Sdiptech AB (publ) publishes interim report for the first quarter (January-March) 2024 The report is available on the company's website: www.sdiptech.se
CONTINUED GROWTH WITH SOLID CASH FLOW
FIRST QUARTER 2024
Net sales increased by 24% to SEK 1,335 million (1,076). In total for the Group, organic sales growth was 10%, excluding currency effects.
EBITA, increased by 24% to SEK 255 million (206), corresponding to an EBITA margin of 19.1% (19.2)
Adjusted EBITA increased by 24% to SEK 251 million (203), corresponding to an adjusted EBITA margin of 18.8% (18.9). Organic adjusted EBITA growth for the Group was 5%, excl. currency effects.
Profit before tax for the Group amounted to SEK 158 (134) million and profit after tax amounted to SEK 107 million (96), of which SEK 106 million (96) was attributable to the Parent Company’s shareholders.
Cash flow from operating activities amounted to SEK 167 million (98), corresponding to a cash conversion of 72% (45).
Earnings per ordinary share (average number), less minority interests and dividends on preference shares, amounted to SEK 2.71 (2.43). After dilution, earnings per ordinary share amounted to SEK 2.71 (2.43).
During the period, the acquisition of JR Industries Ltd in the UK was completed.
SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
On 11 April 2024 Sdiptech acquired all shares in WaterTech of Sweden AB in Sweden.
COMMENTS BY THE CEO
Sdiptech operates in areas that are generally stable and resilient to economic fluctuations. With good demand and strong market positions, we can demonstrate an organic sales growth of 10 percent for the quarter, as well as an organic profit growth of 5 percent in adjusted EBITA, excluding currency effects. At the same time, we had a steady cash flow from operating activities, which generated SEK 167 million.
QUARTER Demand during the first quarter remained solid, resulting in organic sales growth of 10 percent excluding currency. Acquisitions also contributed, with a total sales increase of 24 percent. The continued stable demand is characterised by the fact that our units operate in sectors that are generally less sensitive to economic fluctuations. Our adjusted EBITA increased by 24 percent, of which 5 percent was organic excluding currency effects.
We continue to work hard to ensure good cash generation. During the first three months of the year, we had a solid cash flow from operating activities of SEK 167 million (98), corresponding to a cash conversion of 72 percent (45). Cash flow was to some extent affected by a continued increase in sales, which generates some inventory build-up and an increased share of accounts receivables.
Our financial net debt, including lease liabilities, in relation to adjusted EBITDA was 2.17 (2.47). This means that we are reducing our debt leverage ratio, even though it increased in the short term compared with year-end due to an acquisition that generates approximately SEK 60 million in EBITA on an annual basis. The total net debt leverage ratio, including provisions for future earn-outs, amounted to 3.32 (3.89).
We increased our profit after tax to SEK 107m (96). At the same time, our earnings per share increased by 12 percent to SEK 2.71 compared with SEK 2.43 last year. It is gratifying to see that we can show a solid increase in earnings all the way down to the bottom line, despite continued high interest rates and an increased tax rate in the UK.
Resource Efficiency's sales growth of 16 percent in the quarter was mainly driven by good sales from several comparable units. At the same time, the business area's adjusted EBITA increased by 25 percent, driven by scalable business models and particularly good growth in units with higher-than-average margins. This generated an adjusted EBITA margin of 24.5 percent (22.7).
Special Infrastructure Solutions' sales increase of 29 percent was primarily due to a majority of the larger comparable units having strong sales growth, with a particularly good growth in the business area's units with lower-than-average margins. In addition, the Group continued to incur some costs for restructuring its two units with exposure to new construction, which had an effect on the business area's profit margin. Overall, this resulted in an increase in adjusted EBITA of 19 percent, and an adjusted EBITA margin of 17.9 percent (19.4).
ACQUISITIONS In January, British JR Industries, a leading niche manufacturer in the UK of roller shutter doors for commercial vehicles, was acquired. The company operates in a market with stable underlying growth, driven by electrification of delivery vehicles, e-commerce and fleet adaptation aimed at improved operational efficiency. JR Industries have good opportunities for cooperation with the Group's unit GAH Refrigeration, which manufactures refrigeration systems for transport vehicles. JR Industries is part of the Special Infrastructure Solutions business area.
In April, we acquired the Swedish company WaterTech, which specialises in water chemistry to optimise industrial water systems. The company will work closely with Sdiptech's Danish business unit Kemi-tech to strengthen the offering in industrial water treatment in the Northern European market. Kemi-tech, in its turn, already works closely with Sdiptech’s company Water Treatment Products, which is a leading manufacturer of specialised chemicals in the UK. WaterTech is part of the Resource Efficiency business area.
In summary, we are happy to welcome two high-quality companies that complement and strengthen the Sdiptech's existing offerings, and where we as a group can create extra value by facilitating collaborations and Group-wide knowledge synergies.
OUTLOOK We continue to benefit from our strong brands and positions in sectors that are in general not cyclical. This makes us optimistic about the future.
We are continuing our acquisition efforts to establish contact with high-quality companies, and we are experiencing a good climate with positive dialogues. We look forward to welcoming more companies that strengthen our offerings and position in the market.
As part of our efforts to reduce risk, maximise our sustainability opportunities and prepare for the Corporate Sustainability Reporting Directive (CSRD), we will conduct a comprehensive screening and analysis of our emissions during the year. This is also an important step towards committing to Science Based Targets initiative (SBTi).
In summary, we feel confident that we will be able to grow in a sustainable way, both organically and through acquisitions.
Finally, I would like to extend a big thank you to all our dedicated employees for your commitment. I would also like to take this opportunity to thank all shareholders for your continued trust in us.
Sdiptech’s common shares of series B are traded on Nasdaq Stockholm under the short name SDIP B with ISIN code SE0003756758. Sdiptech’s preferred shares are traded under the short name SDIP PREF with ISIN code SE0006758348. Further information is available on the company's website: www.sdiptech.se
Sdiptech is a technology group that acquires and develops market-leading niche operations that contribute to creating more sustainable, efficient and safe societies. Sdiptech has approximately SEK 5,000 million in sales and is based in Stockholm.
Sdiptech AB (publ) is required to disclose this information pursuant to EU Market Use Regulation 596/2014. The information was provided by the above contact persons for publication 25 April 2024, at 08:00 CEST.
