Interim report second quarter and first half of 2019

Second quarter 2019
• Order intake rose 6% to SEK 4,653 million (4,391). For comparable units, order intake decreased by 1%.
• Net sales rose 4% to SEK 4,587 million (4,390). For comparable units, net sales decreased by 1%.
• Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 6% to SEK 574 million (543), corresponding to an EBITA margin of 12.5% (12.4%).
• Profit for the quarter grew marginal to SEK 365 million (364) and earnings per share were SEK 3.02 (3.01).
• Cash flow from operating activities totalled SEK 488 million (290).

1 January – 30 June 2019
• Order intake rose 8% to SEK 9,263 million (8,564). For comparable units the increase was 2%.
• Net sales rose 8% to SEK 8,953 million (8,287). For comparable units the increase was 2%.
• Operating profit before amortisation of intangible non-current assets attributable to acquisitions (EBITA) rose 12% to SEK 1,111 million (994), corresponding to an EBITA margin of 12.4% (12.0%).
• Profit for the period grew 9% to SEK 715 million (657) and earnings per share were SEK 5.92 (5.43).
• Cash flow from operating activities totalled SEK 656 million (294).

CEO’s message
Continued good and stable demand with a high pace of acquisitions during the second quarter of 2019.

Second quarter
The second quarter of 2019 was characterised by continued good and stable demand. The difference in demand between products, segments and markets has increased slightly, and in a number of segments development has levelled out, such as in construction and automotive.

Order intake exceeded net sales by 1% and reached slightly more than SEK 4.6 billion, growing by a total of 6%. Sales increased by 4%. Many of our companies experienced continued favourable growth, and the UK business area had the strongest organic order growth during the quarter. However, uncertainty surrounding Brexit affected our British companies somewhat more than during the first quarter. The Measurement & Sensor Technology and Flow Technology business areas had good development driven in part by measurement technology and the marine segment. However, due to fewer investment-related projects and slightly weaker demand in certain segments, organic development for several business areas was dampened.

Profitability developed favourably for most of our companies, and five of our eight business areas posted higher operating margins than in the same quarter a year ago. The EBITA margin for the Group as a whole improved slightly to 12.5% (12.4%). The strongest performance was shown in the Flow Technology and UK business areas, mainly driven by a high level of invoicing. Profitability for the Measurement & Sensor Technology business area decreased slightly and was affected by significantly lower demand in North America for one of the larger companies. Profitability remained at a good level.

The market situation and the profitability continued to be challenging in the power generation segment in the Benelux business area. Work with both short-term and more strategic improvement measures continues according to plan.

Cash flow from operating activities increased during the quarter to SEK 488 million (290). Tied-up capital remains at a somewhat high level as a result of high capacity utilisation in many of our companies, customers and suppliers.

During the quarter Indutrade strengthened its long-term financing with a new credit facility, and a bond was issued. The Group’s financial strength creates stability and facilitates investments and acquisitions.

We have continued to develop our sustainability work, and in 2019 we have carried out a training programme in sustainability for all of the Group’s managing directors. The ambition in 2019 is that all subsidiaries will conduct a materiality analysis and start defining relevant KPIs for their respective companies.

We have maintained a high level of acquisition activity, and thus far during the year a total of ten acquisitions have been carried out. Five acquisitions were carried out during the second quarter: QbiQ Group (Netherlands), Adam Equipment and Datum Electronics (UK), Starke Arvid (Sweden), and Färber & Schmid (Switzerland). After the end of the quarter, the Norwegian instruments company Finisterra and the British company Natgraph, a manufacturer of customised drying and curing systems for industrial print applications, were also acquired.

During 2019 we have acquired companies with combined annual sales of approximately SEK 1.2 billion. We have continued to deliver in line with our strategy by investing in successful, well-managed, marketing-leading niche companies with the potential to generate profitable growth. We have an opportunistic acquisition strategy where we pick the cream of the crop, and our future acquisition opportunities remain good.

The prevailing market situation continues to be stable, but with slightly higher variation and a flattening in demand in certain segments. We have a good spread of risk through our diversified structure with many small and flexible companies working in various niches and segments across many countries. Our MDs can independently make fast business decisions and adapt to their customers’ needs. We have a stable platform that gives us favourable prospects for sustainable, profitable growth going forward.

Bo Annvik, President and CEO

The information in this report is such that Indutrade AB is obligated to make public in accordance with the EU Market Abuse Act and the Swedish Securities Market Act. The information was submitted for publication by the agency of the following contact person at 8 a.m. (CEST) on 18 July 2019.

This report will be commented upon as follows:
The interim report will be presented via a webcast at 10.30 a.m. (CEST) on 18 July via the following link:

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