NET ASSET VALUE AND THE LATOUR SHARE
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The net asset value rose to SEK 96 per share, compared with SEK 87 per share at the beginning of the year. This is an increase of 13.3 per cent adjusted for dividend. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 10.8 per cent. The net asset value was SEK 92 per share at 21 August (1).
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The total return on the Latour share was 25.9 per cent in the first six months compared with 10.8 per cent for the SIXRX.
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A 4:1 share split was implemented in June.
INDUSTRIAL OPERATIONS
The second quarter
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The industrial operations' order intake rose 18 per cent to SEK 2,606 m (2,216), which represents a 3 per cent increase for comparable entities adjusted for foreign exchange effects.
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The industrial operations' net sales rose 16 per cent to SEK 2,493 m (2,144), which represents a 1 per cent increase for comparable entities adjusted for foreign exchange effects.
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The operating profit decreased by 3 per cent to SEK 297 m (307), which equates to an operating margin of 11.9 (14.4) per cent for continuing operations.
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Via its subsidiary REAC AB, Latour Industries acquired the German company AAT, which generates annual sales of EUR 18 m. Latour Industries also acquired the Italian company VIMEC, which generates annual sales of EUR 45 m. Since their takeover dates, both acquisitions have had positive impacts on earnings per share.
January - June
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The industrial operations' order intake rose 21 per cent to SEK 5,047 m (4,167), which represents a 7 per cent increase for comparable entities adjusted for foreign exchange effects.
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The industrial operations' net sales rose 20 per cent to SEK 4,728 m (3,933), which represents a 6 per cent increase for comparable entities adjusted for foreign exchange effects.
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The operating profit increased by 8 per cent to SEK 550 m (509), which equates to an operating margin of 11.6 (12.9) per cent for continuing operations.
GROUP
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Consolidated net sales totalled SEK 4,807 m (3,997) and profit after financial items was SEK 1,476 m (2,149), of which SEK 0 m (890) are capital gains.
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Consolidated profit after tax was SEK 1,351 m (2,224), which is equivalent to SEK 2.12 (3.49) per share. Excluding capital gains, profit increased to SEK 2.12 (2.09) per share.
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Net debt at the end of June was SEK 2,608 m (1,700) and is equivalent to 4 per cent of the market value of total assets.
INVESTMENT PORTFOLIO
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During the first six months, the value of the investment portfolio increased by 17.2 per cent adjusted for dividends. The benchmark index (SIXRX) rose 10.8 per cent.
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The ownership in Tomra increased to 26.3 per cent of the equity following the acquisition of 689,000 shares, of which 349,000 shares were acquired in the second quarter.
EVENTS AFTER THE REPORTING PERIOD
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There were no material events subsequent to the end of the reporting period.
(1) The calculation of the net asset value on 21 August 2017 was based on the value of the investment portfolio at 1 p.m. on 21 August and the same values as on 30 June were used for the unlisted portfolio.
Comments from the CEO
“After several quarters of good growth and earnings performance, the second quarter of 2017 was somewhat quieter. However, we’re continuing to grow more than our target of at least 10 per cent. In total, order intake grew by 18 per cent and invoiced sales by 16 per cent. Both order intake and invoiced sales delivered modest organic growth, however, of 3 per cent and 1 per cent respectively. Effects of calendar variation are thought to adversely impact these figures by 4 to 5 percentage points. Similarly, the calendar-related effects helped us in the first quarter when order intake grew organically by 12 per cent and invoiced sales by 11 per cent. The cumulative 7 per cent organic growth in order intake and 6 per cent in invoiced sales thus provides a good picture of the level of activity in our business areas.
The operating profit in the quarter was SEK 297 m (307), giving an 11.9 (14.4) per cent operating margin. One of the reasons why earnings are slightly down, aside from the effects of calendar variation, is that outgoing deliveries are not keeping pace with the order intake. The order backlog has consequently increased. The SEK 320 m increase makes it the highest order backlog ever of SEK 1,340 (1,040) m. It is primarily our customers in the construction sector that have been affected by delays, partly due to a lack of resources in the construction industry. Swegon, the business area most affected by this, has an order intake this year that is SEK 257 m more than invoiced sales. However, there is nothing to suggest that this will not balance out in the second half of the year, and we are therefore anticipating good levels of invoiced sales in the months to come.
We are continuing to invest resources consistently in product development, sales and marketing. We have also been consciously focusing on improving the digital presence of our business areas, particularly with the aim of making it easier for our customers to do business with us. A quarter like this increases expenditure to a greater extent than income. The industrial operations as a whole are steadily continuing to deliver above our 10 per cent annual growth target and well above our 10 per cent operating margin target.
As far as we can see, the economic climate in the building and construction industry remains strong across much of Europe. However, the lack of resources in several markets is becoming increasingly apparent. This may cause growth to slow for a while but, on the other hand, there are a great many development projects in the pipeline which means the construction industry should be able to sustain this high level of activity. The Nordic countries still have the best business climate. Germany is also showing good growth and the UK appears to have stabilised. Developments in the general manufacturing industry have also been better than they have since the end of 2016. We are viewing developments in South East Asia, including China and India, with some optimism, even though the industrial operations do not yet have a significant stake there. Nord-Lock has continued to report pleasing growth in Asia. Business developments and growth in the USA feel least certain at present. We feel the situation there is somewhat unclear with very mixed signals, depending on the sector, but also with regard to the general willingness to invest.
We acquired two businesses for the industrial operations in the second quarter. Latour Industries' subsidiary REAC acquired the German company AAT, which manufactures equipment for customers in the European Mobility Rehab market. And Latour Industries acquired the Italian company VIMEC, a leading manufacturer of platform lifts and stair lifts. Read more about our acquisitions on page 4 in the report. In total, the acquisitions made in 2017 will add just over 8 per cent growth on an annual basis for the industrial operations.
Thanks to our growth and stable earnings performance, we are well-positioned to think and act ahead, as we have in the past, no matter how the markets change. We see good prospects for continuing an in all conditions short-term relatively high acquisition activity in 2017. Our healthy financial position allows for investments of more than SEK 5 billion.
Our listed holdings have reported generally good and stable performances for the second quarter. HMS Networks and Troax have excelled appreciably.
The value of the investment portfolio increased by 17.2 per cent in the first six months, adjusted for dividends, while the benchmark index (SIXRX) increased by 10.8 per cent. The net asset value in Latour increased in the same period by 13.3 per cent to SEK 96 per share, adjusted for dividends.”
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 91 To follow the webcast please visit our webpage or use the link:
http://event.onlineseminarsolutions.com/r.htm?e=1449684&s=1&k=074EE7115D817FADD3EC6216FE502552