Lagercrantz Interim Report 2020/21 Q1

1 April – 30 June 2020

• Net revenue decreased by almost 4 percent to MSEK 977 (1,015). The market situation was dominated by uncertainty, primarily connected to the Covid-19 pandemic.
• Operating profit (EBITA) amounted to MSEK 124 (130), equivalent to an operating margin of 12.7 percent (12.8).
• Profit after financial items amounted to MSEK 93 (105).
• Profit after taxes amounted to MSEK 70 (82). Earnings per share before and after dilution amounted to SEK 5.22 for the moving 12-month period (SEK 5.39 for the 2019/20 financial year).
• Cash flow from operating activities amounted to MSEK 246 (112).
• Return on equity was 21 percent (22). The equity ratio at the end of the period was 41 percent (40).
• The Annual General Meeting will be held on 25 August 2020. Due to the ongoing Covid-19 pandemic, a limited attendance is requested, and an alternative voting procedure will be offered. 
• In view of the prevailing uncertainty as a consequence of the pandemic, the Board of Directors proposes, to the Annual General meeting a reduced dividend of SEK 2.00 (2.50) per share.
• The Board of Directors proposes to the Annual General Meeting that the number of shares in the company be increased by dividing each share, regardless of series, into three shares (so-called share split 3:1).

Statement of the Chief Executive

The first quarter of the financial year was dominated by the uncertainty connected to the Covid-19 pandemic. The pandemic affected the Group starting in March/April when the public health authorities raised the alarm and we noticed an increased volatility in incoming orders among the Group’s different businesses. Within the Group, we took the situation extremely seriously and urged caution. We introduced increased follow-up relating to incoming orders, earnings and cash flows in every profit centre. In particular, we have prioritised measures to protect the health of our employees and business partners, through remote meetings and much fewer physical contacts, less travel, participation in trade fairs etc. We have gradually seen how different the businesses are affected by the pandemic and continued to invest where we see growth, at the same time as we have made necessary restructuring where needed.

My view is that our focus on the situation in every unit has really delivered results and towards the end of the quarter we noted improved conditions in line with an improving general situation and economies reopening. In overall terms, the order volume during the quarter was only about 5 percent weaker than the same period last year and this, in combination with the implemented precautionary measures generally, and more far-reaching measures in businesses with problems, meant that the fall in profit could be limited. It is also important to point out that we reported a continued positive performance in most of the Group’s larger businesses, where many companies have exposure to sectors such as electricity and social infrastructure. Examples here are the businesses Elpress, Elkapsling and Elfac within Mechatronics, R-Con in Communications and Tormek and Wapro within Niche Products. In total, our focus on the right things has generated a strong cash flow with a decrease in operational net debt by MSEK 192 to MSEK 864 during the quarter. I would like to extend a big thank you to all co-workers and subsidiary management teams for extraordinary efforts during this new situation. 

Ahead of the coming quarters, the situation remains uncertain and we are preparing our businesses for different scenarios.  Independent of the scenario, I feel great confidence regarding the Group’s decentralised structure. In times of uncertainty, it really comes into its own, where the Group’s more than 50 companies in about 100 operating locations ensure a large diversification of products, end customer markets and geographies. Given a continued extraordinary sense of responsibility, commitment and the decision-making power among our local management teams, I am convinced that the Group will cope with the crisis well. Far-reaching but balanced actions also pave the way for a more offensive approach and further acquisitions as the situation normalises.

Jörgen Wigh
President and CEO

Stockholm 17 July 2020
 

Lagercrantz Group AB (publ)

A phone conference will be held 17 July at 3 pm CET, in English.
Phone: +46 8 619 7530. PIN: 332347#
Link to presentation: 
https://www.lagercrantz.com/en/reports-and-presentations

For further information, please contact:
Jörgen Wigh, President, phone +46 8 700 66 70
Kristina Elfström Mackintosh, CFO, phone +46 8 700 66 70

This information is such information that Lagercrantz Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication at 08.00 CET on 17 July 2020.

LAGERCRANTZ GROUP IN BRIEF

Lagercrantz Group is a technology group that offers world-leading, value-creating technology, using either proprietary products or products from leading suppliers. The Group is comprised of some 50 companies, each with a focus on a specific sub-market – a niche. High value-creation is common to all the companies, including a high degree of customisation, support, service and other services. Lagercrantz Group is active in nine countries in Northern Europe, in China, India and in the USA. The Group has approximately 1,500 employees and annual revenue of approximately MSEK 4,000. The Company is listed on Nasdaq Stockholm since 2001.

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