Year-end report 2023

NET ASSET VALUE AND THE LATOUR SHARE

• The net asset value increased to SEK 198 per share, compared with SEK 159 per share at the start of the year. This is an increase of 27.5 per cent, adjusted for dividends. By comparison, the Stockholm Stock Exchange’s Total Return Index (SIXRX) increased by 19.2 per cent. The net asset value was SEK 190 per share on 9 February.¹
• The total return on the Latour share was 35.4 per cent during the period, compared to SIXRX which increased by 19.2 per cent.
• The Board of Directors proposes an increased dividend of SEK 4.10 (3.70) per share.

INDUSTRIAL OPERATIONS

Fourth quarter

• The industrial operations’ order intake increased by 11 per cent to SEK 6,374 m (5,730 m). Adjusted for currency effects, this represents an increase of 6 per cent for comparable entities.
• The industrial operations’ net sales increased by 1 per cent to SEK 6,463 m (6,402 m). Adjusted for currency effects, this equates to a decrease of 4 per cent for comparable entities.
• The industrial operations’ operating profit decreased by 8 per cent to SEK 856 m (929 m), which equates to an operating margin of 13.2 (14.5) per cent.

Full year

• During the first quarter, Swegon completed the acquisition of the British company Dalair. During the third quarter, Latour Future Solutions invested in the Swedish company Quandify and became a minority shareholder with approximately 22 per cent of the shares.
• The industrial operations’ order intake increased by 5 per cent to SEK 24,388 m (23,148 m), which represents a 5 per cent decrease for comparable entities adjusted for currency effects.
• The industrial operations’ net sales increased by 13 per cent to SEK 25,550 m (22,611 m). Adjusted for currency effects, this equates to growth of 3 per cent for comparable entities.
• The operating profit increased by 19 per cent to SEK 3,807 m (3,194 m), which equates to an operating margin of 14.9 (14.1) per cent.

THE GROUP

• Consolidated net sales totalled SEK 25,550 m (22,611 m), and profit after financial items was SEK 6,645 m (4,833 m).
• In the period, net impairment losses and impairment loss reversals of shares in associated companies amounting to SEK 639 m (-1,557 m) were recognised in the income statement. Impairment of goodwill was SEK 115 (0) m in the period.
• Consolidated profit after tax was SEK 5,901 m (4,168 m), which equates to SEK 9.22 (6.51) per share.
• The Group reported net debt of SEK 11,433 m (12,532 m). Net debt, excluding lease liabilities recognised under IFRS 16, was SEK 9,983 m (11,067 m) and is equivalent to 7 (10) per cent of the market value of total assets.

INVESTMENT PORTFOLIO

• During the year, the value of the investment portfolio increased by 23.9 per cent adjusted for dividends. The benchmark index (SIXRX) increased by 19.2 per cent.
• During 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. In the same quarter, Latour participated in the issue of preference shares by CTEK, pro rata to its holding of SEK 107 m, purchasing 6,112,324 shares in the company.
• During the fourth quarter, Latour increased its shareholding in CTEK from 31.6 to 33.0 per cent of the votes by acquiring 1,721,665 shares.
• In December, HMS Networks announced that it had entered into an agreement to acquire Red Lion Controls. Latour is positive to the acquisition and has, as principal owner, undertaken to participate with its pro rata share in the new issue which is part of HMS Network's financing of the acquisition.

EVENTS AFTER THE REPORTING PERIOD

• In January, three acquisitions were completed in the industrial operations. Read more on page 4.

¹ The calculation of the net asset value on 9 February was based on the value of the investment portfolio at 1 p.m. on 9 February and the same values as at 31 December were used for the unlisted portfolio.

