Interim report January – September 2020

NET ASSET VALUE AND THE LATOUR SHARE

• The net asset value rose to SEK 148 per share, compared with SEK 136 per share at the start of the year. This is an increase of 9.8 per cent. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 8.2 per cent. The net asset value was SEK 143 per share at 4 November. (1)
• The total return on the Latour share was 39.1 per cent during the period measured against the SIXRX, which rose 8.2 per cent.

INDUSTRIAL OPERATIONS

The third quarter

• The industrial operations' order intake rose 10 per cent to SEK 3,431 m (3,133 m), which represents a 2 per cent decrease for comparable entities adjusted for foreign exchange effects.
• The industrial operations' net sales rose 11 per cent to SEK 3,622 m (3,275 m), which represents a 1 per cent decrease for comparable entities adjusted for foreign exchange effects.
• The industrial operations’ highest operating profit to date. Operating profit increased by 29 per cent to SEK 602 m (466 m), which equates to an operating margin of 16.6 (14.2) per cent for continuing operations.

January - September

• The industrial operations' order intake rose 9 per cent to SEK 10,954 m (10,028 m), which represents a 5 per cent decrease for comparable entities adjusted for foreign exchange effects.
• The industrial operations' net sales rose 9 per cent to SEK 10,794 m (9,924 m), which represents a 5 per cent decrease for comparable entities adjusted for foreign exchange effects.
• Operating profit increased by 9 per cent to SEK 1,524 m (1,393 m), which equates to an operating margin of 14.1 (14.0) per cent for continuing operations.

THE GROUP

• Consolidated net sales totalled SEK 10,975 m (10,091 m), and profit after financial items was SEK 4,307 m (4,399 m). This year, the income statement has been impacted negatively by SEK -243 m due to a write-down of Alimak, and positively by a capital gain of SEK 1,976 m from the sale of Tomra shares. Capital gains and other items that affect the comparability of results had a favourable SEK 849 m impact on last year's income statement.
• Consolidated profit after tax was SEK 4,035 m (4,063 m), which is equivalent to SEK 6.31 (6.35) per share.
• The Group reported net debt of SEK 6,461 m (5,913 m). Net debt, excluding lease liabilities recognised under IFRS 16, was SEK 5,999 m (5,268 m) and is equivalent to 6 (6) per cent of the market value of total assets.

INVESTMENT PORTFOLIO

• The value of the investment portfolio increased by 9.0 per cent in the third quarter when adjusted for portfolio changes and dividends. The benchmark index (SIXRX) rose 8.2 per cent.
• In the third quarter, 1,000,000 shares in Fagerhult were acquired. Earlier this year, 2,560,000 shares in Fagerhult were acquired. The resulting ownership stake at the end of the period is 47.8 per cent.
• In the second quarter, 7.8 million shares in Tomra were sold for a consideration of SEK 2.5 billion. After the sale, Latour holds 21.1 per cent of outstanding shares in the company and remains its principal owner. 
• The shareholding in Alimak increased earlier in the year to 29.6 per cent following acquisition of 210,000 shares.

EVENTS AFTER THE REPORTING PERIOD

• On 2 November, Swegon acquired 100 per cent of the shares in the German company SLT Schanze Lufttechnik, which in 2019 generated net sales of EUR 10 m and had 70 employees.

 (1) The calculation of the net asset value on 4 November was based on the value of the investment portfolio at 1 p.m. on 4 November, and the same values as at 30 September were used for the unlisted portfolio.

Comments from the CEO

“Despite the ongoing pandemic, we can report a strong set of results for the wholly-owned industrial operations. This is very gratifying and confirms that we own sustainable and well-managed companies. During the summer months, the markets have opened up to varying degrees and demand has gradually increased. Sales in the industrial operations grew organically towards the end of the quarter. We can now state that we are in a second wave, and there is a high risk of new shutdowns and thus restrictions on the economy. What is more, we have probably not seen the long-term consequences of the pandemic with regard to changes in behaviour and investment decisions. It may bring threats as well as opportunities.

In the third quarter, order intake fell 2 per cent when adjusted for acquisitions and foreign exchange effects, and invoiced sales were slightly below last year's level. Operating profit increased by 29 per cent in the quarter to SEK 602 m (466 m) with a strong operating margin of 16.6 (14.2) per cent. Adjusted for acquisitions and exchange rate movements, we outperformed the previous year's quarter by 12 per cent. Given the current situation, we are extremely pleased with the performance, much of which was due to our operations' keen cost awareness and ability to steer their organisations.

Our business areas have introduced significant measures to help mitigate the impact of Covid-19 and have taken advantage of the available government support, where appropriate, although to a relatively little extent and far less than in the previous quarter. The operations have been gradually resuming normal activities, but the pandemic is far from over and the companies are ready to adjust and adapt again to new conditions if necessary. We have observed various trends and impacts during the period, depending on which market and segment one looks at. Generally, it can be said that, as in the previous quarter, the countries of northern Europe have been less affected than the rest of Europe. The operations in Asia and North America have experienced relatively positive growth. We have a diversified portfolio of holdings that are exposed to different geographic markets, customers and product segments, which has alleviated the negative impact of the crisis.

We stepped up our acquisition activities again during the quarter and are looking forward to what will hopefully be a busier fourth quarter in terms of transactions. Swegon's announcement that it had acquired SLT Schanze Lufttechnik in Germany earlier in the week was good news.

We are also maintaining our relentless focus on positioning ourselves for the future by investing continuously in various aspects of product development, sales and marketing. Furthermore, we currently have a high rate of investment in our factories. We remain committed to our focus on sustainability and digitalisation which is key to underpinning future growth. During the quarter, we launched several different initiatives to support the companies' within these areas and also implemented additional central sustainability targets that apply to all of the wholly-owned holdings. 

The stock market has had a strong development during the quarter and this is reflected in our investment portfolio. Since the beginning of the year, the investment portfolio has increased by 9.0 per cent when adjusted for portfolio changes and dividends, while the benchmark index (SIXRX) increased by 8.2 per cent. The underlying growth in earnings of the companies has also been good considering the pandemic. Several companies have been hit by a sharp fall in organic sales, but have demonstrated considerable resilience and are posting strong operating profits. The net asset value in Latour increased in the same period by 9.8 per cent to SEK 148 per share.”

Johan Hjertonsson
President and CEO

For further information please contact:
Johan Hjertonsson, President and CEO, Tel. +46 702-29 77 93 or
Anders Mörck, CFO, Tel. +46 706-46 52 110

Conference call
President and CEO Johan Hjertonsson 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 follow the meeting, please call +46 (0)8 505 583 55.
To follow the webcast please visit our webpage, www.latour.se, or use the link:

https://onlinexperiences.com/Launch/QReg/ShowUUID=3B688B62-3E1A-4DA7-B8CB-5CFA6BEF0F5F