Statement of the Chief Executive
The first nine months of the financial year were dominated by the uncertainties of the effects of the Covid-19 pandemic. The third quarter meant a general improvement and recovery, with a profit that exceeded last year's strong third quarter and where the profit for the full nine-month period exceeded the year-earlier period. This is gratifying and shows the strength in our decentralized business concept and structure with almost 60 specialized businesses.
It is important for our results that the Group's largest businesses are continuing to perform well. Elpress, the Group's and the Mechatronics division's largest business, is reaping success on the export side, particularly with its customers in the wind power segment. R-Con, the Communication division's largest unit, delivered another strong quarter and still has a strong order book for the next six months and Tormek, the largest business in the Niche Products division, is the year's fast grower, which is reaping success with attractive products, its own organisation in the USA and increased online sales.
It was also important that the restructuring measures taken have had an effect. During the past year, we discontinued a business in Denmark and one in Norway, which reduced the organic growth, while it had a positive effect on margins and profit. It is satisfying that we are demonstrating that the measures taken in the past year within the Electronics division have also had the desired effect. The division's operating margin reached 12.5 percent in the quarter, after three quarters of one-digit levels, where several of the previously underperforming units have now started to deliver better.
Operating profit for the third quarter of the financial year thus increased by 8 percent to MSEK 168 (156), which means an increased operating margin to 15.6 percent (14.2). Overall, improved margins in several of our larger profit centres combined with lower costs helped to offset a lower business volume. Additionally the cash flow from operating activities remained strong and amounted to MSEK 552 (369) during the first nine months of the financial year.
It is also positive that we carried out four acquisitions during the quarter. Sajas Group is a leading supplier of brushes for road sweeping, airfield and railway cleaning and the business operations are closely related to our subsidiary SIB in Västerås. VP Metall AS is a market leader in systems for electrical connectors for high voltage applications and is closely related to the operations in Elpress. Hovicon International B.V. offers dispensing solutions for personal hygiene products such as soap and hand disinfection and is a supplementary acquisition for our company Asept. During the quarter, we also signed an agreement to acquire Oy Esari Ab, which is one of Finland's leading providers of equipment shelters and technical buildings, with operations that are closely related to our Swedish subsidiary Elkapsling. These acquisitions feel exciting and they all strengthen our positions in existing markets. With our strong balance sheet going forward, I see good opportunities to continue with a high acquisition rate during 2021.
Ahead of the coming quarters, uncertainty persists about the effects of the pandemic. Meanwhile, the Group has stood very strong through the crisis so far and it is positive that the vaccination programme has now got underway. Hopefully, the world is moving towards a normal state of affairs by the summer. This means that overall, I feel great confidence about Lagercrantz's future.
President and CEO
Stockholm 28 January 2021
Lagercrantz Group AB (publ)
A phone conference will be held 28 January at 10:00 CET, in English.
Phone: +46 8 619 7530. PIN: 332347#
Link to presentation:
This information was distributed by Cision http://www.cisionwire.se/