Interim report 1 January – 30 September 2021

CEO's message
A strong quarter with continued profitable growth and record-high earnings.
 

Third quarter
The market situation remained strong during the third quarter. Order intake amounted to SEK 5.4 billion, an increase of 14% organically, and was 3% higher than net sales. Most of the Group’s companies performed well, with strong growth in all of the major customer segments, such as the engineering industry, medical technology and pharmaceuticals, infrastructure and the process industry. Organic order growth was good for all of the eight business areas. It was strongest, however, for the Industrial Components and Fluids & Mechanical Solutions business areas. Order intake for valves for power generation was also positive and it improved compared to the same period last year.

Sales increased by 8% organically and amounted to SEK 5.3 billion. The strongest performance was in the DACH and Industrial Components business areas, with broad growth and improvements from most of the companies. Net sales were also at a high level in the Flow Technology and Benelux business areas, but the growth was somewhat suppressed due to the strong comparison figures for the corresponding period last year.

Profitability developed positively for the Group and EBITA increased by 18% and amounted to SEK 810 million. The EBITA margin improved to 15.3% (14.9%), which is the highest ever. The result includes several non-recurring items, for instance related to revaluation of contingent earn-out payments which had a positive overall impact of SEK 17 (21) million. Excluding non-recurring items, the EBITA margin amounted to 15.0% (14.4%). The improvement was driven by favourable organic growth along with good profitability among the newly acquired companies.  Several of the business areas strengthened their margins, with the strongest performance reported by the Fluids & Mechanical Solutions and DACH business areas.

Disturbances in supply chains became more prevalent during the quarter, along with component shortages and price increases. It impacted several companies in the form of more challenging delivery and invoicing opportunities. Companies that were most affected were those in the Measurement & Sensor Technology and Industrial Components business areas. Thanks to the quick action and successful pricing efforts of our skilled companies however, the total group effects of this have been significantly mitigated.

Cash flow has remained strong during the quarter, although lower than the corresponding period last year, primarily due to a somewhat higher level of working capital. Working capital efficiency has further improved and the Group’s financial position is stable and strong, with a historically low debt/equity ratio.

Acquisitions
Thus far in 2021, we have welcomed 13 new companies to the Indutrade Group, with combined annual sales of slightly more than SEK 1 billion. During the third quarter, two acquisitions were completed. Indutrade acquired the Swedish company Atlas Industrial Print, which is a niche company working with industrial product marking as well as the UK company, Advance Welding, which manufactures electrofusion welding equipment.

Subsequent to the end of the quarter, three additional acquisitions were completed. The Danish company, Alflow, is a niche technical trading company, offering a wide range of flow components to the pharmaceutical, food and industrial markets. The Czech company SILROC designs and produces customised components from liquid silicone rubber in injection moulding presses for many different industries, ranging from medical technology and pharmaceutical production to industrial markets. We also completed our first acquisition in Italy – Italprotec, which offers hoses, connectors, single-use products, valves, fittings and heat exchangers for handling critical fluids in industries such as pharmaceuticals, chemicals and food. An exciting milestone!

We have a solid acquisition strategy that we are continuously developing and adapting to the changes in the world around us. The companies that we acquire must not only be well run and technology-oriented, it is also important that they target customers in sectors that we have assessed as having long-term, sustainable growth potential. Because the restrictions associated with COVID-19 have lightened up in several countries, there are now more possibilities for visiting and evaluating acquisition candidates and we assess our future acquisition opportunities as favourable.

Outlook
The trend in 2021 has been positive, with very good demand that has contributed to our record-strong backlog of orders. However, the challenges in supply chains have resulted in longer delivery times and in some cases, delayed deliveries. Despite some level of uncertainty, our expectation is that the level of demand will remain good during the next quarter, but so too will the disturbances in the supply chains. Gradually, we can see that market activity among the companies is increasing as society continues to open up and the pandemic restrictions ease. 

Indutrade’s strategy and business model is working well and we have a good foundation for continued long-term, sustainable and competitive value creation.

Bo Annvik, President and CEO
 

About Indutrade

Indutrade is an international technology and industrial business group that today consists of more than 200 companies in some 30 countries, mainly in Europe. In a decentralised way, we aim to provide sustainable profitable growth by developing and acquiring successful companies managed by passionate entrepreneurs. Our companies develop, manufacture, and sell components, systems and services with significant technical content in selected niches. Our value-based culture, where people make the difference, has been the foundation of our success since the start in 1978. Indutrade's net sales totalled SEK 19.2 billion in 2020, and the share is listed on Nasdaq Stockholm in Sweden.

Tags: