Interim report 1 January-30 June 2013

1 JANUARY – 30 JUNE 2013

• Order intake amounted to SEK 4,525 million (4,574).
• Net sales rose 5% to SEK 4,331 million (4,129). For comparable units the increase was 1%.
• Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) was SEK 455 million (426), corresponding to an EBITA margin of 10.5% (10.3%).
• Profit after tax rose 6% to SEK 264 million (249).
• Earnings per share were SEK 6.58 (6.23). 

SECOND QUARTER 2013

• Order intake amounted to SEK 2,327 million (2,319).
• Net sales rose 6% to SEK 2,280 million (2,147). For comparable units the increase was 3%.
• Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) was SEK 264 million (234), corresponding to an EBITA margin of 11.6% (10.9%).
• Profit after tax rose 13% to SEK 157 million (139).
• Earnings per share were SEK 3.90 (3.48).
• Cash flow from operating activities was SEK 263 million (45). For the last twelve-month period cash flow per share totalled SEK 17.38 (15.00).

CEO’s message

The market continues to be characterised by great uncertainty, and order intake is varying widely from month to month. In general, we have seen a slowdown in most market segments, however, there are positive exceptions to the general trend. One such area is the international energy sector, which continues to perform at a high level. Another is the group of companies acquired in Switzerland in 2011, which are continuing their favourable performance.

Second quarter

Order intake during the quarter outpaced net sales by 2%. The acquisitions carried out by the Group have compensated for a generally continued weak market. Two of the Group’s business areas reached a higher accumulated order intake than a year ago: Industrial Components and Special Products. Both of these business areas have also carried out more acquisitions than the other three business areas.

In the Nordic countries, the market is weak particularly in Finland and Denmark. Sweden – and to some extent Norway – is experiencing a more positive trend, with certain segments that are growing. Outside the Nordic countries, business in Indutrade Switzerland continues to show strong growth, both organic and through acquisitions. Other important countries such as Germany, Benelux, the UK and Ireland, are stable.

Generally speaking, it is companies with own products or own brands that have had the most positive performance of the Group’s companies. My conclusion is that the Group’s long-term, concerted effort to increase the share of proprietary products with an international base has enhanced growth and stability in the Group. 

Net sales during the past quarter rose 6%, and at constant exchange rates the increase was 9%. Without completed acquisitions, sales would have been unchanged.

The Engineering & Equipment business area, comprising companies in Finland, experienced continued weak development coupled to weak performance for Finnish industry. Owing to completed cost reductions, earnings have improved despite lower volume. It is positive to note that order intake exceeded invoicing by 5%.

Flow Technology had weak order intake during the period, although it improved toward the end of the second quarter. Order intake is generally weak in the marine sector as well as from the process industry in Sweden. Customers are keeping maintenance and investments to a minimum. Earnings for the period were down slightly on account of the weak marine sector, owing in part to lower volumes, but also to costs for creating the right long-term conditions for business in this segment.

Fluids & Mechanical Solutions had weak performance in certain segments, such as automotive hydraulics, while it encountered a more favourable business climate in other areas. Order intake was on a par with invoicing. Earnings were down slightly, mainly in the hydraulics business. Cost savings have been achieved, and further measures will be taken.

For Industrial Components, demand was generally weak, but thanks to acquisitions, sales as well as order intake rose by approximately 9% for the business area. Order intake and invoicing were level with each other. Commercial vehicles continues to show positive development at the same time that certain med-tech segments have had a weak start to the year. The earnings improvement of roughly 20% can be credited to completed acquisitions.

Special Products posted growth in both order intake and invoicing by approximately 15%. New acquisitions as well as Indutrade Switzerland have made a strong contribution to the earnings improvement of slightly higher than 20%. In the energy segment, which is important for the business area, activity remains at a high level.

Margins

All of the business areas are upholding their gross margins despite fierce competition. The Group’s gross margin remains stable at 34.0%, which is level with 2012.

The EBITA margin was 11.6% (10.9%) for the quarter and 10.5% (10.3%) for the half year, which is higher than the Group’s target of a minimum 10% EBITA margin over a business cycle.

Acquisitions

One acquisition was made during the quarter, ESI Technologies Ltd, with business in Ireland and the UK. In early July an additional acquisition was carried out, of AMAB’s med-tech business.

Outlook

Certain signs of an upswing can be seen, such as for commercial vehicles, while the uncertainty remains great in many other segments. Several customers have indicated that they expect things to improve during the autumn, but this remains to be seen. Indutrade has certain businesses that will increase their sales and earnings in the coming quarters at the same time that uncertainty is great for others. On a positive note, order intake outpaced net sales during the quarter.

Johnny Alvarsson, President and CEO

For further information, please contact:
Johnny Alvarsson, President and CEO, tel: +46 70 589 17 95.