Interim report January - March 2017

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Interim report January - March 2017

NET ASSET VALUE AND THE LATOUR SHARE

  • The net asset value rose to SEK 381 per share, compared with SEK 348 per share at the beginning of the year. This is an increase of 9.4 per cent. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 6.5 per cent. The net asset value was SEK 399 per share at 27 April. (1)

  • The total return on the Latour share was 4.6 per cent in the period compared with 6.5 per cent for the SIXRX.

INDUSTRIAL OPERATIONS

  • The industrial operations' order intake rose 25 per cent to SEK 2,441 m (1,951), which represents a 12 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The industrial operations' net sales rose 25 per cent to SEK 2,235 m (1,788), which represents an 11 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The operating profit increased by 25 per cent to SEK 252 m (201), which equates to an operating margin of 11.3 (11.3) per cent for continuing operations.

  • Swegon acquired the Irish company Safegard, which has an annual turnover of EUR 8 m and 24 employees.

  • Hultafors Group acquired Puvab AB, which has an annual turnover of SEK 42 m and 49 employees.

GROUP

  • Consolidated net sales totalled SEK 2,269 m (1,818) and profit after financial items was SEK 611 m (1,466), of which SEK 0 m (890) are capital gains.

  • The Group's profit after tax was SEK 554 m (1,602), which is equivalent to SEK 3.48 (10.05) per share. Excluding capital gains, earnings rose to SEK 3.48 (3.33) per share.

  • Net debt at the end of March was SEK 1,598 m (582) and is equivalent to 2.5 per cent of the market value of total assets.

INVESTMENT PORTFOLIO

  • During the first quarter, the value of the investment portfolio increased by 11.2 per cent adjusted for dividends. The benchmark index (SIXRX) increased by 6.5 per cent.

  • Ownership in Tomra increased to 26.1 per cent of the capital after the acquisition of 340,000 shares.

EVENTS AFTER THE REPORTING PERIOD

  • An agreement was signed on 3 April for the acquisition of AAT in Germany for REAC within Latour Industries.

(1) The calculation of the net asset value at 27 April 2017 was based on the value of the investment portfolio at 1 p.m. on 27 April and the same values at 31 March were used for the unlisted portfolio.

Comments from the CEO
“We are delighted to be able to report once again a quarter of robust organic growth. Order intake saw organic growth of 12 per cent with corresponding growth in invoiced sales of 11 per cent. Including acquisitions, both order intake and invoiced sales grew by 25 per cent. This continues the trend of record quarters in absolute figures. This time, we're pleased to report the best first quarter ever. The operating profit improved by 25 per cent to SEK 252 m (201) to give an operating margin of 11.3 (11.3) per cent. The improvement in absolute figures can be attributed in part to the timing impact resulting from Easter occurring in April this year. At the same time, non-recurring costs of SEK 15 m have been recognised in the income statement.

We have been consistently investing resources in product development, sales and marketing for a long time. 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. Past and present investments and initiatives in the aforementioned areas are currently producing results in the form of growth rather than a rise in the operating margin. The industrial operations as a whole continue to deliver a stable performance above our 10 per cent annual growth target and well above our 10 per cent operating margin target.

We see that activity and growth in the building and construction industry remains strong across much of Europe. Best business climate is in the Nordic countries, although key markets like Germany and the UK are gradually improving too. As well as impressive growth in the construction market, we have noted that demand from our customers in the general manufacturing industry is also stronger. We're also seeing signs of a new-born optimism in North America and in parts of Asia, although not in China. The concern that many feel about the situation in China is not shared by Nord Lock, who continues its fine growth there.

We made two acquisitions for the industrial operations in the first quarter. Swegon acquired the Irish company Safegard, which is a market leading provider of smoke and fire dampers in the UK and Ireland. Hultafors acquired the Swedish company Puvab which complements the earlier range of Hultafors' products extremely well with so-called multi-norm clothing, i.e. high-quality, certified clothes with an innovative design that provide protection to the wearer when working in hazardous and demanding conditions. After the end of the reporting period, REAC in Latour Industries has signed an agreement for the acquisition of the German company AAT. Read more about our acquisitions on page 4 in the report. In total, acquisitions made so far corresponds to a growth of 3.5 per cent on an annual basis.

Thanks to our growth and fine earnings performance, we are well positioned to think and act ahead, as we have in the past, no matter how the markets change. We're expecting acquisition activity to remain relatively high throughout 2017. Our healthy financial position allows for investments of more than SEK 5 billion.

Only a few of our listed holdings have submitted their reports for the first quarter. Those that have submitted a report have, as previously, mainly posted a strong performance.

The value of the investment portfolio increased by 11.2 per cent in the first quarter, adjusted for dividends, compared against the benchmark index SIXRX which increased by 6.5 per cent. The net asset value in Latour increased in the same period by 9.4 per cent to SEK 381 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 42 666. The conference will be webcasted.
To follow the webcast please visit our webpage or use the link:
http://event.onlineseminarsolutions.com/r.htm?e=1392909&s=1&k=2E897BF932A0D9A6B17CC2314A78A093