Second quarter (1 July–30 September 2024)

• Revenue rose by 5 percent to MSEK 1,144 (1,094).
• EBITA increased by 12 percent to MSEK 120 (107) and the EBITA margin improved to 10.5 percent (9.8).
• Net profit rose by 12 percent to MSEK 55 (49).
• Cash flow from operating activities totalled MSEK 94 (176).
• One acquisition has been completed with annual revenue of approximately MSEK 40.

Six months (1 April-30 September 2024)

• Revenue rose by 3 percent to MSEK 2,397 (2,322).
• EBITA increased by 13 percent to MSEK 239 (212) and the EBITA margin improved to 10.0 percent (9.1).
• Net profit rose by 16 percent to MSEK 113 (97).
• Cash flow from operating activities totalled MSEK 288 (355).
• Earnings per share for the most recent 12-month period amounted to SEK 7.50 after dilution, compared with SEK 7.15 for the 2023/2024 financial year.
• Three acquisitions have been completed, one of which after the end of the period, with total annual revenue of approximately MSEK 250.

CEO’s comments

Increased earnings despite a tough market – Diamonds form under pressure
We once again demonstrated that our decentralised governance model – where each operation is developed based on our capital allocation model and where we acquire highly profitable, capital-efficient companies – can deliver strong results, even in challenging times. Just as diamonds are formed under pressure, our companies improve when times get tougher thanks to the efforts of our strong company management teams and our decentralised way of working.

Despite a weak underlying market, we maintained a healthy rate of improvement during the quarter, with increased profit, stronger margins and improved profitability (P/WC). EBITA rose by 12 percent to MSEK 120 compared with the year-earlier period. It is gratifying to note that all three of our divisions contributed to this increase in profit.

Organically, however, revenue decreased slightly during the quarter. We managed to offset this through acquisitions, which resulted in revenue growth of 5 percentage points during the quarter. Thanks to the persistent and systematic work of our companies, in combination with acquisitions, our gross margin remained strong. We continued to focus on improvements in cost efficiency and reduced the Group’s costs in comparable units during the period. At the same time, cost measures have been implemented but have not yet reached their full impact, so we expect additional effects going forward.

To date this year, we have acquired companies with combined annual revenue of MSEK 250. This includes the acquisition of Levypinta, which was carried out on 1 October. Given our specific criteria for acquisitions (operating margin of at least 15 percent and profitability over 45 percent), future acquisitions will continue to improve our margins and profitability.

During the last year our companies succeeded in reducing their inventory by over MSEK 180 organically thanks to methodical assortment and inventory optimisation. Even if we are not yet quite back to the inventory turnover rate the Group had before the pandemic, we are well on our way. Cash flow from operating activities for the quarter totalled MSEK 94. Cash flow was impacted by somewhat higher working capital during the quarter, primarily due to an accrual effect between accounts payable in the first and second quarters and to acquired units.

To sum up, I am pleased that we once again increased our earnings per share, for the quarter as well as accumulated, after having delivered stable earnings improvements for a full 19 consecutive quarters.

All divisions deliver increased profits
All three of our divisions posted increased earnings during the quarter. Division Safety Technology in particular stands out, with an earnings increase over 50 percent compared with the year-earlier period, the result of increased revenue, reduced costs and a stronger gross margin. The EBITA margin at Divisions Core Solutions and Industrial Equipment remained above 10 percent, for the quarter as well as accumulated, and with profitability over 30 percent.

Balance between acceleration and restraint
The current operating environment is challenging, and the economy will not start to improve until early 2025, at best. Until that becomes a reality, we will continue to adapt to the prevailing situation, while ensuring that we are prepared to act when the economy recovers. Between the broad exposure we enjoy with 32 niche corporate groups and our acquisitions, we are positioned to deliver on our financial targets within the established time frame: MSEK 500 in operating profit, 10 percent operating margin and profitability of 45 percent. We will continue to allocate capital to the companies in our Group with high profitability and good growth prospects. Our ambition to acquire companies with combined earnings of MSEK 50–80 during the current year also remains unchanged.

With our broad portfolio of companies, decentralised governance model and strong management teams, we have excellent conditions to continue our positive earnings trend and further increase our profitability.

Stockholm, October 2024

Magnus Söderlind
President & CEO