Interim Report January–June 2018

Q2 April-June 2018

• Net sales increased by 64 percent to SEK 1,428m (872)
• EBITA amounted to SEK 86m (99)
• Organic EBITA growth was -6 percent
• Profit after tax amounted to SEK 61m (68)
• Earnings per common share after deduction of preference share dividends amounted to SEK 0.54 (0.64)

Period January–June 2018

• Net sales increased by 72 percent to SEK 2,783m (1,615)
• EBITA amounted to SEK 137m (139)
• Organic EBITA growth was -2 percent
• Profit after tax amounted to SEK 78m (96)
• Earnings per common share after deduction of preference share dividends amounted to SEK 0.56 (0.79)

Events after the reporting period

• S:t Eriks Group AB, with net sales of SEK 1,038m and EBITA of SEK 65m for the full year 2017, was acquired on 15 August. S:t Eriks becomes a new business unit in the Industry business area.

COMMENTS FROM THE CEO

Operations developing well despite slightly lower profits

Volati’s operations have developed well during the quarter, but with variations between business areas. The Industry business area showed strong earnings growth, while Akademibokhandeln followed its normal seasonal pattern, reporting a negative result. S:t Eriks was acquired after the end of the quarter and becomes a new business unit in the Industry business area.

Net sales for Q2 showed a sharp increase, mainly as a result of acquisitions. EBITA amounted to SEK 86m, a decline compared with the same quarter the previous year. EBITA was particularly affected by the fact that Akademibokhandeln is included in the Volati Group’s figures for Q2, which was not the case for the comparative quarter. The second quarter is usually a quarter of negative earnings for Akademibokhandeln due to seasonal variations. In addition, market-related investments have been made in the business area with the aim of driving the shift towards increased e-commerce and exploiting the potential of the company’s strong loyalty club of 1.8 million customers. The initiatives have resulted in a continuing increase in the proportion of sales coming from e-commerce. However, this has brought a higher cost level during the quarter compared with the corresponding period the previous year. Measures are now being taken within the business area to increase the efficiency of operations in the future.

Strong development in the Industry business area

The Industry business area showed strong sales and earnings growth as a result of measures during the first half of the year, increased efficiency and a clearer strategic focus.

The Trading business area showed growth in both sales and EBITA due to acquisitions and stable growth in existing operations. The Consumer business area experienced slightly negative development driven by weak market conditions for some business units. It should be said that the historically hot summer has created challenges for several of the Group’s business areas.

Working close to the companies

The two key components of Volati’s business model are to develop operations that generate good cash flows and to use these cash flows for further acquisitions of reasonably valued well-managed companies. To succeed, we need to define the right strategic direction for the companies, to place an operational focus on growth and margins, and to ensure that the right skills are in place in the companies’ management. In this context, I am pleased at how well the new business area organisation is working. The business area managers’ expanded mandate means that we as owners are working even closer to the companies, particularly in terms of strategic direction for long-term value creation and operational monitoring. This has had a positive effect in Q2, notably in the Industry business area.

Scope for further acquisitions

We have ample scope for acquisitions and can act quickly when we identify acquisitions that meet our criteria. The bond that we issued in 2017 and the Akademibokhandeln bond that we took over as part of the acquisition meant that we had higher financing costs in Q2 than in the same quarter the previous year. The net debt to adjusted EBITDA ratio at the end of the period was 1.7x, which is well within our financial target of a maximum of 3.0x.

Events after the end of the period – acquisition of S:t Eriks

S:t Eriks, one of Sweden’s leading manufacturers of concrete products and natural stone for infrastructure and landscape architecture, was acquired on 15 August. This is in many ways a typical Volati acquisition and was made at a reasonable valuation. This is a well-managed company with a long history, stable financial development and competent management. We also see continuing development opportunities for the company, both through additional acquisitions and organically. The acquisition has been made within the framework of our new acquisition organisation, which involves business area managers having greater responsibility for identifying acquisition opportunities and driving acquisition work in close cooperation with Volati’s Group management, which we see as contributing to more efficient acquisition processes. Through the acquisition, we have taken a further step towards our financial target of an adjusted EBITA of SEK 700m by the end of 2019. We are focused on building Volati further and are continuously evaluating new acquisition opportunities while working closely with companies to create good conditions for long-term value creation.

Mårten Andersson, CEO

Conference call

CEO Mårten Andersson and CFO Mattias Björk will present the interim report in a conference call on 17 August at 9.00. The presentation will be conducted in Swedish.

Phone number to access the conference call: +46 (0)8 5664 2665. For a webcast of the conference call, go to www.volati.se.

This information is information that Volati AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (MAR) and the Securities Market Act. The information was submitted for publication, through the agency of the contact persons set out below, at 7:45 a.m. (CEST) on 17 August 2018.

For more information, please contact:

Mårten Andersson, CEO, +46 (0)72 735 42 84, marten.andersson@volati.se
Mattias Björk, CFO, +46 (0)70 610 80 89, mattias.bjork@volati.se

Volati AB (publ)
Corporate reg. no. 556555-4317
Engelbrektsplan 1, SE-114 34 Stockholm
Tel: +46 (0)8 21 68 40
www.volati.se

About Volati 

Volati is a Swedish industrial group, formed in 2003, organised in four business areas: Trading, Consumer, Akademibokhandeln and Industry. Volati mainly acquires reasonably valued companies with proven business models, leading market positions and strong cash flows and develops them, with a focus on long-term value creation. The strategy is to build on the companies’ identity and entrepreneurial spirit, adding leadership, expertise, processes and financial resources. Volati has operations in 16 countries and, after the acquisition of S:t Eriks, a total of about 2,300 employees and annual sales of approximately SEK 6.7 billion. Volati’s common shares and preference shares are listed on Nasdaq Stockholm. Further information is available at www.volati.se.