January - December 2019
As the fourth quarter unfolded, it became increasingly clear that the economic climate was worsening. While the overall growth rate in order intake remains positive, it has slowed compared to before. Net sales are unchanged for comparable entities, but there are variations and some of our operations are experiencing negative organic growth. In our assessment, operations that are indirectly dependent on investments in the European automotive industry are facing the greatest challenges at the moment. A large share of our holdings is exposed to economic trends in the construction industry, which is experiencing a smaller lapse.
During the fourth quarter, the order intake in our industrial operations grew by 17 per cent and, excluding acquisitions and foreign exchange effects, growth was 4 per cent. Net sales rose 12 per cent during the quarter and, excluding acquisitions and foreign exchange effects, growth was unchanged. The order backlog at the end of the quarter was SEK 2,544 m (1,866 m), and for comparable entities this corresponds to an increase of approximately 5 per cent over the previous year. The operating profit for the quarter increased by 8 per cent to SEK 434 m (401 m) with an operating margin of 12.1 (12.5) per cent. We can thus sum up yet another record year for the industrial operations, where net sales rose 17 per cent to SEK 13,519 m (11,586 m) and the operating profit increased by 23 per cent to SEK 1,817 m (1,476 m) with an operating margin of 13.4 (12.7) per cent.
We remain confident as we have skilled leaders and own businesses that are well equipped and prepared for a possible continued economic decline. We should be able to continue to advance our positions even in a harsher climate. We continue to take a forward-looking perspective and are investing with undiminished strength in product development, sales and marketing in our business areas. Sustainability is a key aspect of our investments and is critical to underpinning further growth; an aspect that remains central to all our business operations. Our portfolio today comprises companies with long-term sustainable businesses that offer the market products that contribute to the building of a better world. We are committed to the daily challenge of continuously developing sustainable practices.
Our level of acquisition activity during the quarter has been high and our determination to seek out and evaluate new interesting companies has yielded excellent results. We began the quarter with the acquisition of a completely new business area for Latour, the Danish company Caljan, a leading supplier of automation technology for parcel handling in the logistics and e-commerce sectors.
We also acquired the German sensor manufacturer S+S Regeltechnik and the British lift installation companies Invalifts and Ability Lifts for Latour Industries. As reported above, our run of acquisitions has continued into the new year too with the acquisition of the Dutch company Emma Safety Footwear for Hultafors Group and the Spanish company Batec Mobility for Latour Industries. Read more about our acquisitions on page 4.
The stock market performed very well in the fourth quarter. Since the beginning of the year, our investment portfolio has increased by 40.0 per cent, adjusted for dividends and changes in the portfolio, while the benchmark index SIXRX increased by 35.0 per cent. The net asset value in Latour increased by 39.4 per cent adjusted for dividends to SEK 136 per share in the same period.
Most of our listed holdings have now submitted reports. In the light of the uncertainty currently seen in the economy, these reports are stable, which again corroborates the high quality of the companies in our portfolio. Following a relatively high level of acquisition activity in the listed companies of the investment portfolio during the first half of the year, the second half was marked by slightly less activity.
Although we are experiencing an economic situation that is increasingly uncertain and, to some extent, challenging, we are pleased to see that, thanks to the strong development of our industrial operations combined with the excellent performance of our investment portfolio, we can once again propose an increased dividend. The Board of Directors proposes an increased dividend of SEK 2.75 (2.50) per share.
President and Chief Executive Officer
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