Interim report January - June 2019

NET ASSET VALUE AND THE LATOUR SHARE

  • The net asset value rose to SEK 127 per share, compared with SEK 100 per share at the start of the year. This is an increase of 30.3 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 20.7 per cent. The net asset value was SEK 125 per share at 19 August. (1)

  • The total return on the Latour share was 24.6 per cent during the year measured against the SIXRX, which rose 20.7 per cent.

INDUSTRIAL OPERATIONS

The second quarter

  • The industrial operations' order intake rose 12 per cent to SEK 3,570 m (3,192 m), which represents a 3 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The industrial operations' net sales rose 18 per cent to SEK 3,512 m (2,983 m), which represents an 8 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The operating profit increased by 28 per cent to SEK 507 m (397 m), which equates to an operating margin of 14.5 (13.3) per cent for continuing operations.

January – June

  • The industrial operations' order intake rose 17 per cent to SEK 6,897 m (5,914 m), which represents a 7 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The industrial operations' net sales rose 21 per cent to SEK 6,652 m (5,514 m), which represents a 10 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The operating profit increased by 36 per cent to SEK 919 m (676 m), which equates to an operating margin of 13.8 (12.3) per cent for continuing operations.

  • Latour Industries acquired the Norwegian company, TKS Heis AS, in January.

THE GROUP

  • Consolidated net sales totalled SEK 6,752 m (5 614 m), and profit after financial items was SEK 3,575 m (1,119 m). Capital gains and other items impacting comparability amounting to SEK 1,082 m (-570 m) are recognised in the income statement.

  • Consolidated profit after tax was SEK 3,372 m (954 m), which is equivalent to SEK 5.27 (1.50) per share.

  • Net debt, excluding impacts of IFRS 16, was SEK 4,613 m (5,229 m) and is equivalent to 5.4 per cent of the market value of total assets. Recognised Group net debt, where IFRS 16 had full impact, amounted to SEK 5,279 m.

  • The entire shareholding in the part-owned holding in Terratech was divested on 25 April.

INVESTMENT PORTFOLIO

  • During the first six months, the value of the investment portfolio increased by 31.2 per cent adjusted for dividends and net investments. The benchmark index (SIXRX) rose 20.7 per cent.

  • The investment in Fagerhult increased during the quarter by SEK 995 m in connection with the holding’s preference share issue to finance the acquisition of iGuzzini.

  • Earlier in the year, all of the class A shares in Loomis were divested.

EVENTS AFTER THE REPORTING PERIOD

  • On 13 August, Swegon acquired the Norwegian company Klimax A/S, with 12 employees and net sales of NOK 66 m.

(1) The calculation of the net asset value on 19 August was based on the value of the investment portfolio at 1 p.m. on 19 August, and the same values as at 30 June were used for the unlisted portfolio.

Comments from the CEO
“Latour's industrial operations once again delivered a strong performance and we can report yet another record-breaking quarter. Nevertheless, it is becoming increasingly clear that a slowdown is imminent. The rate of organic growth for our wholly-owned companies was slightly lower during the latter part of the quarter. This is not, however, a general decline but rather relatively dispersed signs from different industries and markets. It is thus difficult to draw more precise conclusions. Regardless, our operations are well-positioned and equipped for a more widespread downturn in the economy. During the second quarter, the order intake grew by 12 per cent and, excluding acquisitions and foreign exchange effects, growth was 3 per cent. The rate was somewhat higher for invoicing, which grew by 18 per cent during the quarter, and, excluding acquisitions and foreign exchange effects, growth was 8 per cent. Even with the high invoicing rate, the order backlog continues to rise and, at the end of the quarter, it had reached a new record level of SEK 2,279 m (1,602 m), exceeding last year’s level by 42 per cent. Despite the growing concern about a future downturn, we are proud to report profits of SEK 507 m (398 m) for the quarter, with an operating margin of 14.5 (13.3) per cent. In absolute terms, this is our best quarter to date.

Our stable earnings performance gives us confidence to act proactively regardless of the market climate. At an undiminished pace, we continue to invest in product development, as well as sales & marketing in our business areas. In addition, we’re constantly searching for suitable companies to add to the Group as a way of supplementing organic growth. The number of interesting acquisition candidates is once again on the rise, despite a rather sluggish start to 2019. However, there is no guarantee that we will be successful in finding companies that satisfy our rather strict criteria for investment. Although we did not make any acquisitions during the second quarter, in August, we completed Swegon’s acquisition of Klimax A/S.

Performance of the stock market has been very strong during the first half of the year. Our investment portfolio increased by 31.2 per cent, adjusted for dividends and changes in the portfolio, while the benchmark index SIXRX increased by 20.7 per cent. The net asset value in Latour increased by 30.3 per cent to SEK 127 per share in the same period.

Almost all of our listed holdings have, at this point, already reported their results. On the whole, these reports are good and stable, which again corroborates the high quality of the companies in our portfolio. The acquisition activities of the portfolio companies have continued, but, as with our wholly-owned companies, there were variations in organic growth. Accordingly, it is difficult to make predictions that are entirely positive or negative as regards future economic trends. During the first half of the year, Assa Abloy announced a number of acquisitions, including the acquisition of the listed Swiss company, Agta Record. In addition, Fagerhult acquired iGuzzini in March. This acquisition makes Fagerhult one of the largest leading lighting companies in Europe, generating annual sales in excess of SEK 8 billion. Latour supported the acquisition as guarantor in the new share issue that occurred during the quarter.”

Jan Svensson
President and CEO

For further information please contact:
Jan Svensson, President and CEO, Tel. +46 705-77 16 40 or
Anders Mörck, CFO, Tel. +46 706-46 52 110

Conference call
President and CEO Jan Svensson and CFO Anders Mörck present the report and answers to questions by telephone today at 01.00 PM (CEST). The conference call will be held in English.

To follow the meeting, please call +46 (0)8 505 583 54.
To follow the webcast please visit our webpage, www.latour.se, or use the link:
https://event.on24.com/wcc/r/2040542/D3AD57E135CBA943C35F853EA91CAF3B

About Us

Investment AB Latour is a mixed investment company with operations primarily carried out in two business lines; a wholly-owned industrial operation and a portfolio of nine listed holdings of which Latour is the principal owner or one of the principal owners.