Interim report January – September 2023

NET ASSET VALUE AND THE LATOUR SHARE

• The net asset value rose to SEK 172 per share, compared with SEK 159 per share at the start of the year. This is an increase of 10.8 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange's Total Return Index (SIXRX) increased by 4.6 per cent. The net asset value was SEK 173 per share at 6 November.¹
• The total return on the Latour share was -0.5 per cent during the period measured against the SIXRX, which rose 4.6 per cent.

INDUSTRIAL OPERATIONS

The third quarter

• The industrial operations’ order intake rose 5 per cent to SEK 5,565 m (5,281 m). Adjusted for currency effects, this represents a decrease of 8 per cent for comparable entities.
• The industrial operations’ net sales rose 9 per cent to SEK 6,109 m (5,629 m). Adjusted for currency effects, this represents a decrease of 2 per cent for comparable entities.
• The industrial operations’ operating profit increased by 20 per cent to SEK 942 m (784 m), which equates to an operating margin of 15.4 (13.9) per cent.
• On 13 July, Latour Future Solutions invested in the Swedish company Quandify through a private placement of newly issued shares and became a minority shareholder in the company with a holding of approximately 22 per cent.

INDUSTRIAL OPERATIONS

January - September

• During the first quarter, Swegon completed the acquisition of the British company Dalair.
• The industrial operations’ order intake rose 3 per cent to SEK 18,014 m (17,418 m). Adjusted for currency effects, this represents a decrease of 8 per cent for comparable entities.
• The industrial operations’ net sales rose 18 per cent to SEK 19,087 m (16,209 m). Adjusted for currency effects, this represents an increase of 6 per cent for comparable entities.
• Operating profit rose 30 per cent to SEK 2,951 m (2,265 m), equating to an operating margin of 15.4 (14.0) per cent.

THE GROUP

• Consolidated net sales totalled SEK 19,087 m (16,209 m), and profit after financial items was SEK 5,076 m (3,270 m).
• Net impairment losses and impairment loss reversals of shares in associated companies amounting to SEK 45 m (-1,465 m) were recognised in the income statement in the period. Write-down of goodwill was SEK 115 (0) m in the period.
• Consolidated profit after tax was SEK 4,491 m (2,753 m), which equates to a share price of SEK 7.01 (4.30).
• The Group reported net debt of SEK 13,115 m (11,175 m). Net debt, excluding lease liabilities recognised under IFRS 16, was SEK 11,697 m (9,933 m) and is equivalent to 10 (10) per cent of the market value of total assets.

INVESTMENT PORTFOLIO

• During the 9-month period, the value of the investment portfolio increased by 1.3 per cent when adjusted for dividends. The benchmark index (SIXRX) rose 4.6 per cent.
• In the first quarter, Latour participated in the issue of new shares by Alimak Group, pro rata to its holding, purchasing 16,016,809 shares in the company for SEK 747 m. Also in the first quarter, Latour participated in the issue of preference shares by CTEK, pro rata to its holding, purchasing 6,112,324 shares in the company for SEK 107 m.

EVENTS AFTER THE REPORTING PERIOD

• There were no material events subsequent to the end of the reporting period.

¹ The calculation of the net asset value on 6 November was based on the value of the investment portfolio at 1.00 p.m. on 6 November, and the same values as at 30 September were used for the unlisted portfolio.

Comments from the CEO
“The third quarter continued with positive development for Latour’s industrial operations. The order intake is 8 per cent lower than last year when adjusted for acquisitions and currency effects. It is important to understand, however, that the order intake does not fully reflect underlying demand. The supply chains have gradually and largely returned to normal after a couple of years of the adverse effects of the pandemic and the war in Ukraine. This also means that our customers are now placing orders with shorter lead times. In our view, most of the operations are now back to normal, which should mean that the reported order intake, going forward, will gradually align better with the underlying demand. At the same time, we are aware that we are in an economic recession. Once again, it is mainly the businesses that are exposed to the housing sector that have been impacted by a decline in new orders for some time. Caljan’s order intake levels are also lower following very strong performances in 2021 and 2022. These have now returned to normal. The economic climate has also led to a generally increased focus among customers to hold back on major investments, and this is having a short term, adverse impact on Caljan. We expect the conditions for the construction and property markets to become more challenging in general in the period ahead. Meanwhile, we are seeing a counterbalancing, positive trend for investments in the area of energy efficiency of buildings.

In the third quarter, the total order intake was up 5 per cent, although down 8 per cent when adjusted for acquisitions and currency effects. The total value of invoiced sales was up 9 per cent, but down 2 per cent when adjusted for acquisitions and currency effects. Operating profit grew strongly, up 20 per cent to SEK 942 m (784 m) with an operating margin of 15.4 (13.9) per cent.  The falling order backlog signifies a return to more normal levels, and stood at SEK 5,749 m at the end of September compared with SEK 6,564 m at the start of the year. Caljan in particular has a significantly lower order backlog than at the start of the year.

The results are strong for the industrial operations. We are keeping a close watch on developments in the market and our operations are prepared to make adjustments as needed. Our operations are maintaining good control of costs. On the whole, supply chain disruption issues have been resolved and we are managing with lower stocks to provide our customers with a high level of service and good delivery capacity. This has provided a significant boost to our cash flow during the year.

Our strong financial position and profitable operations allow us to continue investing in the future of our businesses. Notwithstanding the short-term economic challenges, we remain committed to making continuous investments in our facilities, product development, sustainability initiatives and digitalisation. It is of utmost importance for us to keep our operations at the forefront of the industry to ensure we remain sustainable and profitable for years to come. Our long-term investment horizon creates stability and assurance for our companies, which is key to remaining competitive, increasing market shares and, equally important, attracting and retaining talent in our operations.  

We have slowed our pace of acquisition activity so far this year after an intensive year in 2022. We are continuously engaging in analysis and discussions, and have a good pipeline to keep us busy. In the first quarter, we completed an acquisition through Swegon, which acquired the British company Dalair at the start of January. On 13 July, we invested in the Swedish company Quandify through Latour Future Solutions. More details can be found on page 4.

Most of the stock market increase that we saw in the first six months of the year has since fallen off again. However, our main task is to focus on the underlying development of our operations. The majority of our listed holdings have now submitted third-quarter reports and several report a good profit development but, similar with our wholly-owned operations, a mixed picture regarding order intake. Since the beginning of the year, Latour’s net asset value has risen 10.8 per cent to SEK 172 per share and our listed investment portfolio has increased by 1.3 per cent. By comparison, the benchmark index SIXRX has risen 4.6 per cent.”

Johan Hjertonsson
President and CEO

For further information please contact:
Johan Hjertonsson, President and CEO, Tel. +46 702-29 77 93 or
Anders Mörck, CFO, Tel. +46 706-46 52 110

Conference call
President and CEO Johan Hjertonsson and CFO Anders Mörck present the report and answers to questions in a webcasted teleconference today at 10.00 AM (CEST). The conference call will be held in English.

Webcast
Via the webcast you are able to ask written questions.
If you wish to participate via webcast, please use the link: https://ir.financialhearings.com/latour-q3-2023

Teleconference
You can ask questions verbally via the teleconference.
If you wish to participate via teleconference, please register on the link below.
After registration you will be provided phone numbers and a conference ID to access the conference.
https://conference.financialhearings.com/teleconference/?id=5004550

The information contained in this report constitutes information which Investment AB Latour (publ) is required to disclose under the EU Market Abuse Regulation. The information was provided by the above contact persons for publication on 7 November 2023 at 08.30 CET.