Indutrade Q2 Report 2019

Variation increasing between companies, segments and markets Continued strong development in Business Areas UK and Flow Technology, but uncertainty su...

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Q2 Report 2019

Bo Annvik, CEO Patrik Johnson, CFO 18 July 2019

Highlights second quarter 2019 ▪ Good and stable demand with positive book to bill ▪ Increasing variation in demand between companies, segments and markets ▪ High acquisition pace – 10 companies acquired so far during the year ▪ EBITA margin improved slightly ▪ Cash flow improved during the quarter, working capital still on high level

2

Order intake

Q GROWTH

4,653 MSEK

+6% 3

YTD GROWTH

+8%

R3Y CAGR

+11%

Net sales

Q GROWTH

4,587 MSEK

+4% 4

YTD GROWTH

+8%

R3Y CAGR

+11%

EBITA*

Q GROWTH

574 MSEK

+6%

*) Excluding restructuring costs 2017-Q4 5

YTD GROWTH

R3Y CAGR

+12% +12%

Organic sales growth by Business Area Total growth:

-2%

+10%

-14%

+7%

+3%

-1%

+23%

+24%

▪ Variation increasing between companies, segments and markets ▪ Continued strong development in Business Areas UK and Flow Technology, but uncertainty surrounding Brexit affecting to a greater extent than during Q1

▪ Business Area DACH supported by demand from Swiss process industry ▪ Filter/Hydraulics segments strong in Business Area Fluids & Mechanical solutions, but Industry segment declined

▪ Lower demand in North America for one of the larger companies affecting the Business Area Measurement & Sensor Technology ▪ Low sales of Valves for Power Generation impacting Benelux Business Area 6

EBITA margin by Business Area ▪ EBITA margin improved in 5 out of 8 Business Areas ▪ Strongest development in UK and Flow Technology driven by higher sales, favourable mix and good cost control ▪ Finland benefited from efficiency measures and divestments ▪ Benelux declined mainly due to the Power Generation segment ▪ Measurement & Sensor Technology maintained good margin level, but decreased slightly impacted by significantly lower demand in North America related to one larger company

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Acquisitions & divestments 2019 Acquisitions

Q1

Q2

Q3

Q1 Q2

Business Area

Annual Sales

Weldability Sif STRIHL Scandinavia AB

UK Fluids & Mechanical Solutions

100 MSEK 60 MSEK

Acumo AB QbiQ Group B.V. Adam Equipment Co Ltd Datum Equipment Co Ltd Starke Arvid AB Färber & Schmid AG

Industrial Components Benelux Measurement & Sensor Technology Measurement & Sensor Technology Fluids & Mechanical Solutions DACH

60 MSEK 320 MSEK 150 MSEK 50 MSEK 90 MSEK 220 MSEK

Finisterra AS Natgraph Ltd

Industrial Components UK

50 MSEK 120 MSEK

Business Area

Annual Sales

Wilhelm Sander Fertigung GmbH

Flow Technology

60 MSEK

Rostfria VA-system i Storfors AB EssMed Group

Flow Technology Industrial Components

30 MSEK 40 MSEK

Divestments

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Key data summary MSEK

2019-Q2

2018-Q2

Change

2019-YTD

2018-YTD

Change

Order Intake

4,653

4,391

6%

9,263

8,564

8%

Net Sales

4,587

4,390

4%

8,953

8,287

8%

Gross margin, %

34.4

33.6

34.3

34.1

EBITA

574

543

1,111

994

EBITA-margin, %

12.5

12.4

12.4

12.0

Net financial items

-27

-18

50%

-54

-38

42%

Tax

-104

-93

12%

-196

-171

15%

Earnings per share (before dilution), SEK

3.02

3.01

0%

5.92

5.43

9%

Return On Capital Employed, %

20

19

20

19

Cash Flow from operating activities

488

290

656

294

Net debt / EBITDA, times

2.5

2.2

2.5

2.2

9

6%

68%

12%

123%

Overview IFRS 16 effects Item / KPI

Impact

Net debt

+842 MSEK

Comment

Opening balance

Finance net

-10 MSEK

Increased costs YTD-2019

Depreciation

-140 MSEK

Increased costs YTD-2019

EBITA

+10 MSEK

Increased costs YTD-2019

EBITDA

+150 MSEK

Increased result YTD-2019

Net debt / equity

+14%-points

Approximate increase of ratio at end Q2-2019

10

Cash Flow from operating activities ▪ Cash Flow from operating activities grew 68% from 290 MSEK to 488 MSEK, mainly driven by lower working capital build up and increased profit ▪ Working capital still on slightly high level due to high capacity utilization in our companies and long lead times from suppliers

11

Earnings per share ▪ Q2 earnings per share in line with last year, SEK 3.02 (3.01) ▪ 3- and 5-year earnings per share CAGR, are 12% respectively 16%

12

Net debt ▪ The interest-bearing net debt end of Q2 increased 6,422 (4,451) MSEK ▪ Driven by the high acquisition pace and the implementation of IFRS 16 ▪ Net debt/equity ratio increased to 99% (79%). The ratio would have been approximately 85% excluding IFRS 16 effects ▪ Long-term financing strengthened further - new 5-year revolving credit facility in place and a 5,25-year MTN bond issued 13

Stability based on diverse segments Engineering

19%

Construction/ Infrastructure

Energy

17%

Healthcare

12%

No/low segment dependency Business cycle “hedging” 14

11% Net sales per customer segment %, financial year 2018

People – talent management

STRATEGIC INITIATIVES

Sustainability as business opportunity

Knowledge sharing

Indutrade tool box

15

Key takeaways ▪ Good and stable demand, but with increased

variation between companies, segments and markets ▪ Solid profitability

▪ High pace of acquisitions and opportunities

remain good ▪ Diversified Group with agile and flexible

companies, working closely with the customers ▪ Stable platform in place for continued

sustainable profitable growth

16

Thank you! Q&A

Financial Calendar & contact details • 25 October 2019 Interim Report 1 January – 30 September 2019 • 5 February 2020 Year End Report 1 January – 31 December 2019

Contact: Frida Adrian VP Communications, Sustainability and IR +46 70 930 93 24 [email protected] 18