NET ASSET VALUE AND THE LATOUR SHARE
- The net asset value rose to SEK 277 per share, compared to SEK 250 per share at the beginning of the year. This is an increase of 13.5 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 10.0 per cent. The net asset value was SEK 293 per share at 17 August [1].
- The total return on the Latour share was 15.6 per cent for the period, which is better than the SIXRX index.
INDUSTRIAL OPERATIONS
The second quarter
- The industrial operations' incoming orders rose 12 per cent to SEK 2,211 m (1,970), which means an unchanged level for comparable entities adjusted for foreign exchange effects.
- The industrial operations' net sales rose 12 per cent to SEK 2,161 m (1,935), which represents a 1 per cent decrease for comparable entities adjusted for foreign exchange effects.
- The operating profit increased by 19 per cent to SEK 246 m (207), which is equivalent to an operating margin of 11.4 (10.7) per cent for continuing operations.
- During the quarter, Latour Industries acquired Produal, which has 95 employees and an annual turnover of EUR 18 m. Specma Group has acquired Hydraulikhuset, which has 26 employees and an annual turnover of SEK 60 m. REAC has finalised the agreement for the acquisition of a small-scale business from the Ergolet Group in Poland.
January to June
- The industrial operations' order intake rose 14 per cent to SEK 4,355 m (3,813), which means a 1 per cent increase for comparable entities adjusted for foreign exchange effects.
- The industrial operations' net sales rose 14 per cent to SEK 4,191 m (3,665), which represents a 0.2 per cent increase for comparable entities adjusted for foreign exchange effects.
- The operating profit increased by 37 per cent to SEK 453 m (331), which is equivalent to an operating margin of 10.8 (9.0) per cent for continuing operations.
GROUP
- The Group's profit after financial items was SEK 1,872 m (897).
- The Group's profit after tax, including capital gains of SEK 670 m, was SEK 1,735 m (829), which is equivalent to SEK 10.88 (5.20) per share.
- Net debt at the end of June was SEK 3,599 m (2,543) and is equivalent to 7.5 per cent of the market value of total assets.
- Latour acquired 18 per cent of the shares in Steelwrist in June.
INVESTMENT PORTFOLIO
- During the six months, the value of the investment portfolio increased by 15.5 per cent adjusted for dividends. The comparable index (SIXRX) increased by 10.0 per cent.
- Ownership in Nobia dropped to 10.1 per cent following the disposal of 5,395,000 shares. Earlier in the year, 30.1 per cent of the shares in Troax were acquired. The company reports annual sales of approximately SEK 900 m.
EVENTS AFTER THE REPORTING PERIOD
- Latour announced its intention to sell the Specma Group business area.
[1] The calculation of the net asset value at 17 August 2015 was based on the value of the investment portfolio at 1 p.m. on 17 August and the same values at 30 June were used for the unlisted portfolio.
Comments from the CEO
"We are pleased to be able to report yet another quarter of robust performance despite the fact that volume growth adjusted for foreign exchange effects is sluggish. We are experiencing positive growth, albeit rather tepid, in much of Europe, where the most significant share of Latour's industrial operations conduct business. We are seeing stronger growth in our operations in Asia and North America, although these markets still account for a small proportion of total sales.
During the second quarter, incoming orders for the industrial operations were unchanged, when adjusted for foreign exchange effects and acquisitions. Net sales decreased by 1 per cent. The quarter's weak growth in volumes is somewhat coloured by Nord-Lock, in particular, being measured against a very robust quarter in the previous year. Including acquisitions and foreign exchange effects, both order intake and invoiced sales grew by 12 per cent in the industrial operations. To date this year, order intake is exceeding invoiced sales by more than SEK 160 m.
Compared with the adjusted profit in the previous year, profit rose 19 per cent to SEK 246 m (207), which is equivalent to an operating margin of 11.4 (10.7) per cent. Latour Industries accounts for the largest increase in profits from a previously low level. Hultafors Group and Specma Group have also contributed with significant growth in profits.
We can still see good potential for reporting strong earnings even if market growth is relatively weak. We continue to conduct our operations based on the premise that we cannot count on the economic situation offering us any significant help. However, we are not holding back on investments in product development and sales.
There was slightly more acquisition activity in the second quarter in the wholly-owned operations. REAC in Latour Industries finalised the agreement for the acquisition of parts of the Ergolet Group in Poland. The business generates sales of SEK 30 m and is based in Jasien in Poland. The deal ensures that REAC has a supply chain for key components.
Latour Industries also acquired Produal, a leading Finnish manufacturer of devices for building automation measurement and room control. Produal has 95 employees and generates sales of EUR 18 m with a very high level of profitability and operates in an area that is related to our holdings in the field of energy efficiency in buildings, Kabona, Bastec and Elvaco.
Specma Group made a smaller acquisition in the quarter with its purchase of Hydraulikhuset. The company has 26 employees and generates sales of approximately SEK 60 m. The acquisition enhances Specma's position in hydraulic systems and in the after-sales market in west Sweden.
We have also decided to announce our intention of selling the Specma Group business area, with annual revenue of SEK 1.3 billion. Since we have adopted a more rigorous acquisition strategy, which focuses explicitly on business operations with proprietary products and brands, it is only natural to sell Specma. A significant share of Specma's operations are trading services and it is a small player in the huge hydraulics market, with limited potential for expansion outside the Nordic region.
Most of our listed holdings have submitted their reports for the second quarter. On the whole, the companies have reported very positive performances in terms of growth and profitability, although market expectations were even higher in some cases. Several companies have continued to make acquisitions. Sweco's public takeover bid by the Dutch company, Grontmij, is particularly exciting. When finalised, the acquisition will make Sweco the leading technology consultancy company in Europe. Latour reduced its shareholding in Nobia to 10.1 per cent during the quarter.
The value of the investment portfolio rose 15.5 per cent during the first six months. This is higher than the comparable index (SIXRX), which rose 10.0 per cent. The net asset value in Latour increased in the first six months of 2015 by 13.5 per cent to SEK 277 per share, adjusted for dividends.
Finally, Latour has also expanded its portfolio of other unlisted holdings with the acquisition of 18 per cent of the shares in Steelwrist. Steelwrist develops, manufactures and sells tools that increase excavator efficiency, operator-friendliness and safety and had annual revenue of SEK116 m in 2014."
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