Interim report and Year-End report 2022

Fourth quarter 2022

• Order intake increased by 12% to SEK 7,052 million (6,293). For comparable units, it was unchanged.
• Net sales increased by 26% to SEK 7,228 million (5,726). For comparable units, it was an increase of 13%.
• EBITA increased by 29% to SEK 1,081 million (836), corresponding to an EBITA margin of 15.0% (14.6%).
• Profit for the quarter rose 29% to SEK 677 million (524), and earnings per share amounted to SEK 1.86 (1.44).
• Cash flow from operating activities amounted to SEK 850 million (901).

1 January – 31 December 2022

• Order intake increased by 18% to SEK 27,701 million (23,474). For comparable units, it was an increase of 6%.
• Net sales increased by 24% to SEK 27,016 million (21,715). For comparable units, it was an increase of 12%.
• EBITA increased by 28% to SEK 4,098 million (3,202), corresponding to an EBITA margin of 15.2% (14.7%).
• Profit for the year rose 28% to SEK 2,681 million (2,097), and earnings per share amounted to SEK 7.36 (5.76).
• Cash flow from operating activities amounted to SEK 2,372 million (2,853).
• The Board proposes a dividend of SEK 2.60 (2.30) per share.

CEO’s message

A strong fourth quarter concludes the year of 2022 where the Indutrade model once again demonstrated its strength. Our balanced and diversified structure, with customer-oriented, entrepreneurial and flexible companies has resulted in a new record year for Indutrade, with net sales of SEK 27 billion and a margin of 15.2%. We also raised our target for the EBITA margin to a minimum of 14% per year over a business cycle (the previous target was 12%) and continued to take important strategic steps, not least with sustainability, where we started reporting Scope 3 emissions and joined the Science Based Targets initiative.

Fourth quarter
Demand during the fourth quarter was stable and order intake increased by 12% to SEK 7.1 billion (6.3). Organically, order intake was in line with the strong level during the corresponding period previous year. The majority of the companies grew organically and demand was good in several major customer segments, with the strongest performance in the process industry, energy segment and in medical technology and pharmaceuticals. We have, however, noticed large variation in the demand between various companies, segments and countries, with the weakest performance in construction.

Sales growth was strong during the quarter and it improved organically in all business areas. Net sales amounted to SEK 7.2 billion, an increase of 26% compared to the corresponding period previous year. Organically, growth was 13%, driven both by higher volumes and prices. Disruptions in the supply chains continued during the quarter, but the situation continued to improve compared to the third quarter 2022, which impacted invoicing positively. The strongest organic growth occurred in the Benelux and Flow Technology business areas, where the majority of companies developed positively.

EBITA increased by 29% to SEK 1.1 billion, corresponding to an EBITA margin of 15.0% (14.6%). Included in earnings are some nonrecurring items related to revaluation of contingent earn-out payments and impairment of goodwill. Excluding nonrecurring items, the EBITA margin was 14.6% (15.0%). During the quarter, our companies continued with active pricing efforts and the gross margin remained at a high level, although lower than previous year, which somewhat dampened the EBITA margin. In the Flow Technology, Finland and UK business areas, the EBITA margin improved compared to the corresponding period previous year, with positive development in the majority of the companies.

The trend from earlier quarters with increases in inventory dampened during the fourth quarter, driven by strong sales and a somewhat better delivery situation. Overall however, cash flow from operating activities, which amounted to 850 million (901), and working capital efficiency were lower than in the corresponding period previous year. Net debt increased during the quarter as a result of the high rate of acquisition, but our financial position remains strong and the net debt/equity ratio was in line with historical levels.

Acquisitions
In terms of acquisitions, 2022 has been a successful year and we welcomed 16 new companies to the Group, with total annual sales of approximately SEK 1.9 million. During the fourth quarter, the acquisition of the Danish company BPI was finalised, which is a leading manufacturer of customer specific and technology-based engineered foam solutions. We also welcomed the Swedish company, Geotech, which offers specialised drilling rigs, geotechnical instruments and other field equipment for geotechnical investigations. In Germany, which is a prioritised market for us, we acquired Palas – a leading manufacturer of precision equipment for generating, measuring and analysing particles in the air. The last acquisition of the year was Aichhorn in Austria, which offers valves for industrial and infrastructure applications. All of the acquisitions strengthen our position in attractive product and customer segments.

Despite the higher macroeconomic uncertainty, we expect a stable acquisition climate in 2023 and have thus far acquired three companies. In January, Sax Lift, a specialist in scissor lift tables was acquired, as well as Hobe, which manufactures hard-metal precision tools and SKS – a leading technical trading company of flow technology components in the Netherlands.

Over the last few years, we have continuously strengthened our acquisition resources in the business areas and at the Group level. This, together with continued good activity in our acquisition processes, provides us with good prerequisites for making more value-creating acquisitions in 2023.

Outlook
As we now embark on a new year, we have an overall socioeconomic situation characterised by a great deal of uncertainty and there is weaker demand in some of the customer segments. At the same time, the long-term market trends are strong, with large private and public investments being made in, among others, infrastructure, energy and electrification. Our decentralised model will continue being a strength in 2023 and we have an historically large order backlog. This gives us comfort in the sales and earnings trend over the next few quarters, although the comparison figures will be challenging. We are goal-oriented and I have great confidence that Indutrade will continue delivering sustainable profitable growth!

Bo Annvik, President and CEO

Note
The information in this report is such that Indutrade AB is obligated to make public in accordance with the EU Market Abuse Regulation. The information was submitted for publication by the agency of the following contact persons on 2 February 2023 at 7.30 CET.

For further information, please contact:
Bo Annvik, President and CEO, tel.: +46 8 703 03 00,
Patrik Johnson, CFO, tel. +46 70 397 50 30

This report will be commented upon as follows:
A webcast of the report will be presented on 2 February at 9.30 CET via the following link:
https://ir.financialhearings.com/indutrade-q4-2022

To participate in the conference call and ask questions, please register yourself via the link below. Once you have registered, you will be given the telephone number and a conference ID to login to the conference call.

https://conference.financialhearings.com/teleconference/?id=5004898

About Indutrade
Indutrade is an international technology and industrial business group that today consists of approximately 200 companies in some 30 countries, mainly in Europe. In a decentralised way, we aim to provide sustainable profitable growth by developing and acquiring successful companies managed by passionate entrepreneurs. Our companies develop, manufacture, and sell components, systems and services with significant technical content in selected niches. Our value-based culture, where people make the difference, has been the foundation of our success since the start in 1978. Indutrade's net sales totalled SEK 27 billion in 2022, and the share is listed on Nasdaq Stockholm in Sweden.