Interim report January – September 2021
NET ASSET VALUE AND THE LATOUR SHARE
- The net asset value rose to SEK 188 per share, compared with SEK 153 per share at the start of the year. This is an increase of 24.9 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 24.0 per cent. The net asset value was SEK 200 per share at 8 November.1
- The total return on the Latour share was 38.0 per cent during the period measured against the SIXRX, which rose 24.0 per cent.
The third quarter
- The industrial operations' order intake rose 34 per cent to SEK 4,593 m (3,431 m), which represents a 20 per cent increase for comparable entities adjusted for foreign exchange effects.
- The industrial operations' net sales rose 20 per cent to SEK 4,356 m (3,622 m), which represents a 9 per cent increase for comparable entities adjusted for foreign exchange effects.
- The industrial operations' operating profit increased by 3 per cent to SEK 618 m (602 m), which equates to an operating margin of 14.2 (16.6) per cent for continuing operations.
- Swegon invested in the Finnish software company 720° (Seven Twenty degrees). Within the Latour Industries business area, Aritco acquired the Swedish company Motala Hissar, Densiq acquired DEPAC Anstalt based in Liechtenstein and Bemsiq acquired the Canadian company Greystone Energy System Inc.
January - September
- The industrial operations' order intake rose 35 per cent to SEK 14,772 m (10,954 m), which represents a 27 per cent increase for comparable entities adjusted for foreign exchange effects.
- The industrial operations' net sales rose 21 per cent to SEK 13,028 m (10,794 m), which represents a 14 per cent increase for comparable entities adjusted for foreign exchange effects.
- Operating profit increased by 27 per cent to SEK 1,940 m (1,524 m), which equates to an operating margin of 14.9 (14.1) per cent for continuing operations.
- Consolidated net sales totalled SEK 13,243 m (10,975 m), and profit after financial items was SEK 3,881 m (4,307 m). Items impacting comparability had a favourable SEK 1,733 m impact on last year's income statement.
- Consolidated profit after tax was SEK 3,448 m (4,035 m), which is equivalent to SEK 5.39 (6.31) per share.
- The Group reported net debt of SEK 9,106 m (6,461 m). Net debt, excluding lease liabilities recognised under IFRS 16, was SEK 8,477 m (5,999 m) and is equivalent to 7 (6) per cent of the market value of total assets.
- During the 9-month period, the value of the investment portfolio increased by 21.5 per cent adjusted for changes in the portfolio. The benchmark index (SIXRX) rose 24.0 per cent.
- 31.0 per cent of the shares in CTEK AB were acquired in the third quarter when the company was listed on the Nasdaq Stockholm market. CTEK is a leading global supplier of premium battery chargers.
EVENTS AFTER THE REPORTING PERIOD
- The agreement for the acquisition of Scangrip A/S by Hultafors Group was signed and closed on 29 October. Latour Future Solutions invested in Swedish Hydro Solutions through a directed new issue of shares and became a minority shareholder.
- As of the fourth quarter, Bemsiq will be reported as a separate business area. Further details on page 6.
1 The calculation of the net asset value on 8 November was based on the value of the investment portfolio at 1 p.m. on 8 November, and the same values as at 30 September were used for the unlisted portfolio.
Comments from the CEO
“Latour's industrial operations remain on a positive growth trajectory. The supply chain challenges have continued to escalate in the third quarter. Component shortages, supply chain disruptions and increased raw material prices are affecting all our companies but to varying extents. Our operations have handled these challenges in a very satisfactory way and have managed to maintain a high level of customer service, albeit at an increased cost which is having a short-term negative impact on the gross margins. Price increases have been implemented to compensate for rising raw material prices, but have not yet fully fed through. We continue to see a recovery from the pandemic in most of the markets that were previously heavily impacted by restrictions. The numbers of new coronavirus cases are now rising in some parts of the world and we continue to follow developments very closely. However, we feel confident that we are well equipped to adjust and respond quickly to changing circumstances if required.
The strong underlying demand is reflected in the 34 per cent growth in order intake during the quarter, of which 20 per cent is organic growth. Although growth in net sales was positive during the quarter, it did not match the order intake growth rate. This can largely be attributed to production disruptions and delayed deliveries. Net sales saw total growth of 20 per cent, of which 9 per cent is organic. We are very pleased with this. The operating profit for the quarter rose 3 per cent to SEK 618 m (602 m) with an operating margin of 14.2 (16.6) per cent.
We are delighted to announce that Bemsiq, a business unit within Latour Industries, will be reported as a separate business area as of the next quarter. Bemsiq is now ready to form the industrial operation's sixth business area after its impressive growth trajectory, both organically and through acquisitions, over the past few years. Read more about Bemsiq on page 6.
Our investment rate remains high and existing production units have been expanded and new ones established during the year. The most recent is a new factory in Germany that Caljan will be building. We are also making forward-looking investments in product development, sales and marketing in the firm belief that this is the best way to maintain our competitive edge and continue to gain market share.
We are maintaining our strong momentum in acquisition activity and made some interesting acquisitions in the third quarter as well as a couple that were announced after the end of the reporting period. Swegon has acquired a majority shareholding in the Finnish software company 720° (Seven Twenty degrees). Within Latour Industries, Aritco acquired the Swedish company Motala Hissar, Densiq acquired DEPAC Anstalt based in Liechtenstein and Bemsiq acquired the Canadian company Greystone Energy System Inc. In October, Hultafors Group acquired the Danish company Scangrip A/S and Latour Future Solutions became a minority shareholder in Swedish Hydro Solutions. Read more about our acquisitions on page 4.
Since the beginning of the year, the investment portfolio has increased by 21.5 per cent when adjusted for portfolio changes, while the benchmark index (SIXRX) increased by 24.0 per cent. We took principal ownership of CTEK in September, with 31.0 per cent of the shares, when the company was listed on the stock exchange. CTEK is a leading global supplier of premium battery chargers and also specialises in chargers and charging accessories for electric vehicles. This is a very exciting addition to our portfolio of listed holdings, which now total ten.
We are generally seeing the same development in our listed holdings as in our wholly-owned operations, with a rise in order intake, slightly weaker net sales and record high order books. China's slowdown has led to weaker growth and is adversely affecting our holdings that have exposure to APAC. Acquisition activity is high also in the listed holdings. ASSA ABLOY has announced four acquisitions, including the North American company HHI, which is their largest acquisition to date in terms of purchase price.
In summary, the third quarter's strong results once again states that we own high-quality companies that manage the challenges we face in an excellent way, and protect profits, maintain market share and, above all, safeguard our employees while the operations grow and evolve.”
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
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 75.
To follow the webcast please visit our webpage, www.latour.se, or use the link: