Interim report fourth quarter and year-end report 2014

Fourth quarter – Continued Earnings Growth

  • Order intake rose 11% to SEK 2,579 million (2,317). For comparable units, order intake increased by 1%.
  • Net sales rose 13% to SEK 2,654 million (2,352). For comparable units, net sales increased by 1%.
  • Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 18% to SEK 334 million (283), corresponding to an EBITA margin of 12.6% (12.0%).
  • Profit after tax rose 24% to SEK 220 million (178).
  • Earnings per share grew 24% to SEK 5.50 (4.45).
  • Cash flow from operating activities was SEK 378 million (407).

1 January – 31 December 2014

  • Order intake rose 11% to SEK 10,000 million (9,014). For comparable units, order intake increased by 1%.
  • Net sales rose 10% to SEK 9,746 million (8,831). For comparable units, the change was marginal.
  • Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 15% to SEK 1,134 million (990), corresponding to an EBITA margin of 11.6% (11.2%).
  • Profit after tax rose 20% to SEK 703 million (587).
  • Earnings per share grew 20% to SEK 17.60 (14.68).
  • Cash flow from operating activities was SEK 904 million (859).
  • The Board proposes a dividend of SEK 7.75 per share (7.05).

CEO’s message 

In summing up 2014 we can affirm that Indutrade is once again reporting a successful year with growth in sales and earnings. Despite a challenging market situation, with low GDP growth in the countries in which our companies are active, we have achieved the overall financial target of growth in excess of 10%. Growth has been achieved largely through continued successful acquisitions, but also through favourable performance by existing companies on the whole.

In a market where demand has varied a lot from month to month as well as between customers, segments and countries, we have now reached a new level with order intake of SEK 10 billion for the full year. The trend in demand in the countries that are most important for Indutrade has been mixed – continued strong in the UK, at the same time that we have noted a continued negative trend in Finland. For other countries demand was relatively stable on a yearly basis.

Order intake in the energy segment improved gradually during the year after a weak start. Other segments related to the European process industry also had favourable development.

It is also gratifying to note that we succeeded in achieving continued profitable growth with improved margins and higher capital efficiency. This means that we exceeded Indutrade’s overarching financial targets, which are essential for governance and monitoring of the companies in the Group.

Fourth quarter

As a whole the fourth quarter was our best ever, with sales and earnings reaching new record levels. Sales grew 13%, the EBITA margin was 12.6% (12.0%), earnings before tax rose 25%, and earnings per share rose 24%.

However, the variations were great between the different business areas. Flow Technology, Fluids & Mechanical Solutions and Special Products saw improved earnings at the same time that Engineering & Equipment, which operates mainly in Finland, continued to be hurt by weak demand. Industrial Components, whose companies are primarily in Sweden, showed poorer margins as a result of the weaker Swedish krona, as higher purchasing prices in foreign currency could not be compensated during the quarter.

Acquisitions

Growth – organic and through acquisitions – is a central concern for Indutrade. In all, twelve acquisitions were carried out during the year, eleven of which possession was transferred in 2014. After the end of the quarter, in January 2015, an additional three acquisitions were carried out. Annual sales for these 15 companies amount to nearly SEK 1 billion. Most of the acquisitions were made outside Sweden, in companies with own production and proprietary brands, entailing continued expansion outside of the Nordic countries and a slight decrease in the share of traditional trading companies.

Outlook

At present I do not see any general change in the demand situation. Volatility in the market will remain, and our challenge is to capture market shares in a market with low organic growth.

Indutrade, whose companies are small, flexible and close to customers, can act swiftly and adapt to current demand. The companies that have the conditions to grow organically with higher or maintained profitability are challenged to do so. Companies with a high market share and that work in areas in which it is difficult to grow, such as traditional trading companies, are focusing on profitability and cash flow, which enables a continued high level of acquisition activity.

With this combination of strategies and a group of nearly 200 companies in a diversity of countries and segments, we have favourable prospects to create profitable growth also in the years ahead.

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=928133&s=1&k=0E3B583159BF3A9B5625730EBE1D79BD

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