Comments from the CEO
“We can summarize another successful year for Latour's industrial operations with record results. However, the year has been marked by a challenging geopolitical situation and by the fact that we are now facing an economic decline, even if its full effects are not yet seen. Order intake has slowed down in the last few quarters, a consequence of reduced demand as well as of a normalisation of the logistics chains, as customers place orders with shorter lead times. The order book grew in the fourth quarter which is positive, but also partially attributable to a number of large orders with long delivery times. Our assessment is that the customers’ ordering routines have now, in all essential respects, normalized and that going forward, order intake will better reflect the underlying demand. This picture varies by industry and geographies. In general, conditions are tougher on the construction and property markets, though there is a countervailing positive trend as investments are made in improving building energy efficiency. Order intake is on a good level during the fourth quarter, but we are well aware of, and prepared for, that demand may decline.

During the fourth quarter, order intake has grown by a total of 11 per cent. Adjusted for acquisitions and currency effects, this corresponds to a 6 per cent increase. Net sales has grown by a total of 1 per cent. The comparative figures are challenging, as the corresponding quarter in the previous year was a record strong quarter, and adjusted for acquisitions and currency effects, the growth in net sales represents a decrease of 4 per cent. Operating profit, affected by the somewhat lower volumes, general cost inflation as well as currency effects, decreased by 8 per cent to SEK 856 m (929 m) with an operating margin of 13.2 (14.5) per cent.

Our business areas have managed the challenges of a difficult environment well, and have adjusted their businesses to the prevailing circumstances, with good cost control. Our delivering capacity is good, and we have delivered on the large order book with which the year began. The order book has thereby decreased in line with the normalisation, amounting at the end of the year to SEK 5,476 m, compared to SEK 6,564 m at the beginning of the year. Net sales have increased by 13 per cent to SEK 25,550 m (22,611 m), and operating profit by 19 per cent to SEK 3,807 m (3,194 m) with an operating margin of 14.9 (14.1) per cent. We have successfully retained a high level of service to our customers with a lower inventory, and cash flow has therefore improved considerably during the year, amounting to SEK 4,731 m before investments and financial payments.

With profitable operations and Latour’s strong financial position, we can continue to make forward-looking investments in our businesses. We make continuous investments into our factories, in product development and digitalisation, and not least in our employees. Sustainability is another important area for us, and we have made some large strides during the year. Among other things, five of our six business areas have now committed to SBTi (Science Based Targets initiative). The next step is to set climate targets that will be verified by SBTi, a very important task that we, as owners, fully support. The majority of our listed holdings have committed to SBTi, whereof four have had their targets verified.

Following an intensive year in 2022, the pace of acquisitions intentionally have been kept low in 2023. During the first quarter, we completed one acquisition through Swegon, which acquired the British company Dalair at the start of January, and in July, we invested in the Swedish company Quandify through Latour Future Solutions. However, we are continuously engaging in analyses and discussions, and ended the year with a good pipeline. We had a strong start to 2024 by finalizing three acquisitions, within Latour Industries, Bemsiq and Nord-Lock Group. More details can be found on page 4.

The stock market has had its ups and downs during the year, but the year ended on a high note. The net asset value in Latour increased by 27.5 per cent to SEK 198 per share, and the value of our portfolio of listed holdings increased by 23.9 per cent. By comparison, the benchmark index SIXRX has increased by 19.2 per cent. The majority of our listed holdings have now published their year-end reports, and the picture is relatively cohesive with somewhat lower order intake, but solid net sales and profit development. The pace of acquisitions among our listed companies is high. Among others, ASSA ABLOY completed the large acquisition of HHI and have had a high pace with several additional acquisitions in 2023. In addition, HMS Networks have signed an agreement for a larger, transformative acquisition, where we this spring, will participate in the new share issue, which is part of its financing.

As a result of the strong profit development in the industrial operations as well as in the listed holdings, the Board of Directors proposes an increased dividend of SEK 4.10 (3.70) per share, corresponding to an increase of 11 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 (CET). 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-q4-report-2023

Teleconference
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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.
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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 12 February 2024 at 08.30 CET.