Interim Report 1 January – 30 September 2018

Third quarter 2018
• Order intake rose 16% to SEK 4,106 million (3,532). For comparable units the increase was 6%.
• Net sales rose 13% to SEK 4,115 million (3,633). For comparable units the increase was 3%.
• Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 17% to SEK 525 million (450), corresponding to an EBITA margin of 12.8% (12.4%).
• Profit for the quarter grew 17% to SEK 342 million (293), and earnings per share were SEK 2.83 (2.43).

1 January – 30 September 2018
• Order intake rose 14% to SEK 12,670 million (11,156). For comparable units the increase was 4%.
• Net sales rose 14% to SEK 12,402 million (10,915). For comparable units the increase was 3%.
• Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 16% to SEK 1,519 million (1,314), corresponding to an EBITA margin of 12.2% (12.0%).
• Profit for the period grew 17% to SEK 999 million (857), and earnings per share were SEK 8.26 (7.12).

Events after the end of the quarter
• On 8 November 2018 the Board of Directors decided to increase the target for the EBITA margin for the Indutrade Group to a minimum of 12% (previously 10%) per year over a business cycle.

CEO’s message
Continued good demand and earnings growth during the third quarter of 2018.

Third quarter
The positive market situation continued during the third quarter, with stable sales at a high level.
Demand was good and order intake grew 16% during the quarter, of which 6% was organic. This reflects positive development and a sequential improvement in the rate of growth. Invoicing increased by 13%, of which 3% was organic, which was stable at a continued favourable level.
The Group’s companies performed well on the whole. All business areas showed positive earnings development, where companies in the Measurement & Sensor Technology, UK and Finland business areas accounted for the strongest margin improvements. The advanced technological solutions used within measurement and sensor technology to create for example “smart” products, were in demand in many customer segments, and contributed to the quarter’s strong growth. The UK business area had favourable growth also during the third quarter, mainly owing to well positioned and competitive companies. Profitability for the Finland business area improved mainly as a result of focused restructuring work. The business situation remained challenging for some of the companies in Switzerland as a result of lower investment activity in parts of the process industry.
Profitability strengthened both organically and driven by acquisitions. EBITA grew 17%, of which 3% was organic, to SEK 525 million. The EBITA margin for the third quarter was 12.8%, which is a high level from an historical perspective and an increase over the preceding year’s margin of 12.4%. Earnings per share increased by 16% to SEK 2.83.
Cash flow improved during the third quarter, however working capital remained at a slightly high level driven by high capacity utilisation and longer delivery times from suppliers.

Acquisitions
During the quarter Indutrade acquired Norsecraft Tec, a leading Norwegian technology sales company that offers automatic lubrication systems for construction machinery and industrial applications. The add-on acquisition of the American company TXRX was also concluded during the quarter. TXRX is a leading manufacturer of products and technical solutions for Professional Mobile Radio (PMR) systems and complements our Danish company Combilent very well. Combilent has a leading position in the same product areas in the European market.
After the end of the quarter we completed the add-on acquisition of Thermo Electric, a Dutch company that develops, manufactures, markets and calibrates temperature sensors. Thermo Electric will be a subsidiary of Indutrade’s Swedish company Pentronic AB. Add-on acquisitions are part of Indutrade’s strategy to acquire companies also through our existing companies in order to strengthen their market positions in attractive segments.

Activity in the acquisition market remains high, and we have a steady inflow of interesting companies. Through our acquisition history, size and good reputation, we have the experience and resources needed to carry out value-creating acquisitions. We are continuously engaged in talks with a number of interesting companies, where we are in various phases of the acquisition process.

Increased target for EBITA margin
After the end of the quarter the Board of Directors, following its annual strategic review, decided to increase the target for the EBITA margin to a minimum of 12% per year over a business cycle. The financial targets are ambitious and reflect my conviction that our work will result in continued, sustainable profitable growth.

Outlook
The current macroeconomic and political climate is giving rise to somewhat elevated uncertainty surrounding the business climate in the coming quarters, but today we do not see any clear signs of a changed demand situation. Our companies work closely with their customers, they are flexible, and if needed they can act swiftly and adapt to prevailing demand. The Group’s diversified structure with more than 200 companies in different segments and countries creates stability, and with our financial strength, the prospects for competitive value creation are favourable.
We are determined, and I am highly confident that Indutrade will continue to create customer and shareholder value.

Bo Annvik, President and CEO

The information in this report is such that Indutrade AB is obligated to make public in accordance with the EU Market Abuse Act. The information was submitted for publication by the agency of the following contact persons at 2 p.m. (CET) on 8 November 2018.

This report will be commented upon as follows:
The interim report will be presented via a webcast at 3 p.m. (CET) on 8 November under the following link: https://bit.ly/2ymuILB

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