Interim report January–March 2018
Q1 January–March 2018
- Net sales increased 82% to SEK 1,355m (744)
- EBITA rose 27% to SEK 51m (40)
- Organic EBITA growth totalled 9%
- Net profit after tax declined 36% to SEK 18m (28)
- Earnings per common share after deduction of preference share dividends amounted to SEK 0.02 (0.15)
Events after the reporting period
- The Annual General Meeting will be held on 16 May 2018 at 3:30 p.m. at Nalen in Stockholm
COMMENTS FROM THE CEO
Strong Q1 performance with healthy organic growth and positive effects from acquisitions
Volati posted a strong performance for Q1 2018 and reported a 27% increase in earnings based on healthy organic growth and positive effects from completed acquisitions over the last year. During the quarter, we continued to take key steps forward aimed at creating the optimal prerequisites for growth, which included strengthening the business area organisation.
We are satisfied with the Q1 trend and are pleased to report a robust increase in sales as well as healthy organic EBITA growth of 9% despite a particularly snowy winter in the south of Sweden and an early Easter in March, which negatively impacted the operations of the Trading and Consumer business areas. Generally, Q1 is Volati’s weakest in terms of cash flow and earnings, which was accentuated by the current composition of businesses.
At the same time, we believe that Volati’s operations are best viewed over a long-term horizon, beyond individual quarters. This is the perspective we use for managing the operations. As we have made clear, the two core components of Volati’s business model are to own businesses with strong cash flows that we can leverage to make further acquisitions of well-managed companies at reasonable valuations. Both of these components — organic growth and the acquisition of healthy new companies — are subject to variations over time. As long-term owners, we are secure in navigating and delivering in that environment. Since 2013, we have posted average organic EBITA growth of 8% and completed a total of ten acquisitions, during the same period, of which three were in the past year.
More efficient acquisition organisation
We have strengthened our business area organisation by giving business area managers clear mandates for business development, monitoring operations and add-on acquisitions among other duties. As we grow, we are adapting the organisation and work methods to changing needs to, thereby, optimise value creation. At the start of the year, we took an important step aimed at increasing our acquisition efficiency. The organisational change delegates clearer responsibility to the business area managers, who are thus empowered to evaluate and manage add-on acquisitions more closely with operations, at the same time as we work centrally with major acquisitions. The change has panned out well and means greater clarity and faster decision making in our operating activities.
Capital structure for acquisitions
In 2017, Volati issued a bond to strengthen its scope for acquisitions and to diversify our capital structure. Our current capital structure enables us to act quickly, when we identify suitable acquisitions. Irrespective of the market, we can identify interesting opportunities. However as always, we are picky and adhere to the principle that it is better to turn down a good deal than to make a bad one. Our current net debt to adjusted EBITDA ratio is a multiple of 1.5, which is well below our maximum limit of a multiple of 3.0. In Q1, the Volati bond and the Akademibokhandeln bond that we took over as part of the acquisition in 2017 have entailed higher financing costs for the Group, which has negatively impacted net profit after tax. This is partly a timing effect, since a major part of Volati’s earnings arise in the latter half of the year.
During the quarter, we advanced further on our financial earnings target of reaching an adjusted EBITA of SEK 700m before the end of 2019. Over the last 12 months, we have acquired companies with a total EBITA of SEK 139m and accordingly, have reached an adjusted EBITA of SEK 418m for the same period. We will now continue, with a long-term perspective, to keep working with the core areas of our business model — acquisitions and organic growth.
Mårten Andersson, CEO
Mårten Andersson, CEO Volati AB, +46 72-735 42 84, firstname.lastname@example.org
Volati AB (publ)
Engelbrektsplan 1, 114 34 Stockholm, Sweden
Phone: +46 8-21 68 40
Volati is a Swedish industrial group formed in 2003, organised in four business areas: Trading, Consumer, Akademibokhandeln and Industry. Volati acquires mainly companies with proven business models, leading market positions and strong cash flows at reasonable valuations, and develops these with an emphasis on long-term value creation. Volati’s strategy is to build on the identity and entrepreneurial spirit of the companies, adding leadership, expertise, processes and financial resources. Volati has operations in 16 countries, with a total of about 1,900 employees and annual sales of approximately SEK 5.6 billion. Volati’s common share and preference share are listed on Nasdaq Stockholm. Further information is available at www.volati.se.