NET ASSET VALUE AND THE LATOUR SHARE
• The net asset value rose to SEK 223 per share, compared to SEK 212 per share at the beginning of the year. This is an increase of 8.0 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 9.5 per cent. The net asset value was SEK 222 per share at 19 August.1)
• The total return on the Latour share was 17.4 per cent during the first six months of the year, which is better than the SIXRX index which reached 9.5 per cent.
INDUSTRIAL OPERATIONS
The second quarter
• The industrial operations' incoming orders increased to SEK 1,975 m (1,876), which represents a 2 per cent decrease for comparable entities adjusted for foreign exchange effects.
• The industrial operations recorded net sales of SEK 1,940 m (1,750), which represents a 3 per cent increase for comparable entities adjusted for foreign exchange effects.
• The operating profit before restructuring and non-recurring expenses was SEK 207 m (168), which corresponds to an adjusted operating margin of 10.7 (9.6) per cent for continuing operations. Restructuring and non-recurring expenses within the Specma Group amounted to SEK 41 m during the quarter.
• Swegon acquired Vibro-Acoustics® in North America. The company has 167 employees and generates an annual turnover of approximately SEK 170 m.
January to June
• The industrial operations' incoming orders increased to SEK 3,833 m (3,544), which represents a 2 per cent increase for comparable entities adjusted for foreign exchange effects.
• The industrial operations recorded net sales of SEK 3,686 m (3,356), which represents a 3 per cent increase for comparable entities adjusted for foreign exchange effects.
• The operating profit before restructuring and non-recurring expenses was SEK 331 m (300), which corresponds to an adjusted operating margin of 9.0 (8.9) per cent for continuing operations.
• Nord-Lock is reported as a new business area from the start of the first quarter of 2014. Nord-Lock was previously a business entity within Latour Industries.
GROUP
• The Group's profit after financial items was SEK 897 m (710).
• The Group's profit after tax was SEK 829 m (624), which is equivalent to SEK 5.20 (3.91) per share.
• Net debt at the end of June was SEK 2,519 m and is equivalent to 6.6 per cent of the market value of total assets.
INVESTMENT PORT FOLIO
• The value of the investment portfolio rose 9.9 per cent during the first six months, which is slightly higher than the comparable index (SIXRX), which increased by 9.5 per cent.
EVENTS AFTER THE REPORT PERIOD
• Swegon acquires P. Lemmens in Belgium, with an annual turnover of EUR 26 m, and Econdition in Germany, with an annual turnover of EUR 14 m. Latour Industries takes over Bastec, which has an annual turnover of
SEK 45 m.
1) The calculation of the net asset value on 19 August 2014 was based on the value of the investment portfolio at 1 p.m. on 19 August and the same values as on 30 June were used for the unlisted portfolio.
Comments from the CEO
“The market is still gradually improving but at a relatively slow pace. Sales for the industrial operations have progressed at a satisfactory level on the whole. However, we are seeing a mixed picture. Apart from Swegon, all the business areas are reporting organic growth. This is particularly good in Nord-Lock where sales increased by 17 per cent in the second quarter, adjusted for foreign exchange effects and acquisitions. Our largest business area Swegon, which has a late business cycle pattern, is exhibiting negative growth, adjusted for acquisitions. Nevertheless, growth during the quarter including acquisitions was 6.5 per cent.
Incoming orders increased during the quarter overall by 5 per cent to SEK 1,975 m (1,876). This is equivalent to a 2 per cent organic decline when adjusted for foreign exchange effects and acquisitions. Invoicing increased by 11 per cent to SEK 1,940 m (1,750). 3 per cent of this is organic growth. The adjusted operating profit was SEK 207 m (168), which corresponds to an adjusted operating margin of 10.7 (9.6) per cent. Nord-Lock, Hultafors Group and REAC continue to show a strong earning trend. Performance is satisfactory and slightly better than last year's, despite the negative organic growth in Swegon. The measures and interesting acquisitions that we have undertaken, coupled with the improved economy, provide favourable conditions for the positive earnings trend to continue in the industrial operations.
We are maintaining our focus on developing more new products and enhancing our positions in priority markets. Developments in the second quarter confirm that we are gaining market share in Nord-Lock in Asia and that REAC is gaining market share in Medical Rehab. We believe that developments in other operations are consistent with what can be expected in the prevailing economic climate. The focus on forward-looking acquisitions is also unchanged. This is confirmed by Swegon's acquisition of Vibro- Acoustics® in the second quarter, and the three acquisitions that Swegon (two) and Latour Industries (one) made after the end of the quarter.
During the quarter, two non-recurring items were charged to the income statement. One relates to the financial strategy decision to buy ourselves out of all Swedish defined-benefit pension liabilities within the FPG/PRI pension system. During the second quarter, the company redeemed a total of SEK 148 m in pension liabilities which incurred a non-recurring expense of SEK 10 m. The underlying net financial items will improve in the future. The other nonrecurring item stems from the ongoing changes in the operations of the Specma Group. The non-recurring expense for these measures is SEK 41 m, of which SEK 4 m are indirect costs associated with a cost-reduction programme, and SEK 37 m relate to the disposal of obsolete inventory and a more stringent policy for obsolescence assessment, partly attributable to the organisational change and a new business structure. The cost-reduction measures entail annual savings of approximately SEK 10 m with immediate effect.
In all essential respects, our listed holdings are continuing to show stable progress. The value of the investment portfolio rose 9.9 per cent during the first six months, which is slightly higher than the comparable index (SIXRX), which increased by 9.5 per cent. With regard to acquisitions, it was somewhat quieter than previous periods for the listed holdings. The most important acquisition was announced in April, when Loomis purchased VIA MAT in Switzerland. In addition, Assa Abloy and Securitas made a number of smaller acquisitions in the quarter. In the first six months, the net asset value in Latour increased by 8.0 per cent, adjusted for paid dividends.”
INVESTMENT AB LATOUR
Jan Svensson
President and CEO
For further information please contact:
Jan Svensson, President and CEO, Tel. +46 705-77 16 40 or
Anders Mörck, CFO, Tel. +46 706-46 52 110
This information constitutes information which Latour is required to disclose under the Swedish Securities Market act. The information was submitted for publication on 20 August 2014, at 8:30 a.m.