Statement of the Chief Executive
The first quarter of the financial year was dominated by the uncertainty connected to the Covid-19 pandemic. The pandemic affected the Group starting in March/April when the public health authorities raised the alarm and we noticed an increased volatility in incoming orders among the Group's different businesses. Within the Group, we took the situation extremely seriously and urged caution. We introduced increased follow-up relating to incoming orders, earnings and cash flows in every profit centre. In particular, we have prioritised measures to protect the health of our employees and business partners, through remote meetings and much fewer physical contacts, less travel, participation in trade fairs etc. We have gradually seen how different the businesses are affected by the pandemic and continued to invest where we see growth, at the same time as we have made necessary restructuring where needed.
My view is that our focus on the situation in every unit has really delivered results and towards the end of the quarter we noted improved conditions in line with an improving general situation and economies reopening. In overall terms, the order volume during the quarter was only about 5 percent weaker than the same period last year and this, in combination with the implemented precautionary measures generally, and more far-reaching measures in businesses with problems, meant that the fall in profit could be limited. It is also important to point out that we reported a continued positive performance in most of the Group's larger businesses, where many companies have exposure to sectors such as electricity and social infrastructure. Examples here are the businesses Elpress, Elkapsling and Elfac within Mechatronics, R-Con in Communications and Tormek and Wapro within Niche Products. In total, our focus on the right things has generated a strong cash flow with a decrease in operational net debt by MSEK 192 to MSEK 864 during the quarter. I would like to extend a big thank you to all co-workers and subsidiary management teams for extraordinary efforts during this new situation.
Ahead of the coming quarters, the situation remains uncertain and we are preparing our businesses for different scenarios. Independent of the scenario, I feel great confidence regarding the Group's decentralised structure. In times of uncertainty, it really comes into its own, where the Group's more than 50 companies in about 100 operating locations ensure a large diversification of products, end customer markets and geographies. Given a continued extraordinary sense of responsibility, commitment and the decision-making power among our local management teams, I am convinced that the Group will cope with the crisis well. Far-reaching but balanced actions also pave the way for a more offensive approach and further acquisitions as the situation normalises.
President and CEO
Stockholm 17 July 2020
Lagercrantz Group AB (publ)
A phone conference will be held 17 July at 3 pm CET, in English.
Phone: +46 8 619 7530. PIN: 332347#
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