Year-end report 2022

NET ASSET VALUE AND THE LATOUR SHARE

• The net asset value decreased to SEK 159 per share, compared with SEK 216 per share at the start of the year. This is a decrease of 25.0 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange’s Total Return Index (SIXRX) decreased by 22.8 per cent. The net asset value was SEK 176 per share at 9 February.¹
• The total return on the Latour share was -45.7 per cent during the period measured against the SIXRX, which fell 22.8 per cent.
• The Board of Directors proposes an increased dividend of SEK 3.70 (3.30) per share.

INDUSTRIAL OPERATIONS
Fourth quarter

• The industrial operations’ order intake rose 7 per cent to SEK 5,730 m (5,348 m). Adjusted for foreign exchange effects, this represents a decrease of -4 per cent for comparable entities.
• The industrial operations’ net sales rose 22 per cent to SEK 6,402 m (5,252 m). Adjusted for foreign exchange effects, this equates to growth of 8 per cent for comparable entities.
• The industrial operations’ operating profit increased by 29 per cent to SEK 929 m (723 m), which equates to an operating margin of 14.5 (13.8) per cent.
• Hultafors Group acquired the American company Martinez Tool Company on 3 October. LSAB Group (which is a part of Latour Industries) acquired the Finnish company Lahden Teräteos Oy on 1 November. On 11 November, Swegon acquired the Italian company Samp S.p.A, and on 14 December it signed an agreement to acquire the British company Dalair. The acquisition was completed in early January. Bemsiq acquired the American company Dent Instruments Inc on 27 December.
• Latour Future Solutions made minority investments in the Swedish companies Anolytech Holding AB, SenseNode AB and Qoitech AB.

Full year

• The industrial operations’ order intake rose 15 per cent to SEK 23,148 m (20,119 m). Adjusted for foreign exchange effects, this equates to growth of 2 per cent for comparable entities.
• The industrial operations’ net sales rose 24 per cent to SEK 22,611 m (18,280 m). Adjusted for foreign exchange effects, this equates to growth of 9 per cent for comparable entities.
• The operating profit rose 20 per cent to SEK 3,194 m (2,663 m), which is equivalent to an operating margin of 14.1 (14.6) per cent.
• In the first quarter, Latour Industries acquired the Italian company Esse-Ti S.R.L, Bemsiq acquired the German company Consens GmbH, Hultafors acquired the Swedish company Telesteps and Caljan acquired the Austrian company PHS Logistiktechnik. The sale of Neuffer Fenster + Türen GmbH was completed in January. Swegon acquired the Swiss company Barcol-Air in the second quarter. In the third quarter, Swegon acquired the Swedish company ABC Ventilationsprodukter, and Latour Industries acquired the Swedish company MAXAGV.  

THE GROUP

• Consolidated net sales totalled SEK 22,611 m (18,567 m), and profit after financial items was SEK 4,833 m (4,985 m).
• Losses of SEK -1,557 m (-282 m) resulting from a write-down of holdings were recognised in the income statement for the period.
• Consolidated profit after tax was SEK 4,168 m (4,381 m), corresponding to a price of SEK 6.51 (6.85) per share.
• The Group reported net debt of SEK 12,532 m (9,513 m). Net debt, excluding lease liabilities recognised under IFRS 16, was SEK 11,067 m (8,443 m) and is equivalent to 10 (6) per cent of the market value of total assets.

INVESTMENT PORTFOLIO

• During the year, the value of the investment portfolio decreased by 34.6 per cent, adjusted for portfolio changes and dividends. The benchmark index (SIXRX) decreased by 22.8 per cent.
• In October, Latour participated in Securitas’ new issue of shares with its pro-rata allocation at just over SEK 1 billion and acquired 22,704,341 shares in the company.

EVENTS AFTER THE REPORTING PERIOD

• The Board of Directors decided to revise the financial targets on 6 February. The operating margin target has been changed to 15 per cent over a business cycle from earlier 10 per cent and the return target has been clarified to minimum 15 per cent.

¹ The calculation of the net asset value on 9 February was based on the value of the investment portfolio at 1 p.m. on 9 February and the same values as at 31 December were used for the unlisted portfolio.

