Interim report 1 January – 30 September 2020
THE INTERIM PERIOD
» Net revenue totalled SEK 1,609 million (1,608)
» Operating profit amounted to SEK 191 million (184)
» Profit before tax amounted to SEK 175 million (172)
» Profit after tax amounted to SEK 135 million (133)
» Earnings per share were SEK 4.77 (4.75)
THE THIRD QUARTER
» Net revenue totalled SEK 525 million (463)
» Operating profit amounted to SEK 65 million (39)
» Profit before tax amounted to SEK 59 million (36)
» Profit after tax amounted to SEK 46 million (27)
» Earnings per share were SEK 1.57 (0.95)
Important events during the period
» Limited impact of the COVID-19 pandemic
» The AGM decided that no dividends should be paid
» Conversion of personnel convertibles 2016/2020 implemented
» Subscription for personnel convertibles 2020/2023 implemented
Events after the closing day
» Modellteknik was acquired
CEO’S COMMENTS ON THE GROUP’S DEVELOPMENT DURING THE PERIOD
Overall, our companies achieved the Group’s strongest third quarter to date. Compared to last year, our growth stood at just over 13 per cent and the improvement in operating profit amounted to 65 per cent. For the entire nine-month period, this means that sales are matching the results achieved during the strong comparison period, at the same time as profitability has improved.
We experienced a general stabilisation in demand in several market sectors, and the indicated upturn within medical technology was greater than expected. The level of activity remained high in respect of automation projects within the packaging and food industries. The automotive industry stabilised further, with volumes approaching the previously forecast levels.
The ongoing pandemic has had limited impact on the Group’s financial results. However, the spread of the virus has meant that it has been necessary to implement a number of restructuring measures. This initially related primarily to adapting our personnel resources in line with the abrupt decline in production volumes that affected parts of the business. In this respect, the negative impact on profits has been mitigated by the government support measures. In order to continue maintaining our margins during the drawn-out progress of the pandemic, work has been intensified aimed at achieving a reduced cost burden while at the same time optimising our sales activities in line with the new situation.
In relation to the outcome achieved during the comparison period, revenue was marginally higher while operating profit increased by 3 per cent. The operating margin rose from 11.5 to 11.8 per cent. The profit margin was 10.9 per cent (10.7) and continued to exceed our long-term goal of at least 8 per cent.
The Industrial Products business unit
Within the Industrial Products business unit, sales fell by 14 per cent, while operating profit declined by 13 per cent in relation to the comparison period. The operating margin was 13.5 per cent (13.4). The business unit’s proprietary products, primarily within the infrastructure and marine segments, have continued to develop well, which has contributed to a great extent to the strong margins overall. The loss of sales compared to last year is mainly related to the shutting down of the automotive industry during the spring. Following a gradual recovery, deliveries within this sector have now returned to more normal levels.
The Industrial Solutions business unit
Sales within the Industrial Solutions business unit rose by 7 per cent, while operating profit increased by 18 per cent compared to the corresponding period last year. The operating margin was 12.0 per cent (10.8). Greater efficiency and flexibility have contributed to a gradual improvement in profitability. The companies have also benefited considerably from greater exchanges within the business unit. The volumes in respect of customer-specific assignments have increased compared to last year. The influx of project orders has remained good, although there is still a certain amount of caution within some areas. The existing travel restrictions have mainly affected our sales work, whereas it has been possible to carry out installations according to plan in the vast majority of cases.
The Precision Technology business unit
Overall, the Precision Technology business unit reported marginally higher sales, while operating profit was 9 per cent below that of the comparison period. The operating margin was 16.8 per cent (18.6). There were still significant variations between the companies and affected customer segments. The pressure remained high within the medical technology sector, and several other sectors are displaying a slight upward trend. The companies in the business unit have continued to work on optimising the relevant organisation and its resources, as well as implementing ongoing capacity reinforcements. After the closing day, the business unit’s operations have been supplemented with Modellteknik, which possesses leading-edge expertise in advanced cutting machining and mould manufacturing.
The transition due to the altered conditions has been successful. Our decentralised, entrepreneur-governed business model comprising three business units, where decisions are taken close to our operations, has made it possible to adjust working methods rapidly while at the same time maintaining good cost control. Our long-term work with strategic customers and assignments has provided us with a solid foundation on which to stand. Within the Group’s global project activities, it has been possible to carry out installations as planned so far. However, further restrictions to freedom of movement as a result of the coronavirus pandemic may lead to difficulties in fulfilling delivery commitments in affected areas. Aftersales and service have already been affected to a great extent, resulting in reduced sales. Within these areas, we are working to identify alternative solutions. We have appointed additional resources for marketing activities and have raised the level of activity in respect of strategic sales. Product and technical development also remain an important part of our day-to-day work. This includes our sustainability work, with a focus on more energy and resource-efficient manufacturing and environmentally friendly materials, as well as increased recycling and circularity.
We are continually evaluating interesting operations to incorporate in the Group. After the closing day, we have conducted a supplementary acquisition within Precision Technology which is further strengthening us as a group.
The long-term effects of the pandemic on our business are difficult to assess. However, bearing in mind the developments to date and the healthy level of incoming orders in recent months, we are anticipating continued strong results in the near future. Our ability to achieve good margins in this challenging situation is a sign of strength. As a result, I would like to say a big thank you to all the Group’s employees for their commitment and loyalty.
President and CEO