Interim report 1 January-30 September 2013

1 JANUARY-30 SEPTEMBER 2013

  • Order intake rose 5% to SEK 6,697 million (6,406).
  • Net sales rose 6% to SEK 6,479 million (6,117). For comparable units the increase was 1%.
  • Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 10% to SEK 707 million (645), corresponding to an EBITA margin of 10.9% (10.5%).
  • Profit after tax rose 9% to SEK 409 million (376).
  • Earnings per share were SEK 10.23 (9.40).
  • Cash flow from operating activities amounted to SEK 452 million (227). For the last 12-month period, cash flow per share was SEK 18.60 (12.70).

THIRD QUARTER 2013

  • Order intake totalled SEK 2,172 million (1,832), an increase of 19%.
  • Net sales rose 8% to SEK 2,148 million (1,988). For comparable units the increase was 2%.
  • Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 15% to SEK 252 million (219), corresponding to an EBITA margin of 11.7% (11.0%).
  • Profit after tax rose 14% to SEK 145 million (127).
  • Earnings per share were SEK 3.65 (3.18).

CEO’s message

Some uncertainty still remains in the market. Following recent years’ swings in demand, everyone – customers and suppliers alike – is cautious in their future outlook. The market continues to be weak for forest-related businesses – ranging from the pulp and paper industry to the vehicles used to harvest and transport timber. This is impacting our Engineering & Equipment business area in particular. The general process industry has also had weak performance, although here we see signs of growing activity. Thanks to Indutrade’s broad product offering, the Group posted organic growth in order intake of 11% during the past quarter, despite several weak segments. The segments that have had favourable growth have more than adequately compensated for the weaker areas. This growth is being generated by a business upswing in a number of areas as well as by gains in market share by companies. Overall, order intake grew 19% during the quarter, including acquisitions. 

Third quarter
In the Nordic countries, the market is weak particularly in Finland and Denmark. Sweden is experiencing more positive development, with growth in several segments. Outside the Nordic countries, our operations in Switzerland and Ireland continue to show strong growth. Other important countries such as Germany, Benelux and the UK, are stable.

In general it is companies with proprietary products or 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 8%. Excluding completed acquisitions, sales would have increased by 2%.

The Engineering & Equipment business area, comprising companies in Finland, experienced continued weak development on account of Finland’s strong reliance on the forest industry. It is positive to note that order intake increased during the quarter.

Flow Technology had weak order intake during the period, although it improved toward the end of the third quarter. Order intake is generally weak in the marine sector and process industry in Sweden. Customers are keeping maintenance and investments to a minimum. Earnings for the period decreased mainly 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 marginally better than invoicing. Earnings decreased mainly for the hydraulics business.

Industrial Components experienced favourable development. Several segments are showing growth, and owing to acquisitions, order intake grew 21% for the business area and invoicing by 15% during the quarter. Commercial vehicles continue to show positive development, while the medical technology segment experienced favourable growth during the quarter. The general engineering industry in Sweden is showing positive development. The earnings improvement for the quarter was 34%, owing to completed acquisitions and higher earnings in the medical technology field, among others.

Special Products continued to perform strongly. Order intake rose 55% and invoicing by approximately 31%. The energy segment, Indutrade Switzerland and new acquisitions made strong contributions to the 58% improvement in earnings for the quarter.

Margins
The Group’s gross margin remains stable at 33.7%, which is level with 2012.

The EBITA margin was 11.7% (11.0%) for the quarter and 10.9% (10.5%) accumulated, which is higher than the Group’s target of a minimum 10% EBITA margin over a business cycle.

Acquisitions
Two acquisitions were made during the quarter, AMAB and the operations of Micro Joining KB. After the end of the quarter, Medexa in Sweden and the Dutch company Kin Pompentechniek were acquired. AMAB and Medexa work in the med-tech field, Micro Joining is active in chemical technology and Kin Pompentechniek in flow technology.

Outlook
In line with our previous expectation, we can now see signs in several – but not all – segments, of an upswing during the autumn.

Johnny Alvarsson, President and CEO

The report will be commented upon as follows: