Interim report second quarterand first half-year 2015

Second quarter 2015 – Profitable growth

· Order intake rose 22% to SEK 3,026 million (2,483). The increase for comparable units was 6%.
· Net sales rose 24% to SEK 3,025 million (2,430). The increase for comparable units was 7%.
· Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 28% to SEK 362 million (282),  corresponding to an EBITA margin of 12.0% (11.6%).
· Profit after tax rose 32% to SEK 229 million (174).
· Earnings per share before dilution grew 32% to SEK 5.73 (4.35).
· Cash flow from operating activities was SEK 127 million (226).

CEO’s message

In a turbulent business environment, Indutrade continues to grow organically and through acquisitions. The focus on owning and developing companies in selected niches is a continued success concept.

With order intake and invoicing in excess of SEK 3 billion, Indutrade can once again report a quarter with new, record highs. The organic growth within the Group during the quarter was also particularly gratifying.

The Group’s great product breadth provides considerable variation in demand for the respective areas. The same applies as well for the geographic diversification. Currency movements are an additional component that affect performance.

All of the management teams of the some 200 companies in the Group always strive to grow and improve their profitability. It is the ability of these companies to adapt to the prevailing market conditions at any given time that gives Indutrade its strength.

Second quarter

During the quarter, order intake grew by 22%, invoicing by 24%, and earnings per share by 32% compared with the same quarter a year ago. Growth is being driven above all by completed acquisitions, but we also saw very favourable like-for-like performance for most units during the quarter.

Overall, the Group’s business areas showed stable, positive development of order intake, invoicing and earnings during the quarter. Engineering & Equipment, Flow Technology and Fluids & Mechanical Solutions reported higher earnings and improved margins compared with a year ago.

Following a weak start to the year, in which profitability was hurt by the past year’s exchange rate movements, the EBITA margin turned upwards again for Industrial Components during the second quarter.

Most companies in Measurement & Sensor Technology are reporting continued high market activity and demand, at the same time that the EBITA margin was lower during the quarter compared with a year ago due to a changed mix.

For Special Products, a combination of acquisitions and large project deliveries, together with continued favourable performance in the UK and Benelux, contributed to the strong earnings.

Acquisitions

Three acquisitions were carried out during the quarter, plus an additional one after the end of the quarter. Together with the acquisitions carried out during the first quarter, these companies represent roughly SEK 1 billion in annual sales. Our expansion in and outside Sweden continues, both in the form of traditional trading companies and companies with own products and manufacturing. We expect additional acquisitions during the year.

Outlook

The turbulence in our business environment continues, resulting in volatility in demand between products, segments and markets. The strength of our business model is particularly apparent in a quarter such as this, where further development of our existing companies, acquisitions and diversification of risk offer good balance to challenges such as weak development in Finland and in Russia, currency movements, and the decline in parts of the oil and gas segment.

I look forward to the coming quarters with confidence and have every reason to believe that our companies will continue to adapt to the changing market conditions in a swift and effective manner.

Johnny Alvarsson, President and CEO