Interim Report January - September 2017

NET ASSET VALUE AND THE LATOUR SHARE

  • The net asset value rose to SEK 98 per share, compared with SEK 87 per share at the beginning of the year. This is an increase of 15.5 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 12.5 per cent. The net asset value was SEK 95 per share at 6 November. 1)

  • The total return on the Latour share was 31.5 per cent through September compared with 12.5 per cent for the SIXRX.

INDUSTRIAL OPERATIONS
The third quarter

  • The industrial operations' order intake rose 20 per cent to SEK 2,326 m (1,940), which represents a 7 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The industrial operations' net sales rose 19 per cent to SEK 2,374 m (1,990), which represents a 7 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The operating profit increased by 14 per cent to SEK 310 m (271), which equates to an operating margin of 13.1 (13.6) per cent for continuing operations.

January – September

  • The industrial operations' order intake rose 21 per cent to SEK 7,373 m (6,107), which represents a 7 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The industrial operations' net sales rose 20 per cent to SEK 7,102 m (5,922), which represents a 6 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The operating profit increased by 10 per cent to SEK 860 m (780), which equates to an operating margin of 12.1 (13.2) per cent for continuing operations.

THE GROUP

  • Consolidated net sales totalled SEK 7,230 m (6,030) and profit after financial items was SEK 2,288 m (3,015), of which SEK 0 m (890) constituted capital gains.

  • Consolidated profit after tax was SEK 2,090 m (3,018), which is equivalent to SEK 3.28 (4.73) per share. Excluding capital gains, profit increased to SEK 3.28 (3.05) per share.

  • Net debt at the end of September was SEK 4,390 m (1,894) and is equivalent to 6.5 per cent of the market value of total assets.

INVESTMENT PORTFOLIO

  • During the period, the value of the investment portfolio increased by 18.7 per cent adjusted for dividends and net investments. The benchmark index (SIXRX) rose 12.5 per cent.

  • During the third quarter, 26.7 per cent of the shares in Alimak Group were acquired, making it a new long-term holding in Latour's investment portfolio.

  • Earlier in the year, the acquisition of 689,000 shares increased the ownership stake in Tomra to 26.3 per cent.

EVENTS AFTER THE REPORTING PERIOD

  • In October 2017, Latour Industries acquired two smaller business entities; Micor AB for LSAB and NODA AB for BEMSIQ.

  • Latour's Board of Directors is crafting a long-term succession plan for Latour and announced on 26 October that its President and CEO Jan Svensson will be succeeded by Johan Hjertonsson on 1 September 2019.

(1) The calculation of the net asset value on 6 November 2017 was based on the value of the investment portfolio at 1 p.m. on 6 November and the same values as at 30 September were used for the unlisted portfolio.

Comments from the CEO
“The wholly-owned industrial operations reported a continued positive order intake with organic sales growth reaching 7 per cent in the third quarter. Invoicing also increased organically by 7 per cent. Including acquisitions and foreign exchange effects, order intake grew in total by 20 per cent and invoiced sales by 19 per cent. Although comparative figures are gradually becoming tougher, developments mean that organic growth has continued at the same pace as in the first six months. Consequently, we are able to report our best ever quarter in absolute terms. The operating profit in the quarter was SEK 310 m (271), giving a 13.1 (13.6) per cent operating margin. The order backlog decreased slightly during the quarter but remains at a high level for the season at SEK 1,270 m (1,023), 24 per cent higher than the previous year.

We are still experiencing capacity issues in the construction industry in Sweden, which is causing delays. In our industrial operations, it is mainly Swegon that is feeling the effects of this, even if the order backlog has decreased slightly during the quarter. There is still nothing to indicate that orders will be cancelled. Instead, it is more likely that orders will be delivered later than planned.

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.

Activity and growth in the building and construction industry remain strong across much of Europe and, as previously mentioned, some areas are experiencing capacity issues. The Nordic countries still have the best business climate, but Germany is showing good growth too. The UK is showing signs of having peaked. We are viewing developments in South East Asia, including China and India, with continued optimism, even though the industrial operations do not yet have a significant stake there. However, Nord-Lock is continuing to report pleasing growth in Asia. What we are feeling least certain about at the moment, this quarter too, are business developments and growth in the USA. We feel the situation there remains somewhat unclear with mixed signals, depending on the sector.

In the third quarter, no acquisitions were made for the industrial operations. However, we acquired a 26.7 per cent shareholding in Alimak Group, making us the principal owner of yet another listed company. Alimak is a global market leader in vertical access solutions for the construction and industrial sectors, with customers supported by key mega trends such as urbanisation, safety and environmentally friendly energy production.

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. Our healthy financial position allows for investments of more than SEK 3 billion.

The interim reports received from our listed holdings at the time of writing indicate good, stable performances on the whole in the third quarter. HMS Networks, Fagerhult and Troax have excelled appreciably.

The value of the investment portfolio has increased to date by 18.7 per cent, adjusted for dividends and net investments, while the benchmark index (SIXRX) increased by 12.5 per cent. The net asset value in Latour increased in the same period by 15.5 per cent to SEK 98 per share, adjusted for dividends.”

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

Conference call
President and CEO Jan Svensson and CFO Anders Mörck present the report and answers to questions by telephone today at 10.00 AM (CET). The conference call will be held in English.
To follow the meeting, please call +46 (0)8 566 426 91
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About Us

Investment AB Latour is a mixed investment company with operations primarily carried out in two business lines; a wholly-owned industrial operation and a portfolio of nine listed holdings of which Latour is the principal owner or one of the principal owners.