Interim report July–September 2017
Q3 July–September 2017
- Net sales increased 45.8% to SEK 1,223.8m (839.1)
- EBITA increased 6.5% to SEK 95.6m (89.8)
- Net profit after tax increased 3.2% to SEK 52.9m (51.3)
- Earnings per common share after deduction of preference share dividends amounted to SEK 0.45 (0.56)
- Closing of the acquisition of the shares in Akademibokhandeln Holding AB and Silokonsult Göran Persson AB on 3 July and 5 July respectively
January–September 2017 period
- Net sales increased 17.0% to SEK 2,838.9m (2,426.9)
- EBITA declined 4.4% to SEK 234.8m (245.6)
- Net profit after tax decreased 3.9% to SEK 148.9m (155.0)
- Earnings per common share after deduction of preference share dividends amounted to SEK 1.24 (1.78)
Events after the reporting period
- An agreement was signed for the acquisition of T-Emballage, which has sales of SEK 584m and an EBITA of SEK 40m. The company will be included as a business unit under the Trading business area
- The acquisition of T-Emballage implies that companies have been acquired during the year with a total EBITA of SEK 154m on an annual basis, corresponding to annualised EBITA growth of 53%
- Volati has decided to investigate the prerequisites for conducting a bond issue of not less than SEK 750m with the aim of increasing the company’s financial flexibility and acquisition capacity
Comments from the CEO
Growth and further acquisitions
During the third quarter, Volati increased its net sales by 46%. In its first quarter as part of the group, Akademibokhandeln contributed to the large net sales increase, while the new business area has its largest earnings in the fourth quarter with higher sales levels around Christmas. After the end of the quarter, we completed the third acquisition of the year, T-Emballage, which with its solid profitability and strong offering in building materials and packaging solutions fits well into the Trading business area. Following the acquisition, Volati’s annual net sales grows to around SEK 5.5 billion and EBITDA to about SEK 541 million annually.
The Trading and Consumer business areas both posted higher EBITA figures. The negative earnings impact from lower rentals at Corroventa, which affected Q2, continued during Q3. The regular floods that occur in Corroventa’s markets failed to materialise in the late summer, which we described in the Q2 report. Over the last twelve month period, this means that organic EBITA growth altogether was a negative 8 percent. Of course, this is not something we are satisified with, nor are we alarmed. We know that variations are natural in our business – since 2013, organic EBITA growth has averaged 9 percent on an annual basis. The effect of Corroventa’s year-on-year decline in rentals is expected to diminish in Q4.
New acquisitions positively impact on the quarter
In July, we welcomed Akademibokhandeln together with online retailer Bokus to Volati as a new business area. It is fantastic to gain in-depth insight into the company and together with its management to start work on advancing an already well-functioning business even further. Akademibokhandeln, which has significant seasonal variations with Q4 clearly the strongest in terms of earnings, contributed to increased sales during the quarter. During the quarter, we also acquired Silokonsult, which will become part of the Tornum business unit, within the Industry business area, and where it will complement existing operations as a supplier of machinery and project planning for the grain and milling industries.
Third acquisition of the year
Following the close of the third quarter, Volati signed an agreement to acquire an additional business unit, which we are both delighted and proud to have been given the opportunity to acquire. T-Emballage, with operations in building materials and logistics, is a well-run and profitable company with a good track record which had been on our internal list of companies we would like to acquire for some time. The fact that after 40 years as a family-run business, the owner gave us the opportunity to take over is something that we view as recognition that Volati is an attractive partner in the acquisitions market. T-Emballage is an excellent fit for the Trading business area, where opportunities exist to leverage the established sales channels in the Nordic region, and the established and efficient processes for integrating new companies.
Robust EBITA growth from this year’s acquisitions
It will soon be one year since we listed our common shares on Nasdaq Stockholm, when we also set a new earnings target of reaching an adjusted EBITA of SEK 700m before the end of 2019. Following the acquisition of T-Emballage, Volati will have completed three acquisitions in 2017 that will together have contributed SEK 154m in EBITA on an annualised basis to Volati’s profitability, corresponding to acquired EBITA growth of 53%. As we deploy more capital through acquisitions, our return on equity will increase.
Work is ongoing with the continued progressive development of our existing operations towards increased profitability in parallel combined with our methodical evaluation of further acquisition opportunities at reasonable valuations. The weighted average acquisition multiple since the inception of Volati is at a low 6.0x. It is pleasing that the share of acquisition processes which we initiate ourselves, is increasing as a result of our long-term work of building good relations with business owners and entrepreneurs. To ensure we are well-prepared to continue to make acquisitions when we identify the right companies, we have decided to task Nordea and SEB with evaluating the prerequisities for further strengthening our financial flexibility and acquisition capacity through the issuance of a five-year SEK bond of not less than SEK 750m.
Mårten Andersson, CEO
Mårten Andersson, CEO Volati AB, +46 72-735 42 84, email@example.com
Volati AB (publ)
Engelbrektsplan 1, 114 34 Stockholm, Sweden, Phone: +46 8-21 68 40
Volati is a Swedish industrial group formed in 2003, which comprises some 50 operating companies divided into 13 business units organised in four business areas: Trading, Consumer, Industry and Akademibokhandeln. Volati acquires mainly companies with proven business models, leading market positions and strong cashflow 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 1,700 employees and annual sales of approximately SEK 5.5bn. Volati’s ordinary shares and preference shares are listed on Nasdaq Stockholm. Further information is available at www.volati.se.