Interim Report January - March 2016

Press release

Interim Report January - March 2016

NET ASSET VALUE AND THE LATOUR SHARE

• The net asset value declined to SEK 305 per share, compared with SEK 317 per share at the beginning of the year. This is a decrease of 3.8 per cent. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) decreased by 3.4 per cent. The net asset value was SEK 316 per share at 28 April (1).
• The total return on the Latour share was 8.0 per cent for the period, thus outperforming the SIXRX benchmark index.

INDUSTRIAL OPERATIONS

• The industrial operations' order intake rose 9 per cent to SEK 1,951 m (1,786), which represents a 7 per cent increase for comparable entities adjusted for foreign exchange effects.
• The industrial operations' net sales rose 6 per cent to SEK 1,788 m (1,686), which represents a 3 per cent increase for comparable entities adjusted for foreign exchange effects.
• The operating profit increased by 10 per cent to SEK 201 m (184), which equates to an operating margin of 11.3 (10.9) per cent for continuing operations.
• Specma Seals acquired the Norwegian company All Sealing Solutions with net sales of NOK 27 m in 2015 and 15 employees.

GROUP

• The Group's net sales amounted to SEK 1,818 m (1,686) and the profit after financial items was SEK 1,466 m (867). The profit includes capital gains of SEK 890 m, which is equivalent to SEK 5.58 per share.
• The Group's profit after tax was SEK 1,602 m (833), which is equivalent to SEK 10.05 (5.22) per share.
• Net debt at the end of December was SEK 582 m (3,394) and is equivalent to 1.2 per cent of the market value of total assets.

INVESTMENT PORTFOLIO

• During the period, the value of the investment portfolio decreased by 5.1 per cent adjusted for dividends. The benchmark index (SIXRX) decreased by 3.4 per cent.
• The shareholding in Loomis was reduced during the first quarter. All class B shares were sold for a consideration (gross) of SEK 1,247 m, resulting in a capital gain of SEK 890 m. Latour remains the principal owner with 2,528,520 class A shares, corresponding to 23.8 per cent of the voting rights and 3.4 per cent of the capital in Loomis.
• Shareholding in Tomra increased to 25.8 per cent of the capital after the acquisition of 1,570,000 shares.

EVENTS AFTER THE REPORTING PERIOD

• Swegon acquired the German company bluMartin, which generates sales of approximately EUR 2 m and has 16 employees.

(1) The calculation of the net asset value on 28 April 2016 was based on the value of the investment portfolio at 1 p.m. on 28 April and the same values as on 31 March were used for the unlisted portfolio.

Comments from the CEO

"2016 has got off to a positive start. The order intake increased organically by almost 7 per cent in the quarter. Invoiced sales increased by just over 3 per cent, which means our order book has grown even more.

Compared with the general business trend, we feel we have a strong and stable platform and, except for capital goods, growth in Europe has been relatively healthy. There are a few exceptions, such as Norway, where the downturn in the oil & gas industry and the weak Norwegian Krone also have an effect on markets other than the oil and gas industry. The industry continues to face challenges in North America, even after the developments in the oil and gas industry, while construction-related sectors are recovering. Finally, although the general market situation in South-East Asia can only be described as relatively uncertain, our operations there are performing well.

All of the business areas are reporting organic growth with the Hultafors Group showing the strongest performance, having increased its order intake by 12 per cent and its net sales by 11 per cent adjusted for foreign exchange effects and acquisitions. The industrial operations are continuing to achieve improvements in earnings. We are now established at a higher level of profitability thanks to the improvements our companies have made to operations in recent years and the launch of a number of new products. We will continue along the chosen path with the same energy and commitment. The operating profit in the first quarter (which is usually our weakest) increased by 10 per cent to SEK 201 m (184), which equates to an operating margin of 11.3 (10.9) per cent.

Major investment is essential to be able to continue offering our customers new top-quality products, not only in product development, but also in sales and marketing. 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 operation in Germany, Neuffer Fenster + Türen GmbH, has begun the year with a 19 per cent increase in orders, bringing the value of the intake to SEK 28 m. 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 an acquisition in the first quarter. All Sealing Solutions in Norway was acquired by Specma Seals in Latour Industries. The company generated sales of NOK 27 m in 2015 and has about 15 employees. The company is a leading supplier of gaskets and seals for the oil and gas industry in Norway. The fact that we have decided to enter an industry which is currently experiencing challenging market conditions is confirmation that we remain committed to our long-term approach. After the end of the quarter, Swegon acquired bluMartin, which is a niche player in the residential ventilation sector in the German market. The company generates sales of EUR 2 m and has 16 employees.

Some of our listed holdings have submitted their reports for the first quarter. These companies are reporting strong growth on the whole, with some exceptions. In the first quarter, we decreased our shareholding in Loomis with the disposal of all class B shares. We now hold 23.8 per cent of the voting rights and 3.4 per cent of the capital.

The value of the investment portfolio decreased by 5.1 per cent in the first quarter, while the benchmark index (SIXRX) decreased by 3.4 per cent. The net asset value in Latour decreased by 3.8 per cent to SEK 305 per share in the same period. These developments should be seen in the light of the general trend in the stock market in the first quarter, which was affected by the uncertain outlook in China.

I would like to conclude by saying that I think the year has started well."

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=1168936&s=1&k=25F1C3228D0BF6F77FB762B53944E775