Interim report 1 January – 30 September 2019
The interim period
» Net revenue totalled SEK 1,608 million (1,495)
» Operating profit amounted to SEK 184 million (173)
» Profit before tax amounted to SEK 172 million (162)
» Profit after tax amounted to SEK 133 million (126)
» Earnings per share were SEK 4.75 (4.52)
The third quarter
» Net revenue totalled SEK 463 million (450)
» Operating profit amounted to SEK 39 million (51)
» Profit before tax amounted to SEK 36 million (47)
» Profit after tax amounted to SEK 27 million (36)
» Earnings per share were SEK 0.95 (1.30)
Important events during the period
» A 2:1 share split was carried out in June
» Acquisition of Kuggteknik
CEO’s comments on the Group’s development during the period
All three business units reported slightly higher volumes during the third quarter compared to the corresponding period last year. The earnings trend varied from segment to segment, with improved profit margin for Industrial Products and continued good profitability for Precision Technology. However, the weaker earnings reported during the quarter, by some of our companies with project-based operations within Industrial Solutions, had a bigger impact. Overall, the profit margin weakened compared to the comparison period. The market conditions shifted within affected sectors, with incoming orders generally being more cautious than during the first half-year. For the interim period (nine months), sales growth amounted to just under 8 per cent, of which just over 5 per cent was organic. Operating profit improved by 7 per cent, while the operating margin fell marginally from 11.6 to 11.5 per cent. The profit margin stood at 10.7 per cent (10.8).
Within the Industrial Products business unit, sales increased by 5 per cent, while operating profit exceeded last year’s figure by 23 per cent. Profitability was further strengthened as a result of targeted work in relation to organisational development and efficiency improvements. Sales of proprietary products demonstrated a continued positive trend, principally in respect of the infrastructure area. Growth was also stable for standard products targeted at furniture and fittings manufacturers, primarily on the export markets. However, we are experiencing falling volumes to the automotive industry. On the materials side, work is continuing to increase the share of production using fossil-free and recyclable plastics, as well as designing new, more resource-efficient solutions.
The growth in sales within the Industrial Solutions business unit amounted to 9 per cent, of which just over 5 per cent was organic. Operating profit declined by 1 per cent compared to last year. The accumulated project volumes were higher than those during the comparison period, but generated weaker earnings. Above all, profitability was poorer during the third quarter, in part as a consequence of a less favourable content mix in the project deliveries. Sales linked to customer-specific assignments increased in scope somewhat. The demand situation has become increasingly cautious in several customer segments and has resulted in generally weaker incoming orders, above all in respect of automation projects.
The operations within the Precision Technology business unit reported 8 per cent higher sales, of which 6 per cent was organic growth, and an operating profit that surpassed that of the comparison period by 4 per cent. There was continued high pressure on sales, primarily to the medical technology sector, while demand fell within several other sectors after the summer. Profitability remained at a good level, largely thanks to the companies’ high degree of automation and resource-efficient manufacturing. The integration of Kuggteknik in Leksand, which was acquired in July as a complement to Mikroverktyg, is taking place through frequent exchanges between the units which are being conducted in a positive spirit.
The start of the third quarter in particular was characterised by more tangible uncertainty within parts of the Group’s industry segments. We experienced something of a general improvement in stability towards the end of the period, with the exception of project-related operations where incoming orders remained weak. For the immediate future, the focus of our investments remains on the long-term work on capacity reinforcements and optimum utilisation of resources, taking into account any changes in market conditions. Considerable efforts are also being focused on the development of after-sales services and new products. We are noticing a generally more cautious attitude on the part of several of our customers, although we are nevertheless witnessing continued good business opportunities within the Group’s business areas.