NET ASSET VALUE AND THE LATOUR SHARE
- The net asset value rose to SEK 320 per share, compared with SEK 317 per share at the beginning of the year. This is an increase of 3.1 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) decreased by 3.7 per cent. The net asset value was SEK 339 per share at 22 August. (1)
- The total return on the Latour share was 3.6 per cent in the first six months compared with -3.7 per cent for the SIXRX.
INDUSTRIAL OPERATIONS
The second quarter
- The industrial operations' order intake rose 19 per cent to SEK 2,216 m (1,856), which represents a 15 per cent increase for comparable entities adjusted for foreign exchange effects.
- The industrial operations' net sales rose 19 per cent to SEK 2,144 m (1,798), which represents a 15 per cent increase for comparable entities adjusted for foreign exchange effects.
- The operating profit increased by 36 per cent to SEK 307 m (226), which is equivalent to an operating margin of 14.4 (12.6) per cent for continuing operations.
- Latour Industries acquired the Aritco Group with annual sales of SEK 369 m and 157 employees. Swegon acquired bluMartin with annual sales of EUR 2 m and 16 employees.
January - June
- The industrial operations' order intake rose 14 per cent to SEK 4,167 m (3,642), which represents an 11 per cent increase for comparable entities adjusted for foreign exchange effects.
- The industrial operations' net sales rose 13 per cent to SEK 3,933 m (3,484), which represents a 9 per cent increase for comparable entities adjusted for foreign exchange effects.
- The operating profit increased by 24 per cent to SEK 509 m (410), which equates to an operating margin of 12.9 (11.8) per cent for continuing operations.
GROUP
- In the first six months, consolidated net sales totalled SEK 3,997 m (3,484) and profit after financial items was SEK 2,149 m (1,832). The profit includes capital gains of SEK 890 m (670), which is equivalent to SEK 5.58 per share.
- The Group's profit after tax was SEK 2,224 m (1,735), which is equivalent to SEK 13.94 (10.88) per share.
- Net debt at the end of June was SEK 1,700 m (3,599) and is equivalent to 3.2 per cent of the market value of total assets.
INVESTMENT PORTFOLIO
- During the first six months, the value of the investment portfolio increased by 1.3 per cent adjusted for dividends and changes in the portfolio. The benchmark index (SIXRX) decreased by 3.7 per cent.
EVENTS AFTER THE REPORTING PERIOD
- Nord-Lock acquired the Swedish company Expander Group with annual sales of SEK 72 m and 45 employees.
(1) The calculation of the net asset value on 22 August 2016 was based on the value of the investment portfolio at 1 p.m. on 22 August and the same values as on 30 June were used for the unlisted portfolio.
Comments from the CEO
“We're pleased to announce that the second quarter of 2016 turned out to be the best quarter ever for the industrial operations, with total net sales growth exceeding 19 per cent and organic growth topping 15 per cent. This has been underpinned by a good construction market in large parts of Europe, but I think it's fair to say that most of our operations are gaining market share. In the quarter, the Hultafors Group reported 19 per cent organic growth and Swegon 18 per cent. Even a business area like Nord-Lock, which is primarily exposed to the general industry, is reporting a double-figure organic growth rate in the quarter. Latour Industries grew by 7 per cent. I’m delighted to see how successfully our business areas are performing and I know, that after all the systematic work that they’ve been doing right across their operations, from product development to sales, this success is well-deserved.
The order intake in the quarter increased in total by 19 per cent and organically by 15 per cent. Net sales rose 19 per cent to SEK 2,144 m (1,798). The excellent performance means we can announce record earnings of SEK 307 m (226) and a strong operating margin of 14.4 (12.6) per cent.
We believe that the market growth in Europe is good, especially in the Nordic region, with the exception of Norway. Germany is also enjoying favourable growth and there is clear evidence of stability in other regions of Europe. We feel that the immediate effects of Brexit are manageable, but the UK is not an unimportant export market for any of the business areas. Some of the business areas have operations in the UK that may benefit from the Brexit decision. But the immediate effects on existing business flows are likely to be more negative than positive. The indirect effects of Brexit are as difficult for us to ascertain as they are for many others.
It is more difficult to assess how markets in the rest of the world will develop. There are many indications of negative growth in North America. However, this is particularly evident, just as before, in the oil & gas and the mining industries. We believe the general market situation in South-East Asia, including China, is still relatively uncertain.
Thanks to our fine performance and stable financial situation, we are well-positioned to consistently think and act ahead, as we have in the past, no matter how the markets change. Despite relatively weak market growth, we are confident that our firm footing will allow us to continue to report strong earnings.
Our new part-owned subsidiary in Germany, Neuffer Fenster + Türen GmbH, is continuing to grow and reported an order intake of SEK 33 m in the second quarter, compared with SEK 28 m in the first. Neuffer sells windows via online sales sites in Germany, Sweden and France. The table on page 5 of the interim report shows that we report Neuffer separately to the wholly-owned industrial operations.
The industrial operations were complemented with two acquisitions in the second quarter. In April, Swegon acquired the German company bluMartin, which is an innovative manufacturer of residential ventilation systems. The company generates sales of EUR 2 m and has 16 employees. Latour Industries acquired the Aritco Group, a leading Swedish manufacturer of home lifts and platform lifts. The company generates sales of SEK 369 m, has 157 employees and has achieved a double-figure growth rate with stable profitability in recent years. In our opinion, there are favourable conditions for this trend to continue.
Most of our listed holdings have submitted their reports for the second quarter. These companies are reporting strong growth, with some exceptions.
The value of the investment portfolio increased by 1.3 per cent in the first six months, adjusted for dividends, while the benchmark index (SIXRX) decreased by 3.7 per cent. The net asset value in Latour increased in the same period by 3.1 per cent to SEK 320 per share, adjusted for dividends.
In summary, I believe that these developments are extremely positive.”
Jan Svensson
President and Chief Executive Officer
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
Conferense call
President and CEO Jan Svensson and CFO Anders Mörck present the report and answers to questions by telephone today at 11.00 AM (CET). The conference call will be held in English.
To follow the meeting, please call +46 (0)8 566 426 90
To follow the webcast please visit our webpage or use the link:
http://event.onlineseminarsolutions.com/r.htm?e=1193685&s=1&k=7777F146B71BE92CC1FE7D0D5BD84405