Interim report 1 January – 30 June 2021
THE INTERIM PERIOD
» Net revenue totalled SEK 1,522 million (1,084)
» Operating profit amounted to SEK 226 million (126)
» Profit before tax amounted to SEK 221 million (116)
» Profit after tax amounted to SEK 172 million (89)
» Earnings per share were SEK 5.93 (3.20)
THE SECOND QUARTER
» Net revenue totalled SEK 824 million (546)
» Operating profit amounted to SEK 123 million (69)
» Profit before tax amounted to SEK 117 million (64)
» Profit after tax amounted to SEK 91 million (49)
» Earnings per share were SEK 3.13 (1.77)
IMPORTANT EVENTS DURING THE PERIOD
» Acquisition of CPS in the Netherlands
» Acquisition of CIM in Denmark
CEO’S COMMENTS ON THE GROUP’S DEVELOPMENT DURING THE PERIOD
We saw good organic growth and achieved further strengthened profitability during the second quarter. The Group’s operations generated an increase in sales of just over 50 per cent compared to the corresponding period last year, of which 40 per cent was organic growth. At the same time, the operating profit rose by almost 80 per cent. High capacity utilisation and a favourable product mix are the primary reasons behind the strong results during the period. During the comparison quarter, we were adversely affected by the initial effects of the Coronavirus pandemic, for example in the form of periodic production stoppages among our customers.
The market trend has generally been favourable. The medical technology sector has continued to grow, although the previously very steep growth curve has stabilised somewhat. Activities within the operational area of batteries for electric vehicles, which is relatively new for the Group, have really picked up speed in recent months. In this area, a number of orders relating to large-scale automation assignments have been received in both Europe and North America. Sales within other sectors have generally remained at a stable level.
The two companies that were acquired shortly before the start of the year, as well as the other two that were added in May of this year, have made a positive contribution. The execution of the implementation work is a high priority, and interesting collaborations have already been established within the relevant business units.
Compared to last year’s first six months, revenue rose by 40 per cent, of which 32 per cent was organic growth. Operating profit improved by 80 per cent and the operating margin rose from 11.6 to 14.8 per cent. The profit margin was 14.5 per cent.
The Industrial Products business unit
Within the Industrial Products business unit, sales rose by 27 per cent and operating profit improved by 40 per cent in relation to the comparison period.
Sales of the companies’ own products have continued to rise, contributing to strengthened margins. Growth was particularly clear in respect of infrastructure solutions, and there has also been further stabilisation within the automotive sector. More and more strategic discussions regarding sustainable deliveries are being conducted with customers, such as vehicle manufacturers. Collaborations of this type are fully in line with the business unit’s sustainability focus, and are also generating new business opportunities. The companies are carrying out joint activities, linked principally to material recycling, energy efficiency and reduced climate emissions.
The Industrial Solutions business unit
Sales within the Industrial Solutions business unit rose by 37 per cent, of which 5 per cent refers to business combinations. Operating profit improved by 83 per cent compared to the corresponding period last year.
Sectors such as sustainable energy solutions, food and medical technology have developed strongly. For example, large orders have been received during the period regarding automation solutions for the manufacture of batteries for electric vehicles. In the short period that has passed since they were acquired, the addition of CPS and CIM has injected further energy into the business unit. CIM is already in the start-up phase regarding development collaborations with some of its sister companies. Remaining travel restrictions have continued to hamper some aspects of project operations, although things have started looking brighter towards the end of the period.
The Precision Technology business unit
The operations within the Precision Technology business unit reported 74 per cent higher sales, of which 33 per cent refers to business combinations. Operating profit surpassed the outcome of the comparison period by 104 per cent.
Affected sectors have developed well, on the whole, and the companies in the business unit have conducted their assignments efficiently. There has been significant organic growth, and profitability has been substantially strengthened at the same time by making optimal use of available resources. The newly acquired companies have contributed to a great extent here as well. The ongoing implementation work with the new operations has laid the foundations for collaboration at a new level within the business unit.
All the business units are reporting a level of incoming orders which means that the Group as whole is expected to be able to continue performing well in the near future. Our focus on profitable growth on the basis of strategic sales work has been further reinforced. Long-term relationships have given rise to business opportunities within new business areas and on new markets, and these activities are now being intensified. We also have important work ahead of us in relation to integrating our newly acquired companies in the optimal manner. This applies in particular to Lasertech and CIM, where synergies are immediately available, in the first instance with their sister companies within the relevant business units.
To date, the mass vaccinations against Coronavirus appear to be having a significant dampening effect on the spread of infection. We are looking forward to being able to increase our presence in various contexts in the near future. The supply of materials has moved higher and higher up the agenda in the wake of the pandemic. As in the previous quarter, we have not experienced any major disruptions to our operations linked to access to components and materials. However, there is some concern that the lack of input goods may have a dampening effect on our development in future.
The Group’s strong organic growth means that we need to expand our capacity. Extensive investments are being carried out in terms of both machinery and premises. Resources are also being committed to increase the pace of our work aimed at safeguarding our products from a sustainability perspective. Long-term collaborations with our customers are extremely important in this respect.
Over the past eight months, we have welcomed four new companies into the Group. There are still many interesting potential acquisitions to evaluate and, as before, this work is a high priority.