Year-end report 2022

THE FULL YEAR
»    Net revenue totalled SEK 3,509 million (3,151)
»    Operating profit amounted to SEK 341 million (453)
»    Profit before tax amounted to SEK 309 million (433) 
»    Profit after tax amounted to SEK 249 million (342)
»    Earnings per share were SEK 4.30 (5.90)
»    Proposed dividend per share SEK 1.75 (1.75)

THE FOURTH QUARTER
»    Net revenue totalled SEK 806 million (883)
»    Operating profit amounted to SEK 34 million (114)
»    Profit before tax amounted to SEK 19 million (107) 
»    Profit after tax amounted to SEK 23 million (88)
»    Earnings per share were SEK 0.40 (1.51)

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

CEO’S COMMENTS ON THE GROUP’S DEVELOPMENT DURING THE PERIOD 
The Group
After a generally strong start, most of our operations were increasingly impeded by difficult external factors over the past year. We still exceeded our long-term financial objectives for the year as a whole, but the Group reported a deterioration in operating profit of approx. 25 per cent compared to the previous year. The operating margin was 9.7 per cent (14.4) and the profit margin amounted to 8.8 per cent (13.8). Sales increased by 11 per cent, of which 2 per cent was organic growth.
    The end of the year followed the trend from the preceding period and the consolidated results during the fourth quarter were weak. Relative to the comparison period, sales declined by almost 9 per cent, while the operating margin fell from 12.9 to 4.2 per cent. This negative trend mostly affected the majority of the operations in the Industrial Solutions business unit. Here, the relatively weak incoming orders during the second half of the year, along with the effects of delayed project deliveries, had a significant impact during the period. Continued disruptions in both our own and our customers’ supply chains meant that many ongoing automation projects were paused and the start-up of new projects was postponed. Within all our business units, however, some operational areas have not been particularly affected by external circumstances, and consequently have seen a more favourable development.
    If we look at the Group as a whole, there are two main factors that have affected profitability. The first relates to deteriorations in productivity as a result of constantly having to adapt the production process in line with new preconditions, combined with periodic high sickness absence. The second is that we have not managed to compensate sufficiently for the cost increases we have been affected by. Far-reaching measures are being implemented in the form of cost savings and price rises, as well as to safeguard critical processes in the supply chain. These are being combined with aggressive initiatives in respect of marketing activities, for which resources are continually being allocated.

The Industrial Products business unit
Sales increased by 29 per cent compared to the previous year, of which 17 per cent was achieved through acquisitions. Operating profit fell by 10 per cent.  
    Within the business unit, there were major differences between the companies in terms of outcome, with many of the companies reporting stable profits. One contributory factor is the positive trend as regards the proprietary product ranges within infrastructure and industry. The most significant negative effect was experienced by our businesses that have a high proportion of their production linked to the automotive sector. Here, the shortage of input goods at our customers both reduced order volumes and delayed the placing of orders. Within the automotive segment, it has also been difficult to implement price adjustments, and there is a considerable lag as regards promised compensation. Outside of the automotive segment, the market situation is generally good, and more resources have been allocated to marketing activities including the introduction of our own products on new markets.

The Industrial Solutions business unit
Sales increased by 12 per cent compared to the previous year, of which 8 per cent was achieved through acquisitions. Operating profit fell by 17 per cent.
    Successful project sales during the previous year resulted in relatively stable margins during the first nine months of this year. However, the final quarter was impacted to a great extent by the effects of the lower incoming orders and the disruptions in the supply chain experienced during the second half of the year. In practice, this has resulted in both ongoing automation projects and major deals in the start-up phase being postponed. Orders have also not been realised to the anticipated extent, and our organisations that have geared up for growth have had to adjust and gear down. However, we have seen positive results from our investments in new business areas and on new geographic markets. More in-depth collaboration with our customers through extended after-sales services has also opened the door to new opportunities.  

The Precision Technology business unit
Sales fell by 12 per cent and operating profit decreased by 51 per cent compared to the previous year.
    Taking the current global situation in consideration, it was already beforehand looking difficult to match the previous year’s strong results, but the business unit’s combined performance over the past year was still below our own expectations. Developments during the final quarter followed the trend from previous periods, with a generally more cautious market. Within the medical technology sector, which is the dominant sector for the business unit, customers continually revised their purchase volumes downwards. With the high degree of unpredictability, it has not been possible to utilise the resources satisfactorily, and the lower productivity levels have hit profitability hard. In addition to this, our companies have not been able to compensate for increased costs with corresponding price rises. The organisations have continued to adapt to the lower volumes. At the same time, aggressive initiatives are being implemented on the marketing side in an attempt to seek out new niches and customer segments.

Future development
The market situation is expected to remain cautious in the immediate future, although we are witnessing a certain levelling out of the downward trend and a more balanced influx of orders. Raw material prices have stabilised, although general cost increases are continuing to have a dampening effect on our business. During the present quarter, we will be seeing the effects of implemented price adjustments and the gradual adaptation of our workforce to the lower incoming order levels. Cash flow and margins are the focus of our agenda. Our order situation is good, but the shortage of critical components is a concern, particular in respect of our project-related operations. Work aimed at identifying alternative supply routes is therefore being prioritised, alongside investments in after-sales services. Through one of our more recent acquisitions, we have also extended our offering in respect of software solutions, an area where we can see considerable potential for growth. We are consequently maintaining our aggressive approach and have great faith in the future.
    When it comes to acquisitions, we have consciously adopted a more cautious approach for a period of time, but, backed by our extended credit facilities, we have good potential to supplement our operations in future.