncertainty had a negative impact on the business climate for our companies in the UK business area, with a decline in both sales and margins during the quarter.

The uncertain market conditions put high requirements on a company’s ability to adapt and our dedicated MDs are continually striving to adjust their organisations to the prevailing opportunities, while coping with the challenges. Our decentralised organisation allows us to retain the flexibility of a small enterprise, yet with the stability and financial strength of a large company.

EBITA improved by 11% to SEK 631 million, which corresponds to an EBITA margin of 13.0% (12.8%) and that is an all-time high EBITA margin for the fourth quarter. The underlying EBITA margin is, however, on a par with last year given that the improvement is primarily attributable to one-off items. The largest margin improvements are attributable to the Benelux and Industrial Components business areas. For the Benelux business area, there was strong performance from valves for power generation and positive effects from one-off items. For Industrial Components, performance was primarily fuelled by our companies in the medical technology segment. Profit for the period grew 8% to SEK 399 million. 

Cash flow improved during the quarter and totalled SEK 732 million, which corresponds to an increase of 23% compared to the same period last year. The level of working capital was still somewhat high.

Acquisitions
Growth via acquisitions of successful, market-leading niche companies is a key component of our business model. A total of 15 acquisitions were made in 2019, of which three were in the fourth quarter. The total annual sales for these acquisitions amount to just over SEK 1.5 billion.

Four additional acquisitions were made subsequent to year-end - the German company Stein Automation, which delivers customised automation solutions, VarioDrive which offers motion control solutions in the Netherlands, the Swedish measurement company AVA Monitoring which manufactures fully automated measurement systems and Sverre Hellum & Sønn which is a supplier of diamond tools on the Norwegian market. We have had a good start in 2020 as regards acquisitions and opportunities remain favourable.

Outlook
The levelling off that we have witnessed during parts of 2019, along with uncertainty about the macroeconomic and political situations, makes it difficult to assess the market. The rate of growth has slowed down in 2019, with significant variations between geographic areas and segments. The Group’s diversified structure allows for good risk diversification and is a prerequisite for stability.

We're looking forward to an eventful 2020, where we continue generating sustainable, profitable growth by developing and acquiring successful companies that are led by passionate entrepreneurs. We are quite determined, and I am highly confident, that Indutrade will continue delivering attractive returns to our shareholders.

Bo Annvik, President and CEO

Note
The information in this report is such that Indutrade AB is obligated to make public in accordance with the EU Market Abuse Act and the Securities Market Act. The information was submitted for publication by the agency of the following contact persons at 7.30 a.m. (CET) on 5 February 2020.

This report will be commented upon as follows:
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