Interim report 1 January – 30 September 2022

THE INTERIM PERIOD
»    Net revenue totalled SEK 2,703 million (2,268)
»    Operating profit amounted to SEK 307 million (339)
»    Profit before tax amounted to SEK 290 million (326) 
»    Profit after tax amounted to SEK 226 million (254)
»    Earnings per share were SEK 3.90 (4.39)

THE THIRD QUARTER
»    Net revenue totalled SEK 776 million (746)
»    Operating profit amounted to SEK 63 million (113)
»    Profit before tax amounted to SEK 57 million (105) 
»    Profit after tax amounted to SEK 44 million (82)
»    Earnings per share were SEK 0.76 (1.42)

Important events during the period
»    Extended credit facilities
»    2:1 share split implemented

CEO’S COMMENTS ON THE GROUP’S DEVELOPMENT DURING THE PERIOD
The Group
The Group started the year strongly but has during the last two quarters been negatively affected by various external factors to a gradually increasing extent. Viewed over the whole interim period, we exceeded our long-term financial targets but compared to last year’s strong figures, we reported a deterioration in consolidated operating profit of almost 10 per cent. The operating margin for the nine-month period was 11.4 per cent (15.0) and the profit margin amounted to 10.7 per cent (14.4). Revenue increased by 19 per cent, of which 8 per cent was organic growth.
    If we look at development during the third quarter alone, it can be summarised as weak. The effects of the challenging global business climate were further accentuated. The degree of this impact varied between the business units, however, with Industrial Solutions reporting more positive results than the others. Compared to the same period last year, the Group reported an increase in revenue of 4 per cent, wholly related to acquired operations, while the operating margin fell from 15.2 to 8.1 per cent. Last year’s profit figure includes non-recurring items of SEK 8 million. Excluding non-recurring items, the operating profit fell from 14.1 to 8.1 per cent.
    Generally speaking, the level of activity on affected markets has declined further since the end of the second quarter. Some of our companies are still experiencing good demand, although the majority of the businesses are affected by a cooler market climate. In combination with shortages of materials and components, for example, this is resulting in deteriorations in productivity. To date, price adjustments in relation to customers have not been able to match generally rising purchase prices and high energy costs, which have lowered profitability. Current measures are focusing on strengthening margins by adapting the cost level for the future.

The Industrial Products business unit
Compared to the first nine months of last year, sales rose by 39 per cent, of which 21 per cent related to business combinations. The operating profit increased marginally.
    Results during the third quarter were weak. Developments in respect of proprietary infrastructure and industrial products continued to display a positive trend, although this did not balance out the falling volumes linked to customer-specific assignments. Above all, the conditions within the automotive sector, which represents a dominant sector for the business unit, remained challenging. The order situation is good, but delays at short notice and lagging compensation for cost increases adversely effected profitability. The high energy prices also had a major impact. Adaptations aimed at tightening up operations are being implemented, as well as joint ventures linked to areas such as sustainable production, where the interests of customers are becoming increasingly tangible.

The Industrial Solutions business unit
In relation to last year’s first nine months, sales rose by 20 per cent, of which 11 per cent related to business combinations. Operating profit fell marginally.
    Here, too, contract volumes have decreased. Thanks to the successful launching of projects at the start of the year, the business unit still managed to report a decent third quarter. As feared, however, the market situation has become more cautious, including within the packaging and food industries. Disruptions to ongoing projects, in the form of component shortages and customers postponing installations, had an adverse impact on margins. It is pleasing to note that the investments in automation solutions for handling batteries for electric vehicles have resulted in large-scale assignments for a new customer in Europe. The work of establishing our operations on new geographic markets is continuing. The same applies to the business unit’s collaborations regarding business-critical processes and technical developments.  

The Precision Technology business unit
Sales decreased by 7 per cent and operating profit fell by 39 per cent compared to the first nine months of last year.
    The business unit reported a weak third quarter. In relation to the comparison period, the decline was primarily linked to the medical technology sector, which achieved extremely strong growth last year. However, the level of caution has become increasingly tangible within the majority of affected sectors. Our companies have found it difficult to match increased costs with price rises. In addition, a shortage of input goods has resulted in disruptions both in our own businesses and at our customers. This has resulted in a lower utilisation of resources and poorer productivity, with a direct and significant impact on profitability. The market investments are continuing, at the same time as the organisations are otherwise being adjusted in line with the changed conditions.

Future development
A general reduction in incoming orders is indicating a continued decline within a number of market segments, although the rate and extent of this decline are hard to judge. We are constantly adapting our operations with a focus on cash flow and margins. The immediate future is expected to remain difficult in many ways, but we are confident about the future in a longer perspective.
    With a solid financial position combined with a business model based on entrepreneurship and well-thought-out strategies, our investments in profitable growth and development are continuing. We will continue to be careful as regards the profile on the markets and the projects we select. We can see good opportunities for growth within areas such as sustainable energy and infrastructure solutions. Through in-depth collaboration within the Group, we can also reinforce our offering and develop our customer relations. Wide-ranging, joint initiatives are also being conducted in relation to areas such as sustainability and internal processes. And supplementing the Group’s operations through further acquisitions remains relevant.