Interim report fourth quarter and Year-end report 1 January – 31 December 2017

Fourth quarter 2017
• Order intake rose 13% to SEK 3,895 million (3,434). For comparable units the increase was 6%.
• Net sales rose 12% to SEK 3,932 million (3,499). For comparable units the increase was 5%.
• EBITA excluding restructuring costs was SEK 431 million, corresponding to an adjusted EBITA-margin of 11.0%. The operating profit was charged with SEK 132 million in restructuring costs in the Sander Meson Group. Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) decreased 24% to SEK 299 million (391), corresponding to an EBITA margin of 7.6% (11.2%).
• Net profit for the quarter decreased by 31% to SEK 173 million (249), corresponding to earnings per share of SEK 1.42 (2.08).

1 January – 31 December 2017
• Order intake rose 16% to SEK 15,051 million (13,004). For comparable units the increase was 6%.
• Net sales rose 15% to SEK 14,847 million (12,955). For comparable units the increase was 5%.
• EBITA excluding restructuring costs was SEK 1,745 million, corresponding to an adjusted EBITA-margin of 11.8%. The operating profit was charged with SEK 132 million in restructuring costs in the Sander Meson Group. Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 9% to SEK 1,613 million (1,484), corresponding to an EBITA margin of 10.9% (11.5%).
• Net profit for the year rose 10% to SEK 1,030 million (936), corresponding to earnings per share of SEK 8.54 (7.80).
• Cash flow from operating activities was SEK 1,554 million (1,207).
• The Board of Directors proposes a dividend of SEK 3.75 (3.20) per share.

CEO’s message
2017 was a successful year for Indutrade with profitable growth. We have implemented a significant management and organisational change that is adapted to a continued development of our existing companies, as well as future acquisitions. Sales amounted to nearly SEK 15 billion, growing 15% for the year with an improved, adjusted EBITA margin of 11.8%. Indutrade’s decentralised business model remains firm, and I am confident that through continued evolution Indutrade has all the conditions needed to continue creating customer and shareholder value.

Fourth quarter
In general, the good business climate has continued during the quarter. In a market segment perspective, it is positive to see improvements also in Oil & Gas. The higher oil price is leading to more investments in both new projects and maintenance activities which is beneficial for our companies in that sector.

The majority of our companies showed a positive development in order intake, invoicing and earnings, and four of our six business areas showed improved margins compared with a year ago.
The EBITA margin for the Fluids & Mechanical Solutions business area was lower during the quarter than in the same quarter a year ago, mainly due to single time effects within a few companies, as for example, an early stage e-commerce project with limited revenues. The decline in earnings for the Special Products business area is to a large extent explained by significantly lower financial result in a larger company within the power generation segment. However, on a positive note, the same company had a strongly increasing order intake during the quarter.

As previously communicated, we have decided to implement a number of actions to restore profitability for the Sander Meson Group, which led to restructuring costs impacting earnings for the fourth quarter of SEK 132 million. The drawdowns have resulted in a more manageable cost structure.

Acquisitions
During the quarter we closed the acquisition of the German company Inovatools. The company delivers, both in Germany and internationally, metalworking products and is expected to have good opportunities for expansion. The ambition is also to further develop Indutrade´s presence in the German market. We also succeeded in finalizing the acquisition of the Dutch company Tradinco Instruments before year-end.

We continue to deliver according to our strategy by investing in successful, well managed, market leading niche companies with potential to generate profitable growth.

During 2017 Indutrade acquired twelve companies with combined annual sales of SEK 1,270 million. Together these acquisitions will have a positive impact on our earnings and financial position in the coming year. We find that the Indutrade model continues to attract business owners who are considering selling their companies, and thus the conditions for future acquisitions are favourable.

Outlook
As of 1 January 2018, we have a new Group structure and Group Management Team. I am convinced that these changes will strengthen the conditions for continued profitable growth, further developing our portfolio companies and enable us to maintain a high acquisition pace.

We have built a flatter structure and increased from six to eight business areas, and thereby created even better conditions to develop our companies and take responsibility for the companies we acquire. The new Group Management Team members are all internally recruited and with their international experience and knowledge we are better positioned to continue our international expansion.

It is my hope and belief that Indutrade, in 2018, will continue to give our shareholders a competitive return.

Bo Annvik
President and CEO

This report will be commented upon as follows:
This interim report will be presented via conference call/webcast at 11 a.m. (CET) on 13 February under the following link:

http://event.onlineseminarsolutions.com/r.htm?e=1584728&s=1&k=9E44678D86285A04C6078B6B7BF5B3D6

To participate, call :

SE: +46 8 566 426 65
UK: +44 203 008 98 10
USA: +1 (855) 831-5945