Comments from the CEO
“Latour’s industrial operations ended the year on a high note. Underlying demand remains constant in most markets. Component shortages and supply chain disruptions are still an issue. The situation has improved however, and our businesses continue to make every effort to provide their customers with top-class service. This is particularly apparent in invoiced sales where growth reached 22 per cent in the quarter.

Soaring energy prices, general inflation in the economy and heavy exchange rate fluctuations are placing considerable demands on the ability of our organisations to adapt quickly. Price increases have been introduced throughout the year in order to meet the rising costs, and the high level of cost awareness across the organisations is helping to maintain the profitability of operations. The fourth quarter operating profit rose 29 per cent to SEK 929 m (723 m). In absolute terms, this is our highest ever for a single quarter, with an operating margin of 14.5 (13.8) per cent. In a geopolitically unstable world we have consolidated our positions and continued to deliver profit growth, which is very pleasing to report.

The year as a whole has been dominated by the fact that there is an ongoing war in Europe. Uncertainty exists over a potential economic downturn and markets are concerned about the rising inflation. In all of this turmoil, our employees are our highest priority. The operations have coped well with the challenges posed during the year and the industrial operations have shown solid growth performance. Net sales rose 24 per cent to SEK 22,611 m (18,280 m) and the operating profit rose 20 per cent to SEK 3,194 m (2,663 m), giving an operating margin of 14.1 (14.6) per cent.

We are continuing to invest in our operations to support long-term business growth. Latour is in a financially strong position and is not cutting back on investments in progress because of short-term concerns about the economy. Moreover, we are continuing to invest in cross-company networking and collaboration in the Group. As part of Latour, the companies should be able to derive benefit from our wide geographic reach and the wealth of expertise that exists in both the wholly-owned industrial operations and our listed portfolio.

Acquisition activity played out at a high rate in the last quarter, with eight acquisitions in the industrial operations, of which three to Latour Future Solutions’ portfolio. Swegon has acquired two businesses in the UK and Italy. Hultafors Group and Bemsiq have each made an acquisition in North America, and LSAB, part of Latour Industries, has acquired a company in Finland. More details can be found on page 4.

The weak performance of stock markets during the year is a reaction to uncertainty about, among other things, the war in Ukraine, inflation, the current energy crisis. This has caused Latour’s net asset value to fall 25.0 per cent to SEK 159 per share and our listed investment portfolio has decreased by 34.6 per cent. By comparison, the benchmark index SIXRX has fallen by 22.8 per cent. To date, half of our listed holdings have published their full-year results, most of them reporting good growth, with some performing exceptionally well.

The listed companies have pursued acquisitions during the period. Alimak Group, for example, has considerably strengthened its presence in the global market through its acquisition of the French company Tractel. During the quarter, Latour participated pro rata in Securitas’ new issue of shares, which was part of the financing of the acquisition of Stanley Security that was finalised in the summer.

We have undertaken a strategic review to further strengthen the long-term profitability and returns of the industrial operations. The financial targets have been revised as a result of this. The growth target remains unchanged, but the profitability target over a business cycle has changed from an operating margin of at least 10 per cent in each holding, to an operating margin of at least 15 per cent as an average for all holdings. The return target have been clarified from 15–20 per cent return on operating capital in each holding, to at least 15 per cent return on operating capital in each holding. As a long-term and responsible owner, we fully support our existing holdings and will continue to make assessments based on all three targets combined.

As a result of the strong performance of both the industrial operations and the listed holdings, the Board of Directors proposes an increased dividend of SEK 3.70 (3.30) 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 in a webcasted teleconference today at 10.00 AM (CET). The conference call will be held in English.

Webcast
Via the webcast you are able to ask written questions.
If you wish to participate via webcast, please use the link: https://ir.financialhearings.com/latour-q4-2022

Teleconference
You can ask questions verbally via the teleconference.
If you wish to participate via teleconference, please register on the link below.
After registration you will be provided phone numbers and a conference ID to access the conference.
https://conference.financialhearings.com/teleconference/?id=5002197

The information contained in this report constitutes information which Investment AB Latour (publ) is required to disclose under the EU Market Abuse Regulation. The information was provided by the above contact persons for publication on 10 February 2023 at 08.30 CET.