Interim report January – September 2018

NET ASSET VALUE AND THE LATOUR SHARE

  • The net asset value rose to SEK 108 per share, compared with SEK 95 per share at the start of the year. This is an increase of 17.0 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange’s Total Return Index (SIXRX) increased by 11.3 per cent. The net asset value was SEK 106 per share at 5 November. 1)

  • The total return on the Latour share was 12.6 per cent in the period compared against SIXRX at 11.3 per cent. 

INDUSTRIAL OPERATIONS
The third quarter

  • The industrial operations’ order intake rose 21 per cent to SEK 2,787 m (2,311 m), which represents a 10 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The industrial operations’ net sales rose 21 per cent to SEK 2,857 m (2,362 m), which represents a 10 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The operating profit increased by 29 per cent to SEK 399 m (310 m), which equates to an operating margin of 14.0 per cent (13.1) for continuing operations.

  • On 6 July, Hultafors Group acquired Hellberg Safety AB in Stenkullen. On 5 September, Swegon signed an agreement for the acquisition of the German company Zent-Frenger GmbH. In September, Nord-Lock’s acquisition of its Spanish distributor IDQ was finalised. 

January - September

  • The industrial operations’ order intake rose 19 per cent to SEK 8,730 m (7,315 m), which represents a 10 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The industrial operations’ net sales rose 19 per cent to SEK 8,392 m (7,059 m), which represents a 10 per cent increase for comparable entities adjusted for foreign exchange effects.

  • The operating profit increased by 25 per cent to SEK 1,076 m (858 m), which equates to an operating margin of 12.8 per cent (12.1) for continuing operations. 

THE GROUP

  • Consolidated net sales totalled SEK 8,517 m (7,230 m) and profit after financial items was SEK 1,952 m (2,288 m). Assa Abloy’s goodwill write-down in the second quarter negatively impacted the income statement by SEK 570 m. Additionally, a revaluation of the holdings negatively impacted the income statement by SEK 230 m. Excluding these items, profit increased by 20 per cent to SEK 2,752 m (2,288 m).

  • Consolidated profit after tax was SEK 1,697 m (2,090 m), which is equivalent to SEK 2.66 (3.28) per share.

  • Net debt at the end of September was SEK 5,233 m (4,390 m) and is equivalent to 7 per cent of the market value of total assets.

INVESTMENT PORTFOLIO

  • During the period, the value of the investment portfolio increased by 15.5 per cent adjusted for dividends and net investments. The benchmark index (SIXRX) rose 11.3 per cent.

  • In the first quarter of the year, 800,000 shares were acquired in Alimak Group and a further 545,000 were acquired in the third quarter. At the end of the period, the ownership stake in Alimak Group amounts to 29.2 per cent of the capital.

EVENTS AFTER THE REPORTING PERIOD

  • Swegon has completed the acquisition of Zent-Frenger. No other material events subsequent to the end of the reporting period.

(1) The calculation of the net asset value on 5 November 2018 was based on the value of the investment portfolio at 1.00 p.m. on 5 November, and the same values as at 30 September were used for the unlisted portfolio.

Comments from the CEO
“In summarising the third quarter, we are able to report that all the business areas in our wholly-owned industrial operations are continuing to expand through both acquisitive and organic growth. Order intake and invoiced sales both grew by 21 per cent in the quarter. Excluding acquisitions and foreign exchange effects, order intake grew by almost 10 per cent and invoiced sales by just over 10 per cent. Our consistent investment in product development, sales and marketing in the companies therefore continues to pay off. At the end of the quarter, the order backlog stood at SEK 1,545 m (1,234 m) and is thus up 25 per cent on the previous year’s value. As a result of the industrial operations’ robust growth, the operating profit once again reached a record high in absolute terms and we are pleased to report the best quarter ever in absolute terms with an operating profit of SEK 399 m (310 m) and an operating margin of 14.0 per cent (13.1). We have exceeded all our financial targets in the last 12-month period. Growth was 18 per cent, the operating margin was 12.6 per cent and the return on operating capital was 15.8 per cent. The industrial operations now have an annual turnover in excess of SEK 11 billion.

The economic situation has remained strong throughout the third quarter. However, there are a number of markets that we feel are showing some uncertainty and slightly less activity than before, mainly the UK, Germany, the Middle East and China. We are seeing signs of a slight slowdown in North America too. Despite indications of a slowing in activity, our wholly-owned industrial operations continued to report good growth. Nord-Lock in Asia, for example, delivered yet another excellent quarterly performance with 24 per cent organic growth, and our largest business area, Swegon, announced almost 13 per cent organic growth. Although the slowdown has not had a major impact on our operations in the third quarter, we are now getting our operations ready for a possible downturn in the economy.

We believe that our stable earnings performance will enable us to continue building our business for the future, even if faced with a more uncertain economic climate. The search for suitable companies to add to the Group continues with unabated vigour, and the industrial operations were complemented by two acquisitions during the quarter. The Swedish company Hellberg Safety AB was acquired for Hultafors Group and the German company Zent-Frenger GmbH for Swegon. You can find out more about our acquisitions in 2018 on page 4. Combined, they add more than SEK 700 m in annual sales.

The growth in value on the stock exchange has remained positive throughout the third quarter and the value of our investment portfolio increased in the 9-month period by 15.5 per cent, adjusted for dividends and net investments. By comparison, the SIXRX increased by 11.3 per cent. In the same period, the net asset value in Latour increased by 17.0 per cent to SEK 108 per share, adjusted for dividends.

The majority of our listed holdings have now reported. Overall, they have submitted good or excellent reports, but like for many other companies with very mixed reactions. The short-term movements of the stock exchange obviously do not affect our attitude towards the companies nor our long-term approach of helping to build strong, healthy and profitable companies that generate long-term value for shareholders.”

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 10.00 AM (CET).
The conference call will be held in English.
To participate in the meeting and be able to ask questions, please call +46 (0)8 566 426 93.
To follow the webcast please visit our webpage or use the link:
http://event.on24.com/wcc/r/1853555-1/53326676C5419E4906A631A6DD7E1D23?partnerref=rss-events

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.