Interim report first quarter

1 January-31 March 2016

First quarter 2016 – Yet another quarter of growth

  • Order intake rose 5% to SEK 3,066 million (2,926). For comparable units, order intake decreased by 1%.
  • Net sales rose 14% to SEK 2,963 million (2,601). The increase for comparable units was 8%.
  • Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 11% to SEK 311 million (280), corresponding to an EBITA margin of 10.5% (10.8%).
  • Profit after tax rose 15% to SEK 189 million (165).
  • Earnings per share grew 15% to SEK 4.73 (4.13).
  • Cash flow from operating activities was SEK 107 million (100).

CEO's message

Yet another quarter of continued growth despite challenging market conditions.

In recent years demand has varied between quarters, countries and product segments at the same time that global growth has been low. The first quarter of 2016 did not differ from the preceding year, and industrial growth remains weak overall. The lower price of oil that many countries have benefited from has not led to an increase in industrial investment. On the contrary, oil producing countries have scaled back on their investments, which on the whole has led to weaker growth in global industrial production.

Moreover, it is difficult to find markets and countries with a favourable growth outlook in the immediate future. During the first quarter, order intake and invoicing were negatively affected by the fact that Easter fell in March this year. Despite a challenging economic situation, Indutrade still continues to grow.

First quarter

Sales increased by 14% during the quarter, of which 8% was organic.

Organic sales growth during the period was achieved primarily from favourable performance in Sweden, Denmark, Benelux and Ireland.

Sweden and Denmark continue to show good growth, and the Benelux countries, which historically have been dependent on development in Germany, outperformed their neighbour in recent years. Ireland is experiencing strong growth in the pharmaceutical industry, among other areas, which benefits our business.

The previous strong growth in the UK has subsided, owing in part to the negative impact of the decline in the oil and gas sector and in part to mounting uncertainty that is likely being caused by concerns over “Brexit” and the strong pound sterling during the preceding year.

In Finland, which is an important market for Indutrade, the business climate was weaker than expected.

Indutrade’s target to achieve at least 10% growth over an economic cycle is based on a combination of organic and acquired growth. In the current market climate, a larger share of growth will be achieved through acquisitions, compared with the situation in a strong economy, where we would gain a boost from a broad-based upswing in industrial production.

Acquisitions

Our acquisition prospects remain favourable, and during the year to date five acquisitions have been carried out, of which two after the end of the first quarter. Two of the acquisitions were carried out in the UK – one company that manufactures advanced packings, and the other a distribution company for hydraulic components. In Norway we acquired another distribution company specialising in infrastructure. In the Netherlands a company was acquired that complements our existing operations in fasteners. Our largest acquisition during the period, of Senmatic in Denmark, strengthens the Group’s position in temperature measurement, where we have since previously had a strong position in Sweden and Finland.

Outlook

At present I do not see any general change in the demand situation. The 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 their customers – can act swiftly and adapt to prevailing demand. The companies that have prospects to grow organically with improved or maintained profitability are challenged to do so. Companies with a high market share and that have a hard time growing, 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 200 companies in a diverse range of countries and segments, we have favourable prospects to achieve profitable growth this year as well.

Johnny Alvarsson, President and CEO

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