Investment AB Latour: Interim report January - September 2024

NET ASSET VALUE AND THE LATOUR SHARE

• The net asset value at the end of the period was SEK 216 per share compared with SEK 198 per share at the start of the year, which is an increase of 11.3 per cent adjusted for dividends. The benchmark index (SIXRX) rose 15.2 per cent. The net asset value was SEK 218 per share at 5 November.¹
• The total return on the Latour share was 22.5 per cent measured against the SIXRX, which increased 15.2 per cent.

INDUSTRIAL OPERATIONS

The third quarter

• The industrial operations' order intake rose 3 per cent to SEK 5,739 m (5,565 m), a 2 per cent increase for comparable entities adjusted for exchange rate effects.
• The industrial operations' net sales rose 2 per cent to SEK 6,228 m (6,109 m), which represents a 1 per cent increase for comparable entities adjusted for exchange rate effects.
• The industrial operations' operating profit decreased by 2 per cent to SEK 927 m (942 m), which equates to an operating margin of 14.9 (15.4) per cent.
• In the third quarter, Swegon acquired the Dutch company HC Groep, Bemsiq acquired the Canadian company QEL, and Innovalift signed an agreement to acquire the Turkish company Arkel.

INDUSTRIAL OPERATIONS

January - September

• The industrial operations' order intake rose 3 per cent to SEK 18,573 m (18,014 m). Adjusted for exchange rate effects, this equates to growth of 1 per cent for comparable entities.
• The industrial operations' net sales decreased by 1 per cent to SEK 18,871 m (19,087 m). Adjusted for exchange rate effects, this represents a 3 per cent decline for comparable entities.
• The operating profit was down 8 per cent to SEK 2,723 m (2,951 m), which equates to an operating margin of 14.1 (15.4) per cent.
• In the first quarter, Innovalift acquired the German company BS Tableau, Bemsiq acquired 51 per cent of the shares in the Italian company Eelectron, and Nord-Lock Group acquired the Canadian companies Precision Bolting Ltd and Condor Machinery Ltd. In the second quarter, Latour Future Solutions invested in the Swedish companies Plant and Econans, both conducted through private placements of new shares, with Latour Future Solutions becoming a minority shareholder in the companies.

THE GROUP

• Consolidated net sales totalled SEK 18,871 m (19,087 m), and profit after financial items was SEK 5,315 m (5,076 m). The net impact of impairments and reversals of impairments of shares in associates on the income statement in the period was SEK 784 m (45 m).
• Consolidated profit after tax was SEK 4,736 m (4,491 m), which is equivalent to SEK 7.36 (7.01) per share.
• The Group reported net debt of SEK 14,790 m (13,115 m). Net debt, excluding lease liabilities recognised under IFRS 16, was SEK 13,315 m (11,697 m) and is equivalent to 9 (10) per cent of the market value of total assets.

INVESTMENT PORTFOLIO

• In the first nine months of the year, the value of the investment portfolio increased by 17.0 per cent adjusted for dividends and changes in the portfolio. The benchmark index (SIXRX) rose 15.2 per cent.
• No changes were made to the portfolio in the third quarter. Earlier in the year, however Latour participated in the issue of new shares by HMS Networks, pro rata to its holding, purchasing 905,244 shares in the company for SEK 362 million, and also increased its holding in CTEK by 317,151 shares.
• As an active owner, Latour seeks to secure a substantial level of remuneration to board members of our listed holdings.

EVENTS AFTER THE REPORTING PERIOD

• There were no material events subsequent to the end of the reporting period.

¹ The calculation of the net asset value on 5 November was based on the value of the investment portfolio at 5.30 p.m. on 5 November and the same values as on 30 September were used for the unlisted portfolio.

Comments from the CEO
"The third quarter saw continued positive growth for Latour's industrial operations. Despite the current economic downturn, demand is relatively robust although the picture varies across segments and geographic regions. Demand has been relatively positive for several of our operations in both the third quarter and the first nine months of the year.

Although the situation remains somewhat subdued for the construction and real estate markets, the outlook is relatively positive for our three business areas with most exposure in these markets. Swegon and Bemsiq are reporting a rise in order intake compared with the previous year, while Hultafors Group is just below the previous year's level in terms of organic growth. Innovalift is experiencing a slowdown in new installation orders, but is also seeing pleasing growth in modernisation projects. Both Latour Industries and Nord-Lock Group are reporting stable business development. The post-pandemic market has proved highly challenging for the logistics sector, but we believe that Caljan's order intake is now bottoming out. As always, we are well prepared for any changes in the demand profile.

The order intake increased in the third quarter by 3 per cent, representing a 2 per cent increase on an organic basis. Net sales increased by 2 per cent, representing a 1 per cent increase on an organic basis. The operating profit decreased by 2 per cent to SEK 927 m (942 m) with an operating margin of 14.9 (15.4) per cent. Our strong gross margins and firm control of costs are keeping profitability at a healthy level. Overall, we are satisfied with the performance delivered in the third quarter.

With profitable operations and 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. To secure long-term sustainability and profitability, it is important that the companies are at the forefront of their industries. Latour's long-term investment horizon creates stability and security for our companies and employees, especially during these times of international turbulence and uncertainty.

So far this year, the acquisition pace is up significantly on 2023, when the level of activity was intentionally kept low. During the third quarter, we have completed two acquisitions and signed an agreement for a third acquisition. Swegon has gained a significant position in the key Dutch market in one fell swoop through its acquisition of HC Groep in the Netherlands. Our new business area Innovalift has signed an agreement to acquire Arkel in Turkey, which gives Innovalift a leading position and access to new geographic markets. Finally, Bemsiq has acquired the Canadian company QEL and is expanding further in North America. Earlier this year, we acquired three businesses for the wholly-owned operations. The overall contribution of these six transactions to acquired growth is approximately SEK 2.4 billion on an annual basis and they all have profitability levels well in line with Latour's other industrial operations. The process of identifying suitable targets continues at a consistent pace and we have substantial scope for further acquisitions. More information about our acquisitions can be found on page 4.

The net asset value in Latour increased by 11.3 per cent, adjusted for dividends. The value of our portfolio of listed holdings increased by 17.0 per cent. By comparison, the benchmark index SIXRX increased by 15.2 per cent. The majority of our listed companies have submitted their Q3 reports. The picture is generally consistent with the challenging market landscape. Despite the tough market environment, most of our companies are managing to maintain or increase the profitability of their businesses. There is a high level of acquisition activity, with ASSA ABLOY alone having completed seven acquisitions during the quarter. TOMRA too is actively pursuing acquisition opportunities and, after the close of the reporting period, acquired the German company c-trace, which is a leading supplier of digital waste management solutions. This acquisition enables TOMRA to expand its capabilities and offerings in waste management and recycling services and unlock new market opportunities.

The work of our listed companies' nomination committees is well under way and is an important task for us as active principal owners. Having the best possible board for each company is in the interests of both the shareholders and ourselves, and as active owners we can help ensure this is the case. As a consequence, we want to increase remuneration of board members to internationally competitive levels so that Swedish listed companies are attractive to both domestic and international board candidates.

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 (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-q3-report-2024

Teleconference
You can ask questions verbally via the teleconference.
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=50047089

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 6 November 2024 at 08.30 CET.