Interim report third quarter 2014

CONTINUED GROWTH

• Order intake rose 19% to SEK 2,588 million (2,172). For comparable units, order intake increased by 5%.
• Net sales rose 12% to SEK 2,412 million (2,148). For comparable units the change was marginal.
• Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 17% to SEK 294 million (252), corresponding to an EBITA margin of 12.2% (11.7%).
• Profit after tax rose 26% to SEK 183 million (145).
• Earnings per share grew 26% to SEK 4.60 (3.65).
• Cash flow from operating activities amounted to SEK 210 million (158).

CEO’s message

For the third quarter Indutrade is reporting order intake, invoicing and earnings at new top levels so far. We can thereby summarise a quarter that is well within the framework of our overarching financial targets for growth, profitability and the debt/equity ratio.

The cautious optimism that prevailed in the market earlier in the year has given way to worries about future development. Despite this, Indutrade increased both its order intake and invoicing. Growth is partly organic, but above all it has been achieved through successful acquisitions.

In the current market situation, with low GDP growth in most European countries, the challenge for many industrial companies including Indutrade is to grow organically. Indutrade, whose companies are small, flexible and close to customers, can act quickly and adapt to prevailing demand. Despite a weak market, Indutrade has a number of companies with good organic growth in areas such as fasteners, valves and ice detectors. At the same time, we have companies with large market shares in their respective niches, that have a hard time growing without infringing upon their margins, as well as companies for which structural changes are leading to contracting markets. In these companies we are adapting our costs to the market situation. This applies, among others, to several operations in the Engineering & Equipment business area, which conducts most of its business in Finland.

This mix of companies, markets and product segments is the foundation of the Indutrade Group’s stability and growth. The Group’s business model, which calls for a number of acquisitions each year, puts us in a good position to achieve our profitability and growth targets even in tough times.

Third quarter

During the third quarter, order intake rose 19%, sales increased by 12%, and earnings per share grew by 26%.

The quarter had many positive aspects. In the Engineering & Equipment business area the profit margin improved, despite a weak market. Another example can be seen in the strong earnings generated by all of the acquisitions during the year. In addition, companies in the energy segment, which started out the year with weak order intake during the first quarter, had good order intake during the second quarter and has now succeeded in landing record high orders during the third quarter.

Acquisitions

Two acquisitions were carried out during the quarter – one in the UK and one in Sweden. After the end of the quarter, another two acquisitions were carried out in Sweden. Combined annual sales of companies acquired through the end of the third quarter amount to nearly SEK 440 million. 

Outlook

Uncertainty is generally high in the market, but for Indutrade the trend has been positive in 2014, and I believe that this trend will continue during the final quarter of the year.

Johnny Alvarsson, President and CEO

This report will be commented upon as follows:

• Through a conference call/webcast today at 3 p.m. (CET) under the following link:
  http://event.onlineseminarsolutions.com/r.htm?e=862057&s=1&k=4E4477E9EFD954451688FD7E0C726896
  To participate, call SE: +46 851999030, UK: +44 2076602077 or US: +18777889023
• Through a videotaped version available under the following link:
  http://www.indutrade.se