Lagercrantz Year-End Report 2018/19
The financial year 1 April 2018 – 31 March 2019 (12 months)
- Net revenue increased by 15 percent to MSEK 3,932 (3,410). Organically, net revenue increased by 7 percent.
- Operating profit (EBITA) increased by 19 percent to MSEK 519 (436), equivalent to an operating margin of 13.2 percent (12.8).
- Profit after financial items increased by 20 percent to MSEK 431 (358).
- Profit after taxes amounted to MSEK 342 (286). Earnings per share, before and after dilution, amounted to SEK 5.05 (4.21).
- Cash flow from operating activities increased by more than 60 percent to amounted to MSEK 462 (282).
- Return on equity was 24 percent (23). The equity ratio at the end of the period was 39 percent (36 percent).
- During the financial year 2018/19, the acquisition of Schmitztechnik GmbH in Germany was carried out. The acquisition is expected to add annual sales of about MEUR 6.7 with good profitability.
- The Board of Directors proposes a dividend of SEK 2.50 (2.00) per share.
1 January– 31 March 2019 (fourth quarter)
- Net revenue during the fourth quarter increased by 13 percent and amounted to MSEK 1,078 (954). Organically, net revenue increased by 9 percent.
- Operating profit (EBITA) increased by 20 percent to MSEK 153 (128), equivalent to an operating margin of 14.2 percent (13.4).
- Profit after financial items increased by 21 percent to MSEK 130 (107) and profit after taxes increased by 17 percent to MSEK 104 (89).
- Cash flow from operating activities during the quarter amounted to MSEK 155 (109).
- After the end of the period, a further acquisition was completed of Dorotea Mekaniska AB (Truxor), which generates annual revenue of approximately MSEK 70 with good profitability.
STATEMENT OF THE CHIEF EXECUTIVE
The financial year 2018/19
“Success on a broad front”, sums up the 2018/19 financial year. The strength in our business concept was confirmed as we achieved a new record profit for the 9thyear in a row. For the full-year, profit after net financial items was MSEK 431, an increase of about 20 percent compared to the previous year. Earnings per share also reached a new record level of SEK 5.05 per share, an increase of 20 percent and the Board proposed an increased dividend to the shareholders of SEK 2.50 per share.
The fact that the organic sales growth was higher than before was extra positive in this context and that the increases in profits were seen on a broad front among many of our more than 50 companies.
The better organic growth than before was due to a favourable market situation but also to the fact that the Group is selling a higher proportion of proprietary products. We have had this ambition ever since 2006 and the proportion today has increased to 55 percent of sales. The gross margins are generally higher with proprietary products and companies can develop a market position where they exercise better control, with products based on their own merits and which are less exposed for this reason. If the products are unique and leading in the domestic market, there are often growth opportunities, not least in terms of exports.
Apart from an increased proportion of product companies, we have also clarified the prioritisation of growth internally in the Group. We have made international investments to a greater extent and prioritised sales and product development as well as digitalisation in our companies. We have also increased the level of expectation and made changes in subsidiaries where administration rather than entrepreneurship has dominated the discussion. This has delivered results. Organic growth, i.e. sales growth in comparable units, measured in local currency, has been 7-9 percent during the past four quarters.
In light of these strategic ambitions, it is pleasing to see that the profit improvements are being reported on a broad front. This shows that the governance model and how we are developing the companies is working. Benchmarking is a tool in the business development where we rank all the Group’s companies from best to worst using different metrics. One metric is the net margin where comparisons stimulate improvements when it comes to sales activities, active pricing strategies and cost control. Everyone wants to improve and no one wants to be in the relegation zone in the comparison, which generates results. Of our total of 51 companies, 30 currently achieve a profit after net financial items in excess of 10 percent of sales. These units account for about 70 percent of the Group’s business volume. This means that many companies in the Group are performing very well and with regard to risk, we are diversified in many sub-markets, geographies, customer segments and product technologies.
I really want to take this opportunity to thank all our employees for the many fantastic efforts during the year. Our business philosophy with decentralisation and management by objectives provides a great basis for every management team to reach their goals and realise their visions. Taken together, this leads to a successful listed company.
Looking ahead, we will continue on our chosen path. Today we have a strong business concept, a strong company portfolio and a strong balance sheet, which will enable more investments and acquisitions. The ambition is to further increase the proportion of proprietary products and reach 75 percent of sales in 3-5 years’ time.
In recent years, sustainability issues have come into stronger focus. We have always worked on a long-term basis with high ethical standards and we want to be the good company. We have strengthened our Code of Conduct and we are prioritising environmental and gender equality issues. Taken together, all of this gives me a very strong confidence in Lagercrantz’s future.
May 9 2019
President and CEO
Lagercrantz Group AB
For further information please contact:
Jörgen Wigh, President and CEO, Lagercrantz Group AB, telephone +46 8 700 66 70
Kristina Elfström Mackintosh, Chief Financial Officer, Lagercrantz Group AB, telephone +46 8 700 66 70
or visit our website www.lagercrantz.com
This information is information that LAGERCRANTZ GROUP AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication on 9 May 2019 at 12:45 CET.
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 3,900. The Company is listed on Nasdaq Stockholm since 2001.