Year-end Report 2015

Report

Presentations

Press release

Year-end Report 2015

NET ASSET VALUE AND THE LATOUR SHARE

  • The net asset value rose to SEK 317 per share, compared to SEK 250 per share at the beginning of the year. This is an increase of 29.9 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 10.4 per cent. The net asset value was SEK 297 per share at 17 February(1).
  • The total return on the Latour share was 57.2 per cent for the period, which is better than the SIXRX index by a considerable margin.
  • The Board of Directors proposes a dividend of SEK 6.75 (6.00) per share.

INDUSTRIAL OPERATIONS
Fourth quarter

  • The industrial operations' order intake rose 9 per cent to SEK 2,166 m (1,994), which represents a 3 per cent increase for comparable entities adjusted for foreign exchange effects.
  • The industrial operations' net sales rose 13 per cent to SEK 2,284 m (2,018), which represents a 7 per cent increase for comparable entities adjusted for foreign exchange effects.
  • The operating profit increased by 17 per cent to SEK 270 m (229), which equates to an operating margin of 11.8 (11.4) per cent for continuing operations.
  • During the quarter, Nord-Lock acquired its distributor in Korea. The company has 10 employees and annual sales of approximately SEK 35 m. Latour also acquired 66.1 per cent of the shares in Neuffer Fenster + Türen GmbH, which reports annual sales of approximately EUR 13 m and has 24 employees.
  • During the quarter, Latour concluded an agreement for the disposal of the Specma Group business area. The sale was finalised on 4 January for an EV-value corresponding to SEK 780 m.

Full year

  • The industrial operations' order intake rose 13 per cent to SEK 8,613 m (7,643), which represents a 2 per cent increase for comparable entities adjusted for foreign exchange effects.
  • The industrial operations' net sales rose 13 per cent to SEK 8,555 m (7,559), which represents a 3 per cent increase for comparable entities adjusted for foreign exchange effects.
  • The operating profit increased by 29 per cent to SEK 972 m (755), which equates to an operating margin of 11.4 (10.0) per cent for continuing operations.

GROUP

  • The Group's profit after financial items was SEK 4,299 m (2,064).
  • The Group's profit after tax was SEK 4,117 m (1,874), which is equivalent to SEK 25.81 (11.75) per share. The profit includes capital gains of SEK 1,753 m, which is equivalent to SEK 11.0 per share.
  • Net debt at the end of December was SEK 2,205 m (3,516) and is equivalent to 4 per cent of the market value of total assets.

INVESTMENT PORTFOLIO

  • During the period, the value of the investment portfolio increased by 31.6 per cent adjusted for dividends. The benchmark index (SIXRX) rose 10.4 per cent.
  • In the first quarter, 30.1 per cent of the shares in Troax Group AB were acquired. The company reports annual sales of approximately SEK 900 m. In the second and fourth quarters, the ownership in Nobia dropped to 2.8 per cent following the disposal of 18.4 million shares corresponding to a purchase price of SEK 1.8 billion.

EVENTS AFTER THE REPORTING PERIOD

  • All Sealing Solutions, a Norwegian company with annual sales of NOK 27 m and 15 employees, was acquired in January by Specma Seals, a subsidiary in the Latour Industries business area.

(1) The calculation of the net asset value on 17 February 2016 was based on the value of the investment portfolio at 1 p.m. on 17 February and the same values as on 31 December were used for the unlisted portfolio.

Comments from the CEO

"2015 was the best year ever for Latour. The operating profit in the fourth quarter also meant that it was the best fourth quarter ever for the industrial operations. The same is true for the second and third quarters of 2015. We have seen a dramatic increase in profit, despite low organic growth and the continuation of rather considerable investments in product development, sales and marketing, all of which are included in the income statement. Furthermore, our listed holdings have produced good earnings and their growth in value during the year has therefore been better than the benchmark index. The part-owned unlisted holdings are also producing good earnings, but their impact on the Group as a whole is marginal. Altogether, they reported a record consolidated net profit of SEK 4.1 billion.

In the fourth quarter, industrial operations reported a 3 per cent organic increase in order intake and 7 per cent in net sales. For the full year, the corresponding growth rate for both order intake and invoiced sales was 2 per cent. The business areas that developed best were Hultafors Group and Latour Industries. Growth has been slightly slower for Swegon and Nord-Lock, although it improved in the last quarter. When acquisitions and foreign exchange effects are included, both order intake and invoiced sales in the industrial operations grew by 13 per cent during the year.

In the fourth quarter, the operating profit increased by 17 per cent to SEK 270 m (229), which equates to an operating margin of 11.8 (11.4) per cent. The operating profit for the year increased by 29 per cent to SEK 972 m (755).

The uncertain market conditions continue to make it difficult to predict the situation over the coming years. Stabilisation in the oil and gas industry at a long-term, sustainable level and stabilisation in growth in China are key issues affecting the world economy. The fact that the US economy has lost some momentum is perhaps largely due to developments in the oil, gas and mining industries. And although parts of Europe are slowly seeing better growth, it still doesn't feel like the economy is on a stable and sustainable path of recovery.

Despite relatively weak market growth, we are confident that our firm footing will allow us to continue to report strong earnings. We conduct our operations based on the premise that we cannot count on the economic situation offering us any significant help. But when it comes to investment in product development, marketing and sales, we're not slackening the pace. There is a particular need to increase the content of digital solutions in traditional industries too. I believe our acquisition of Neuffer in the fourth quarter to be an important building block in our digitisation activities.

We are currently in a strong financial position, which means there is no reason to slow our rate of growth through acquisitions, even if times become more difficult. There should instead be increased opportunities.

We made two acquisitions in the industrial operations in the fourth quarter. Nord-Lock acquired its distributor in Korea, with annual sales of SEK 35 m and 10 employees. South Korea has a massive manufacturing industry which is an extremely important market for Nord-Lock. In addition, the Latour Group acquired the German company Neuffer Fenster + Türen GmbH, which reports annual sales of EUR 13 m and has 24 employees. The acquisition constitutes an important step into the digital world for Latour and will help increase expertise throughout the industrial operations.

During the fourth quarter, we concluded an agreement for the sale of Specma Group. Back in August, we announced our intention to divest the business area and we are very pleased that the new industrial owner is the Danish company, Hydra-Grene. Hydra-Grene has many years of experience in the field of hydraulics and plans to further strengthen Specma's and Hydra-Grene's footholds in the Nordic region and globally. The sale was a natural part of our ongoing focus on operations that fulfil the investment criteria that we have today.

Many of our listed holdings have submitted their reports for the fourth quarter. On the whole, the companies have once again reported very positive performances with regard to both growth and profitability. We continued to sell shares in Nobia in the fourth quarter and our holding at year-end was 2.8 per cent of capital and votes.

The value of the investment portfolio in 2015 rose 31.6 per cent, adjusted for dividends, thus outperforming the SIXRX benchmark index, which rose 10.4 per cent. The net asset value in Latour increased in 2015 by 29.9 per cent to SEK 317 per share, adjusted for dividends. Following the positive performance in 2015, the Board propose an increased dividend to SEK 6.75 (6.00) per share."

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)8 566 425 08
To follow the webcast please visit our webpage or use the link:
http://event.onlineseminarsolutions.com/r.htm?e=1119822&s=1&k=9C0CB2275E1D34E24A8CC812683E3828