Lagercrantz Year-end Report 2022/23

FOURTH QUARTER (1 JanuarY – 31 MarCH 2023)

• Net revenue increased by 30% to MSEK 2,040 (1,575),
  of which organic growth amounted to 9%.
• Operating profit (EBITA) increased by 29% to MSEK 343 (265),
  equivalent to an EBITA margin of 16.8% (16.8).
• Profit after financial items (EBT) increased by 27% to MSEK 272 (214).
• Cash flow from operating activities amounted to MSEK 418 (168).
• Profit after taxes increased by 26% to MSEK 213 (169).
   

 the financial year (1 APRIL 2022 – 31 march 2023)

• Net revenue increased by 32% to MSEK 7,246 (5,482),
  of which organic growth amounted to 10%.
• Operating profit (EBITA) increased by 35% to MSEK 1,205 (895),
  equivalent to an EBITA margin of 16.6% (16.3).
• Profit after financial items (EBT) increased by 31% to MSEK 968 (741)
  and profit after taxes increased by 33% to MSEK 758 (572).
• Cash flow from operating activities amounted to MSEK 1,070 (594).
• Return on equity amounted to 29% (28) and the equity ratio was 37% (36).
• Earnings per share after dilution increased by 32% to SEK 3.70 (2.80).
• The Board of Directors proposes an increased dividend by 23% to SEK 1.60 (1.30)
  per share.
• During the financial year, six acquisitions were completed as well as two asset acquisitions with total annual revenue of approximately MSEK 1,020. After the end of the financial year, a further three acquisitions were carried out with total annual revenue of approximately MSEK 260.

CEO COMMENT

“A strong fourth quarter completes a new record year.”

The 2022/23 financial year was a new record year for Lagercrantz and a year in which we reached our goals on many points. This shows the strength of our business concept, our vision, our business culture and our organisation. As a serial acquirer of companies without an exit horizon, we grow by acquiring highly profitable and well-run technology companies, which we then nurture with clear ambitions in terms of growth and improvements. 

In recent years, we have exceeded our financial goals of increasing profit after net financial items by at least 15% per year and a return on equity above 25%, mainly through self-generating cash flows. But the journey does not end here.  We have certainly grown faster than before in recent years, but most of this journey is still to come and we see great opportunities to continue on our chosen path with more acquisitions, offensive investments in existing companies and geographical expansion. As we now enter a new financial year, we will probably have to deal with weaker market conditions, higher interest rates and inflation. So far, however, things still look good for our businesses and our business concept has been successful for more than 100 years. Therefore, I am convinced that Lagercrantz will be able to continue to grow and to be successful for many years to come.

The past year
Two years ago, in March 2021, we launched ”Lagercrantz towards one billion”, a programme that clarified our strategic direction and the financial goal to double our profit to one billion SEK within five years. We implemented a new divisional structure with a clear focus on attractive, sustainability-oriented segments with underlying structural growth and we defined clearer ambitions in relation to sustainability.

Now, two years later, this one billion target is close to being met. During the 2022/23 financial year, we reached a profit after net financial items of MSEK 968 (741), an increase of 31% compared to the previous year and up from MSEK 502, which was the level at the start of our journey. 

The new organisation with increased decentralisation, greater power and capacity at the divisional level, means that the organic growth rate has increased, and so has the acquisition rate along the way as we can drive more processes at the same time. Profitability measured as return on equity has also improved and now amounts to 29%, four percentage points above our long-term goal.  

Strategically, we continued to increase the share of proprietary products and reached our goal of 75% which we have had for several years. Proprietary products are important as we see that they provide better potential for both good margins and organic growth, particularly on the export side.

We also continued to broaden our presence geographically and, among other things, established a new organisation in the UK, which in less than one year has carried out three acquisitions and where we see several attractive opportunities in the coming years.

I would also like to comment on the cash flow, where from operating activities it improved significantly to MSEK 1,070 SEK (594) during the year. We began the year with a weaker cash flow primarily due to the build-up of safety stock in several parts of the Group. The situation with long delivery times from our suppliers has improved along the way which meant that stockbuilding could be reduced during the second half of the year. As a result, Lagercrantz today has a strong financial position with scope to both raise our dividend and to make further value-creating acquisitions. 

Finally, I want to express a big thank you to all of Lagercrantz’s fantastic leaders and employees. Many extraordinary efforts and enthusiasts characterise our organisation and it is a great privilege to be able to work with all of you. 

Future
I am optimistic about the future despite the current global and economic situation. The market situation is still stable for most of the Group’s businesses and the feared downturn has so far not materialised. The uncertainty surrounding inflation, interest rates, and the economic development going forward is difficult to judge, but we have strong confidence in the ability of our decentralised organisation to rapidly adapt its offerings and costs. The Group’s broad exposure with niche B2B products to attractive sectors such as electrification, infrastructure and safety products provides stability. Should an economic slowdown have a greater impact on us in the future, we are well-prepared to implement action plans that are adapted to the situation in each company.

To sum up, we will therefore continue on our chosen path of building a strong technology group with leading positions in sustainable and expansive niches.

Jörgen Wigh
President and CEO

Stockholm, 16 May 2023

Lagercrantz Group AB (publ)

A phone conference will be held 16 May at 10 am CET, in English.
Phone: +46 8 619 7530 or +44 20 707 532 17 (UK).
PIN: 332347#
Link to presentation:
https://www.lagercrantz.com/en/reports-and-presentations  

This disclosure contains information that Lagercrantz Group is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 16 May 2023 at 07:40 CET.