Interim report Q2 1 April - 30 September 2019

Second quarter (1 July - 30 September 2019)

• Net sales increased by 25 percent and amounted to SEK 2,917 million (2,338).
• Operating profit before amortisation of intangible non-current assets (EBITA) increased by 41 percent and amounted to SEK 380 million (270) corresponding to an EBITA margin of 13.0 percent (11.5). 
• Operating profit increased by 45 percent and amounted to SEK 329 million (226) corresponding to an operating margin of 11.2 percent (9.7).
• Profit after tax increased by 37 percent and amounted to SEK 240 million (174) and earnings per share before dilution amounted to SEK 3.55 (2.60). 

Period (1 April - 30 September 2019)

• Net sales increased by 24 percent and amounted to SEK 5,851 million (4,733).
• Operating profit before amortisation of intangible non-current assets (EBITA) increased by 36 percent and amounted to SEK 721 million (530) corresponding to an EBITA margin of 12.3 percent (11.2). 
• Operating profit increased by 39 percent and amounted to SEK 621 million (447) corresponding to an operating margin of 10.6 percent (9.5).
• Profit after tax increased by 39 percent and amounted to SEK 466 million (336) and earnings per share before dilution amounted to SEK 6.90 (4.95). For the latest twelve month period earnings per share before dilution amounted to SEK 11.80 (8.60).
• Return on working capital (P/WC) amounted to 56 percent (53).
• Return on equity amounted to 33 percent (29) and the equity ratio amounted to 32 percent (33).
• Cash flow from operating activities amounted to SEK 519 million (145), of which the implementation of IFRS 16 has resulted in an increase of SEK 72 million. For the latest twelve month period, cash flow per share from operating activities amounted to SEK 12.30 (8.20).
• Since the start of the financial year eight acquisitions have been completed, with total annual sales of about SEK 570 million. 

CEO's comments

Second quarter – stable demand and strong growth in earnings
In the second quarter too, Addtech developed very well and we are continuing to grow in all of our business areas. Despite strong comparison figures from the preceding year, sales increased by 25 percent, of which 17 percent was organic. EBITA rose by 41 percent and the operating margin continued to strengthen substantially.

Over all, the Group experienced favourable underlying demand during the quarter, although the market scenario varies between geographic regions and customer segments. In some segments, a slower pace can now be noted, with demand evening out at a high level, just as expected. This is most evident in the engineering and special vehicle segments. During the quarter, demand was also somewhat lower for aftermarket products for the forest industry, particularly the sawmill segment. Market segments where development remained favourable include components and solutions in electronics and wind power, where sales increased, and infrastructure products, where demand was still good.

Sales of our products and services regarding environmental improvement solutions remained very strong and, during this quarter too, accounted for a significant part of the Group’s organic growth. Demand in new projects for scrubber solutions was lower during the quarter, although we assess that the market situation remains favourable and we have a very good order backlog.

From a geographical perspective, the market situation remained most favourable in Norway and Finland. Our sales in Sweden and Denmark were stable, while the market situation for our operations outside the Nordic region was varied but somewhat subdued overall.

Acquisitions
Since the beginning of the financial year, we have completed eight acquisitions in six different geographical markets. Combined, these acquisitions contribute annual sales of approximately SEK 570 million. We have good opportunities to carry out further acquisitions, particularly given our strong balance sheet and a very favourable cash flow during the period. We have numerous projects in progress, at various phases and in different geographical markets.

Outlook – additional initiatives in sustainable business
With our entrepreneurial and dynamic culture, Addtech has always been at the forefront in the developments – a topic discussed in depth at the well-attended and appreciated capital market day that we arranged in mid-September. Another aspect of our culture is our desire to contribute, not only to customers and suppliers, but also to the broader external society. We enjoy a unique position and have a long tradition of adding value between customers and suppliers, including from the perspective of sustainability. To further sharpen our offering in sustainable business, as increasingly demanded by customers and investors alike, we have now initiated extensive efforts to strengthen the link between our sustainability work and the UN’s global sustainability goals.

To sum up, we can affirm that the outcome of our operations remains favourable. Despite declining demand in certain segments and the prevailing uncertain global environment, I take a positive view of the Group’s future prospects. We have a strong business concept and a business model with niche units in many different industries and geographies, generating good opportunities for profitable growth that is sustainable in the long term.

Stockholm, October 24, 2019

Niklas Stenberg
President and CEO

This information is information that Addtech AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out below, at 8.15 a.m CET on 24 October 2019.

A conference call in English will be held at October 24, at 2.00 PM CET, dial in +46 8 121 335 49, conference ID 465716. Presentation material will be made available on the Addtech web prior to the meeting https://www.addtech.com/investors/financial-information/presentations For further information about Addtech please see material from the Capital Markets Day held on September 19, also available there.

For further information, please contact:
Niklas Stenberg, President and CEO, +46 702 679 499
Malin Enarson, CFO, +46 705 979 473

Addtech in brief
Addtech is a technology trading group that provides technological and economic value added in the link between manufacturers and customers. Addtech operates in selected niches in the market for advanced technology products and solutions. Its customers primarily operate in the manufacturing industry and infrastructure. Addtech has about 2,900 employees in more than 130 subsidiaries that operate under their own brands. The Group has annual sales of more than SEK 10 billion. Addtech is listed on the Nasdaq Stockholm.