Interim report 1 January - 31 March 2013

2013-05-06

1 JANUARY – 31 MARCH 2013

  • Order intake totalled SEK 2,198 million (2,255).
  • Net sales rose 3% to SEK 2,051 million (1,982). For comparable units, sales decreased by 1%.
  • Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) was SEK 191 million (192), corresponding to an EBITA margin of 9.3% (9.7%).
  • Profit after tax decreased by 3% to SEK 107 million (110).
  • Earnings per share were SEK 2.68 (2.75).

CEO's MESSAGE
Order intake during the quarter exceeded net sales by 7%. Adjusted for currency translation effects, order intake was at the same level as in 2012. The acquisitions carried out by the Group have compensated for a generally weaker market. Two of the Group’s business areas achieved higher order intake this year than a year ago: Industrial Components, whose increase is attributable to acquisitions, and Special Products, owing both to acquisitions and organic growth.  

In general, the trend is weaker in Indutrade’s “older” core markets – Sweden, Finland and Denmark – while other markets are experiencing a more stable to positive trend. Indutrade Switzerland, which was acquired slightly more than two years ago, continues to perform strongly both organically and through acquisitions. Similarly, the Group’s internationally active companies with own brands and proprietary products are performing stronger than companies that work mainly in the Nordic countries. These companies are part of the Special Products business area. The part of the Group that is active in the USA is encountering a growing market.

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 quarter rose 3%, and at constant exchange rates the increase was 6%. Without completed acquisitions, sales would have been largely unchanged. 

Business areas
The Indutrade Group is organised in five business areas since the start of the year. This is a natural development given the fact that the Group’s size has doubled since 2004 without any expansion in the Group’s management.

The Engineering & Equipment business area, which comprises companies in Finland, experienced continued weak development coupled to weak performance for Finnish industry. Cost-cutting measures have been carried out to improve profitability.

Flow Technology experienced weak order intake during the period as well as weak earnings. The single largest explanation is the marine sector’s weak performance, followed by soft demand from the process industry. Cost-cutting measures are being carried out in this area as well.

The newly formed Fluids & Mechanical Solutions business area experienced weak performance in certain segments, such as automotive hydraulics, while in other areas it encountered a more favourable business climate.

For Industrial Components, demand was generally soft, but owing to acquisitions the business area posted higher sales. 

Special Products posted organic growth in both order intake and invoicing. In the energy segment, which is important for the business area, activity remained at a high level. 

Margins
The gross margin of 33.8% (33.9%) is level with 2012. Historically, the Group’s gross margin is in the range of 33%-34%. This level has been stable for many years. 

The EBITA margin was 9.3% (9.7%). Two business areas reported a higher margin – Industrial Components and Special Products. The respective increases can be credited to acquisitions with good margins and strong performance for the energy segment. 

Acquisitions
Two interesting acquisitions were carried out during the opening months of the year.

In January we took possession of Thermotech AS, with customers primarily in the Norwegian oil and gas industry. This is an area that has shown strong growth for many years running, so it is therefore gratifying to increase the Group’s business in this area.

The latest addition among our acquisitions was made as late as April, when ESI Technologies Ltd, with business in Ireland and the UK, was acquired. The company has been a strong performer with a distinct focus on growth, which makes it an extra exciting first acquisition in Ireland. 

Outlook
In general, certain signs of an upswing can be seen for commercial vehicles, for example, at the same time that many other segments remain highly uncertain. Several customers have indicated that they expect an improvement in 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 exceeded net sales during the first quarter. 

Johnny Alvarsson, President and CEO

The report will be commented upon as follows:

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

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