Interim report 1 January – 30 September 2021
THE INTERIM PERIOD
» Net revenue totalled SEK 2,268 million (1,609)
» Operating profit amounted to SEK 339 million (191)
» Profit before tax amounted to SEK 326 million (175)
» Profit after tax amounted to SEK 254 million (135)
» Earnings per share were SEK 8.78 (4.77)
THE THIRD QUARTER
» Net revenue totalled SEK 746 million (525)
» Operating profit amounted to SEK 113 million (65)
» Profit before tax amounted to SEK 105 million (59)
» Profit after tax amounted to SEK 82 million (46)
» Earnings per share were SEK 2.85 (1.57)
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 finished the quarter with a strong September and are able to summarise yet another period of growth with good profitability. During the third quarter of the year, we witnessed an increase in sales of 42 per cent compared to the corresponding period last year. Our most recent acquisition contributed to this to a great extent, although the Group achieved organic growth of 19 per cent at the same time. Operating profit rose by 75 per cent and the operating margin thereby exceeded the results achieved during the third quarter of last year, which had been our strongest Q3 to date. We have enjoyed an extended period of strong development for our proprietary products and solutions, which, in combination with a well-balanced mix of assignments, has meant that we have been able to make optimal use of available resources.
The rate of incoming orders remains good, and the market situation has generally continued to be favourable and stable. The periodic production stoppages experienced in recent times within the automotive industry have had a negative impact on some of our companies, however. Project-related operations represent an increasingly large share of our total volumes. In this area, we have been witnessing a high, steady influx of orders for a considerable period of time. The eased restrictions also mean that the projects can now be implemented more efficiently.
Compared to last year’s first nine months, revenue rose by 41 per cent, of which 28 per cent was organic growth. Operating profit improved by 78 per cent and the operating margin rose from 11.8 to 15.0 per cent. The profit margin was 14.4 per cent (10.9). The profit figure includes non-recurring items of SEK 8 million in respect of the payment of funds for collective AGS insurance. Excluding non-recurring items, the operating margin amounted to 14.6 per cent (11.8) and the profit margin to 14.0 per cent (10.9).
The Industrial Products business unit
Within the Industrial Products business unit, sales rose by 25 per cent and operating profit improved by 40 per cent in relation to the comparison period.
The proportion of sales of proprietary products has continued to rise, while customer-specific assignments have stabilised. Within the automotive sector, however, several players have been forced to reduce their rate of production as a result of a shortage of components, which has affected outgoing deliveries from some of the companies in the business unit. The supply of materials has functioned without any major problems to date, although the lead times have generally grown longer. Within the business unit, there is a major focus on sustainable production and sustainable products, both internally and in collaboration with customers. Several joint activities are being conducted with the aim of maximising material recycling and energy efficiency in order to reduce our climate footprint. At the same time, the rate of development in respect of the proprietary product ranges remains high.
The Industrial Solutions business unit
Sales within the Industrial Solutions business unit rose by 40 per cent, of which 14 per cent relates to business combinations. Operating profit improved by 74 per cent compared to the corresponding period last year.
An extended period with a high influx of project orders has generated significant growth and strong profits. At the same time, the reopening of borders has created the conditions for carrying out installations and service assignments with improved efficiency. After a period of high incoming orders in respect of automation solutions for handling batteries for electric vehicles, deliveries have now picked up speed. The phasing out of restrictions has also contributed towards the increase in the scope of customer-specific assignments. The implementation of our two most recent new acquisitions is continuing and is supplying technical expertise that is reinforcing a number of sister companies. The production unit in China has successfully relocated its operations. The difficulties as regards travel to and within China remain.
The Precision Technology business unit
The operations within the Precision Technology business unit reported 70 per cent higher sales, of which 33 per cent relates to business combinations. Operating profit surpassed the outcome of the comparison period by 124 per cent.
The level of activity among customers in the field of medical technology has remained high, while the number of enquiries and project start-ups, for example in the automotive and defence sectors, has also increased. Here too, however, the shortage of input goods has hampered deliveries to some extent, primarily within the automotive sector. There has been significant pressure on the companies in the business unit and they are working intensively with resource optimisation to safeguard the working environment at the same time as living up to customers’ expectations optimally. The strengthening of capacity in the form of staff recruitment, investments in machinery and the expansion of production areas is continuing.
A stable market situation, with good incoming orders within all business units, is giving us reason to stick to our previous assessment that the Group as a whole looks like it will be able to continue performing well in the near future. Our areas of focus and our strategies remain unchanged. They are providing us with a good foundation for future activities, where joint projects and the exchange of knowledge within the business units are high priorities. Previously implemented and current development programmes within XANO Academy are improving our potential to identify synergies and establish rewarding collaborations on several levels.
Our market presence has begun to revert to a structure and scope that are more normal for us. It is still not possible to conduct physical meetings everywhere, although there has been a marked change in recent weeks. On the negative side, material supply problems have become increasingly apparent and are causing a certain amount of concern. We have managed well to date, although we have been indirectly affected by customers who have not received input goods to the required extent and have therefore postponed deliveries. Transport operations have also been subject to disruption and we are generally experiencing longer lead times.
The Group is growing, and we continue our investment programmes in order to respond to our customers’ wishes from a capacity perspective. We are reinforcing resources both in terms of personnel and machinery, as well as by expanding our factory space. In parallel with this, work is being conducted aimed at safeguarding the sustainability of products and production in the long term, both through internal activities as well as valuable collaborations with customers.
As before, the evaluation of potential acquisitions is a continuous process. We have a well elaborated selection model for identifying companies with operations that supplement our existing activities as optimally as possible, while at the same time having the conditions for both organic growth and technical development.