Interim report 1 January – 31 March 2021

CEO’s message

Improved demand and continued high earnings.

First quarter

Overall, demand during the first quarter was favourable and improved compared to last year’s high level. Still, the development varied across companies, segments and countries. Order intake amounted to SEK 5.7 billion, an increase of 5% organically, and was 12% higher than net sales. The strongest growth was still in the medical technology and pharmaceutical segment, but there was also positive development for infrastructure, wind power and the process industry. Many companies with customers in the engineering industry noted an improvement in demand during the quarter compared to last year. Demand remained weak, however, for the aircraft industry and marine sector. The Measurement & Sensor Technology and Fluids & Mechanical Solutions business areas reported the most favourable organic order growth, with positive development in most segments.

Sales increased by 3% organically and amounted to SEK 5.1 billion. The strongest performance came from the Industrial Components and Benelux business areas, which was primarily driven by the medical technology and pharmaceutical segment. Organic growth was weakest for the Finland and Flow Technology business areas. In Finland, the business climate is still being negatively impacted by weaker demand due to the pandemic and for Flow Technology, the comparison figures for the same period last year were high.

The EBITA result increased by 16% to SEK 713 million, corresponding to an EBITA margin of 13.9% (12.4%). It is a record-high result for a first quarter and seven of our eight business areas strengthened their margins, with the strongest development in the Industrial Components and Benelux business areas. The improvement was primarily driven by the continued positive performance of companies in the medical technology and pharmaceutical segment, along with good cost control and performance from newly acquired companies.

During the quarter, many companies were impacted by longer lead times and disruptions in the supply chains, which resulted in somewhat hampered delivery and invoicing opportunities. Several of our companies also noted that there were price increases from suppliers during the end of the quarter. The overall impact on the Group’s net sales and earnings has, however, been assessed as being limited.

Since the end of last year, most of the short-term work that had been set up at the start of pandemic has been terminated and during the quarter, there were only a few companies with some of their employees on temporary lay-off.

The inventory for comparable units continued to decrease somewhat, which, in combination with positive earnings, contributed to an improved cash flow. The Group’s financial position remains strong, with a relatively low debt/equity ratio. During the quarter, Indutrade was assigned the credit rating BBB-, with stable outlook from S&P Global Ratings, which corresponds to investment grade and is affirmation of our stable business model. The rating strengthens our position and attractiveness even further in the credit markets.

Acquisitions

Five acquisitions were made during the quarter with total annual sales of nearly SEK 500 million. In January, the Finnish company Pistesarjat was acquired, which is focused on advanced cable systems for such things as heating and frost protection. Indutrade also acquired the Dutch company Fire Proof, which is a distributor of passive fire protection products. In February, Indutrade acquired the German company Tecno Plast, which offers single-use tubing sets, PTFE and silicone hoses. The Dutch company Typhoon was also acquired, specialising in stirring and mixing systems for customers in a variety of segments, including the food, chemical and pharmaceutical industries. In March, we welcomed the Dutch company Efcon Water to the Group. It is a highly focused supplier of products and measurement instrumentation for wastewater sampling systems. There is a good inflow of interesting companies and we also assess our opportunities for making future acquisitions as good. Thanks to our local presence, we are able to drive the acquisition processes forward despite the ongoing restrictions on travel and physical meetings.

Outlook

We expect that there will be gradual improvement in overall demand. Our strong segments, such as medical technology and pharmaceutical, are expected to continue performing at a good level, although with a slightly lower rate of growth. However, the business climate remains somewhat uncertain because of the pandemic, with many local restrictions and lock-downs still in place. Disruptions in the supply chains, involving longer lead times, is contributing to the uncertainty. As the level of activity increases in our companies, so too will the cost levels.

Our success is largely based on decentralised decision-making by dedicated MDs who work closely with customers, act on opportunities and respond to the challenges. Going forward, I am convinced that we will continue to manage the changed market conditions in an agile and successful way, thereby creating the prerequisites for continued 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.

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