Second quarter 2016 – Indutrade’s growth continues
· Order intake rose 13% to SEK 3,422 million (3,026). The increase for
comparable units was 8%.
· Net sales rose 10% to SEK 3,317 million (3,025). The increase for
comparable units was 5%.
· Operating profit before amortisation of intangible non-current assets
attributable to acquisitions (EBITA) rose 12% to SEK 405 million (362),
corresponding to an EBITA margin of 12.2% (12.0%).
· Net profit rose 13% to SEK 259 million (229), corresponding to earnings per
share of SEK 2.16 (1.91).
CEO's message
The uncertainty that has overshadowed the market in recent years did not
decrease during the second quarter. Many countries continue to experience weak
or no growth, and the Brexit vote in the UK has given rise to even more
questions about the future.
The combination of political instability and large fluctuations in currency
rates and commodity prices is presenting our company presidents with major
challenges. What does this entail for our customers? Will the trend continue as
forecast? Added to this, many of the projects that customers have planned are
being pushed back due to the general level of uncertainty.
One advantage that our company presidents have is that their organisations are
relatively small, and they can independently make quick business decisions and
adapt to their customers’ needs. We have continued to become accustomed to
varied growth in different segments and sharp swings in the market. In previous
years there were countries with strong growth that served as locomotives for our
own growth, but performance in several of these growth markets has clearly
slowed during the past year, and no one knows when growth will return. Despite
this difficult economic climate, Indutrade continues to grow.
Second quarter
Order intake increased by 13%, of which 8% was organic, and sales rose 10%, of
which 5% was organic.
In the second quarter as well, this favourable organic growth can be credited to
strong performance by companies in Sweden, Denmark, Benelux and Ireland.
In Sweden investments grew in the pulp and paper industry, which benefited
Indutrade. Commercial vehicles are another segment that has performed well.
Major investments in the pharmaceutical industry in Ireland continue to generate
good business opportunities for our companies.
The previous strong growth in the UK has slowed, partly owing to the negative
impact of the decline in the oil and gas sector and partly as an effect of
increased uncertainty, associated with Brexit. Sterling has weakened after the
referendum, but on the other hand this may benefit export companies over time.
Indutrade’s operations in Finland performed better than expected during the
quarter, which can be credited to the performance of individual companies and
not to higher growth in the country as a whole.
Indutrade is achieving its target of at least 10% growth over an economic cycle
as a result of both organic and acquired growth. In the current market climate,
a considerable share of growth will continue to be achieved through acquisitions
until we can gain a boost from an upswing in industrial production.
Acquisitions
Our acquisition prospects remain favourable, and during the year to date we have
carried out nine acquisitions, including two after the end of the quarter, with
another one scheduled for possession to take place in August. Indutrade
continues to grow above all outside of Sweden.
A total of three acquisitions have been made in Denmark during the year. The two
most recent are Klokkerholm, which manufactures spare parts for the automotive
industry aftermarket, and Crysberg, which makes irrigation control systems. Both
of these companies complement previous acquisitions made by the Group.
In the UK we have carried out three acquisitions, where the most recent – Vacuum
Engineering – gives the Group a stronger position in the area of leak detection.
In Sweden one acquisition has been made – KA Olsson – which strengthens our
position in chemical products. In addition, acquisitions have been made in the
Netherlands and Norway during the year.
Outlook
I do not expect any major change in the demand situation in the near future. The
market will continue to be unstable, and our challenge is to capture market
shares in a market with low growth.
The Indutrade model, which we have worked with for decades, entails a
decentralised way of working for our small, flexible and local companies. They
can act swiftly and adapt to prevailing demand. We have a good diversification
of risk, with many small companies in many countries that work in a range of
niches and segments.
Our prospects to generate profitable growth therefore remain favourable.
Johnny Alvarsson, President and CEO
For further information, please contact: Johnny Alvarsson, President and CEO:
+46 70 589 17 95, or Jan Öhman, CFO: +46 70 226 75 34.
Indutrade markets and sells components, systems and services with a high-tech
content to industrial customers in selected niches. Indutrade’s business is
distinguished by the following factors, among others:
- High-tech products for recurring needs
- Growth through a structured and tried-and-tested acquisition strategy
- A decentralised organisation characterised by an entrepreneurial spirit
The Group is structured into six business areas: Engineering & Equipment, Flow
Technology, Fluids & Mechanical Solutions, Industrial Components, Measurement &
Sensor Technology and Special Products.
The Group’s financial targets (per year across a business cycle) are to grow by
a minimum of 10%, to attain a minimum EBITA margin of 10% and a minimum return
on operating capital of 20%.
