Investment AB Latour: Interim report January - June 2023

NET ASSET VALUE AND THE LATOUR SHARE

• The net asset value at the end of the period was SEK 198 per share compared with SEK 198 per share at the start of the year, which is an increase of 1.8 per cent adjusted for dividends. The benchmark index (SIXRX) rose 10.6 per cent. The net asset value at 19 August was SEK 204 per share.¹
• The total return on the Latour share was 10.7 per cent measured against the SIXRX, which increased 10.6 per cent.

INDUSTRIAL OPERATIONS

The second quarter

• The industrial operations' order intake rose 7 per cent to SEK 6,570 m (6,128 m), a 5 per cent increase for comparable entities adjusted for exchange rate effects.
• The industrial operations' net sales decreased by 1 per cent to SEK 6,522 m (6,605 m). Adjusted for exchange rate effects, this represents a decrease of 4 per cent for comparable entities.
• The industrial operations' operating profit decreased by 8 per cent to SEK 939 m (1,020 m), which equates to an operating margin of 14.4 (15.4) per cent.
• Latour Future Solutions invested in the Swedish company Plant on 9 April and in the Swedish company Econans on 19 June, both through directed new issues, with Latour Future Solutions becoming a minority shareholder in the companies.

INDUSTRIAL OPERATIONS

January - June

• In the first quarter, Innovalift acquired all the shares in the German company BS Tableau, Bemsiq acquired 51 per cent of the shares in the Italian company Eelectron, and Nord-Lock Group acquired all the shares in the Canadian companies Precision Bolting Ltd and Condor Machinery Ltd.
• The industrial operations' order intake rose 3 per cent to SEK 12,834 m (12,449 m). Adjusted for exchange rate effects, this equates to growth of 1 per cent for comparable entities.
• The industrial operations' net sales decreased by 3 per cent to SEK 12,644 m (12,977 m). Adjusted for exchange rate effects, this represents a 5 per cent decline for comparable entities.
• The operating profit was down 11 per cent to SEK 1,796 m (2,009 m), which equates to an operating margin of 14.2 (15.5) per cent.

THE GROUP

• Consolidated net sales totalled SEK 12,644 m (12,977 m), and profit after financial items was SEK 4,008 m (4,360 m). The net impact of impairments and reversals of impairments of shares in associates on the income statement in the period was SEK 800 m (777 m).
• Consolidated profit after tax was SEK 3,651 m (3,935 m), which is equivalent to SEK 5.68 (6.15) per share.
• The Group reported net debt of SEK 13,011 m (14,213 m). Net debt, excluding lease liabilities recognised under IFRS 16, was SEK 11,597 m (12,738 m) and is equivalent to 8 (9) per cent of the market value of total assets.

INVESTMENT PORTFOLIO

• During the first six months, the value of the investment portfolio increased by 5.7 per cent adjusted for dividends and changes in the portfolio. The benchmark index (SIXRX) rose 10.6 per cent.
• During the second quarter, Latour participated in the issue of new shares by HMS Networks during April, pro rata to its holding, purchasing 905,244 shares in the company for SEK 362 m. In the same month, Latour increased its holding in CTEK by 317,151 shares.

EVENTS AFTER THE REPORTING PERIOD

• Swegon acquired the Dutch company HC Groep, Innovalift signed an agreement to acquire the Turkish company Arkel, and Bemsiq acquired the Canadian company QEL.

¹ The calculation of the net asset value on 19 August was based on the value of the investment portfolio at 17.30 on 19 August and the same values as on 30 June were used for the unlisted portfolio.

Comments from the CEO
"Latour's industrial operations are developing positively despite the economic downturn. The order intake increased by 7 per cent in the second quarter. Adjusted for acquisitions and exchange rate effects, this equates to an increase of 5 per cent. Net sales were down 1 per cent. The comparative figures for net sales are tough, as they were at a record high in the same quarter a year ago due to the recovery in the logistics chains. Adjusted for acquisitions and exchange rate effects, the decline in net sales growth is 4 per cent.

The operating profit was affected by the slightly lower volumes, decreasing by 8 per cent to SEK 939 m (1,020 m) with an operating margin of 14.4 (15.4) per cent. Our strong gross margins and good cost control are keeping profitability at a healthy level. Overall, we are satisfied with the performance delivered in the second quarter.

Despite the weak economic conditions, demand remains relatively positive overall, with many areas experiencing reasonably good demand considering the economic backdrop. Although the construction and real estate markets are generally facing a somewhat difficult situation, the picture for our three business areas with most exposure in these markets is rather positive. Swegon and Bemsiq are reporting a rise in order intake compared with the previous year, while Hultafors Group is on a par with the previous year in terms of organic growth. Innovalift is experiencing a slowdown for new installations, but is also seeing pleasing growth in modernisation projects. Latour Industries and Nord-Lock Group are both reporting positive momentum. Finally, we believe that Caljan's order intake is now bottoming out. As always, we are well prepared for any changes in the demand profile.

We own profitable businesses, and, with Latour's strong financial position, we will continue to invest in the future of our companies. We regularly invest in our factories, in product development and digitalisation and, most importantly, in our employees.

While the rate of acquisition was intentionally kept at a low level in 2023, we completed three acquisitions in quick succession at the beginning of this year. In the second quarter, investment area Latour Future Solutions completed two investments, and we became minority owners through new share issues in the Swedish companies Plant and Econans. Acquisition activities in the wholly-owned industrial operations have continued throughout the second quarter, and we were able to announce three additional acquisitions subsequent to the end of the reporting period. Swegon gained a significant position in the important Dutch market in one fell swoop when acquiring HC Groep in the Netherlands. Our new business area Innovalift have signed an agreement to acquire Arkel in Turkey, which gives Innovalift a leading position and access to new geographic markets. Finally, Bemsiq have acquired the Canadian company QEL and is expanding further in North America. Overall, these three acquisitions contribute to acquired growth of approximately SEK 2 billion on an annual basis and all have profitability levels well in line with Latour's other industrial operations. We are thus proceeding with the work of identifying suitable opportunities and have substantial capacity for further acquisitions. More information about our acquisitions can be found on page 4.

The net asset value of Latour increased by 1.8 per cent adjusted for dividends and the value of our portfolio of listed holdings increased by 5.7 per cent. By comparison, the benchmark index SIXRX increased by 10.6 per cent. All of our listed holdings have now submitted their Q2 reports, and the general picture reflects the relatively weak market conditions. Despite the widespread weakness across markets, several of the companies are managing to improve their performance."

Johan Hjertonsson
President and CEO

For further information please contact:
Johan Hjertonsson, President and CEO, Tel. [phone] or
Anders Mörck, CFO, Tel. [phone]

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
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If you wish to participate via webcast, please use the link:
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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.
https://conference.financialhearings.com/teleconference/?id=50047088

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 20 August 2024 at 08.30 CEST.