Interim Report January - September 2014

Press release

Interim Report January - September 2014

NET ASSET VALUE AND THE LATOUR SHARE

• The net asset value rose to SEK 233 per share, compared to SEK 212 per share at the beginning of the year. This is an increase of 12.8 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange’s Total Return Index (SIXRX) increased by 9.2 per cent. The net asset value was SEK 236 per share at 5 November.(1)
• The total return on the Latour share was 14.4 per cent during the nine-month period, which can be compared against the SIXRX index which reached 9.2 per cent.

INDUSTRIAL OPERATIONS
Third quarter

• Strongest quarter performance ever.
• The industrial operations’ incoming orders increased to SEK 1,864 m (1,644), which means an unchanged level for comparable entities adjusted for foreign exchange effects.
• The industrial operations recorded net sales of SEK 1,877 m (1,702), which represents a 3 per cent decrease for comparable entities adjusted for foreign exchange effects.
• The operating profit before restructuring and non-recurring expenses was SEK 237 m (207), which corresponds to an adjusted operating margin of 12.6 (12.2) per cent for continuing operations. Restructuring and non-recurring expenses amounted to SEK 0 m (11) during the quarter.
• Swegon acquired P Lemmens in Belgium. The company has 59 employees and generates an annual turnover of approximately EUR 26 m. Swegon also acquired Econdition in Germany. The company has 40 employees and generates an annual turnover of approximately EUR 14 m. Swegon also acquired Luftmiljö AB in Sweden. The company has 14 employees and generates an annual turnover of approximately SEK 15 m. Latour Industries acquired Bastec AB in Malmö. The company has 28 employees and generates an annual turnover of approximately SEK 45 m.

January to September

• The industrial operations’ incoming orders increased to SEK 5,696 m (5,188), which represents a 1 per cent increase for comparable entities adjusted for foreign exchange effects.
• The industrial operations recorded net sales of SEK 5,563 m (5,057), which represents a 1 per cent increase for comparable entities adjusted for foreign exchange effects.
• The operating profit before restructuring and non-recurring expenses was SEK 567 m (507), which corresponds to an adjusted operating margin of 10.2 (10.0) per cent for continuing operations.
•  

GROUP

• The Group’s profit after financial items was SEK 1,457 m (1,242).
• The Group’s profit after tax was SEK 1,322 m (1,103), which is equivalent to SEK 8.29 (6.92) per share.
• Net debt at the end of September was SEK 3,302 m and is equivalent to 8.2 per cent of the market value of total assets.

INVESTMENT PORTFOLIO

• The value of the investment portfolio increased by 15.8 per cent during the nine-month period. The comparable index (SIXRX) increased by 9.2 per cent.

EVENTS AFTER THE REPORTING PERIOD

• Hultafors has signed an agreement to acquire Tradeport AB.

(1) The calculation of the net asset value at 5 November 2014 was based on the value of the investment portfolio at 1 p.m. on 5 November and the same values at 30 September were used for the unlisted portfolio.

Comments from the CEO

“It is gratifying to be able to report a quarter with a really robust performance. It is our strongest ever, expressed in absolute terms, and only one-tenth or so away from our best in terms of operating margin. And this is despite subdued volume growth. This proves that we are maintaining a high level of efficiency and good cost control in our operations.

My picture of market development is of a generally weak Europe. Indicators look positive in the United Kingdom and Ireland and the markets in Sweden, Denmark and Norway are relatively stable. Russia, Finland, France and southern Europe, on the other hand, have weak market situations. The fact that the important German market is currently marked by considerable uncertainty gives cause for concern.

The picture within industrial operations is still mixed. Apart from Swegon and Latour Industries, all the business areas are continuing to report organic growth. This is particularly good in Nord-Lock where sales increased by 13 per cent in the third quarter, adjusted for foreign exchange effects and acquisitions. Our largest business area Swegon, which has a late business cycle pattern, is exhibiting negative growth, adjusted for acquisitions. Nevertheless, growth during the quarter, including acquisitions, was 12.1 per cent.

Incoming orders increased during the quarter overall by 13 per cent to SEK 1,864 m (1,644). This is equivalent to unchanged organic growth when adjusted for foreign exchange effects and acquisitions. Invoicing increased by 10 per cent to SEK 1,877 m (1,702). The adjusted operating profit was SEK 237 m (207), which corresponds to an adjusted operating margin of 12.6 (12.1) per cent. Nord-Lock and the Hultafors Group continue to show a strong earnings trend. Performance in the industrial operations is better than last year’s, despite the negative organic growth in Swegon. The measures that we have undertaken and the interesting acquisitions that we have made provide favourable conditions for a continuation of the positive earnings trend in the industrial operations. It is currently uncertain whether market developments will give us any other help.

We completed a number of very interesting acquisitions in the summer months. These were primarily in Swegon, where we acquired three companies in the third quarter, one in each business area. These are P Lemmens in Belgium for Commercial Ventilation, Econdition in Germany for Cooling and Luftmiljö for Residential. In addition to these, Swegon acquired Vibro-Acoustics® in North America in June. Moreover, Latour Industries acquired Bastec at the end of June. The coming period will be marked by the integration of these acquisitions, and Swegon, above all, has a period of consolidation ahead. (More information about the acquisitions later in the interim report.)

In all essential respects, our listed holdings are continuing to show stable progress. The value of the investment portfolio rose 15.8 per cent, adjusted for dividends, during the nine-month period. This is slightly higher than the comparable index (SIXRX), which rose 9.2 per cent. With regard to acquisitions, the last two quarters have been somewhat quieter than previous periods for the listed holdings. The most significant acquisition was announced in April, when Loomis purchased VIA MAT in Switzerland. The most important news in the third quarter was Nobia’s announcement that it had managed to sell the troubled French division of its operations at favourable terms.

In the nine-month period, the net asset value in Latour increased by 12.8 per cent, adjusted for paid dividends.”

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

This information constitutes information which Latour is required to disclose under the Swedish Securities Market act. The information was submitted for publication on 6 November 2014, at 8:30 a.m.