Interim report 1 January-30 June 2012

1 January – 30 june 2012

• Net sales rose 8% to SEK 4,129 million (3,831). The increase for comparable units was 4%.
• Operating profit before amortisation of intangible non-current assets (EBITA) attributable to acquisitions rose 1% to SEK 426 million (421), and the EBITA margin was 10.3% (11.0%).
• Profit after tax rose 4% to SEK 249 million (240).
• Earnings per share were SEK 6.23 (6.00). 

Second quarter 2012

• Net sales rose 7% during the second quarter to SEK 2,147 million (2,015). The increase for comparable units was 2%.
• Operating profit before amortisation of intangible non-current assets (EBITA) attributable to acquisitions decreased by 2% to SEK 234 million (238), and the EBITA margin was 10.9% (11.8%).
• Profit after tax was SEK 139 million (139).
• Earnings per share were SEK 3.48 (3.48).

CEO’s message

Earnings for the second quarter were marginally lower than in the corresponding period in 2011. During the quarter, some of the projects in the international energy sector that we previously reported on were invoiced, but not to a greater extent than order intake for this type of projects – just like for the Group as a whole – continued to exceed invoicing. Order intake can be described as volatile, with a strong start and weaker end to the quarter. The total market is showing a downward trend, with the exception of the international energy sector, where demand remains strong. The Finnish market, which was previously showing growth, has now clearly turned downward. Customers continue to be cautious in the face of uncertainty about the future development.
 

Second quarter

Order intake totalled SEK 2,319 million (2,103), with favourable performance for the Flow Technology and Special Products business areas. For Industrial Components and Engineering & Equipment, business was weaker as a result of lower demand for industrial consumables and a downturn in the Finnish industrial market. The trend during the quarter was that the first two months were stronger than the third. Overall, order intake grew 10%, of which acquisitions accounted for 4%. Order intake during the quarter exceeded net sales by 8%. 

Sales for the quarter totalled SEK 2,147 million (2,015), an increase of 7%, of which acquisitions accounted for 5%. 

Most of Indutrade's companies see lower demand in the market. This applies to companies with international customers as well as to the local water and wastewater markets in Finland and Sweden. The general unease that continues to prevail with respect to the development of the global economy is causing many customers to be more cautious and to not order more than their short-term needs. 

The Engineering & Equipment business area, which has its markets in Finland and the Baltic countries, experienced a downturn during the period. Sales for comparable units were level with the preceding year, but with a higher level of costs in connection with market investments. 

Flow Technology had another quarter with favourable growth in order intake driven by domestic as well as international projects. Compared with the preceding year, invoicing was at a stable level, and earnings were marginally lower than for the comparison period. 

For Industrial Components, sales were level with the preceding year. Although the market situation has been uncertain for a long time, the decline that we previously saw now appears to have slowed. 

The Group's largest business area, Special Products, had continued strong order intake for its companies that are active in the international energy sector. Many of the other companies in the business area are experiencing weaker demand in practically all markets. During the period, deliveries began for parts of the large energy projects. The operation in Switzerland that was acquired by the business area in 2011 is showing favourable earnings performance. 

Margin

The gross margin, at 34.0%, was marginally better than the preceding quarter, but lower than the corresponding quarter in 2011. The differences between the quarters are due to changes in the product mix, where deliveries for major projects are having a dampening effect on the gross margin. The EBITA margin was 10.9% (11.8%). The lower margin is attributable to the generally weaker market trend. 

Acquisitions

Indutrade carried out four acquisitions during the quarter: the med-tech companies Rubin Medical and Conroy Medical; the hydraulics company Hydnet (with possession taking place in August); and Topflight, which specialises in labelling solutions for industrial applications. 

Outlook

Due to the general anxiety about the world economy, companies in most sectors are growing increasingly cautious, which is also contributing to the slowdown. Against the background of the good increase in order intake, the energy segment and flow technology businesses are expected to do well during the year, while the uncertainty will continue for the other businesses. While several major customers have a positive outlook for the second half of the year, on the whole I believe that the level of uncertainty is great in most industries. 

Johnny Alvarsson, President and CEO

This report will be commented upon in a videotaped version on Indutrade's websitewww.indutrade.se.

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