Sdiptech AB (publ) publishes interim report for the third quarter (July - September) 2021 The report is available on the company's website: www.sdiptech.se
INCREASED ACQUISITION GOAL, NEW MARKETS AND SOLID INCREASE OF SALES DESPITE SEVERAL UNCERTAINTIES IN THE WORLD
THIRD QUARTER 2021
Net sales increased by 25.3% to SEK 646.2 million (515.9). In total for the Group, organic sales growth was 3.6%, excluding currency effects.
Operating profit EBITA* increased by 28.6% to SEK 119.3 million (92.8), corresponding to an EBITA*margin of 18.5% (18.0). Organic EBITA* growth for the Group was -13.5%, excluding currency effects.
Operating profit (EBIT) increased by 18.4% and amounted to SEK 102.5 million (86.6).
Earnings after tax for the Group amounted to SEK 77.0 million (87.1), of which SEK 76.8 million (86.5) was attributable to the Parent Company’s shareholders. Last year's results included a capital gain of SEK 27 million from previous divestments.
Cash flow from current operations amounted to SEK 75.4 million (74.6), corresponding to a cash conversion of 77% (59).
Earnings per ordinary share (average number), less minority interests and dividends on preference shares amounted to SEK 2.07 (2.47). After dilution, earnings per shares amounted to SEK 2.05 Kr (2.44). Last year's earnings included a capital gain of SEK 0.79 per share from previous divestments.
On September 3, Sdiptech acquired all shares in Wake Power Distribution Ltd (IDE Systems).
On September 14, Sdiptech communicated annually raised acquisition targets amounting to an annual acquired profit, EBIT, of SEK 120-150 million (90).
EVENTS AFTER REPORTING DATE
On October 13, Sdiptech acquired 85% of the shares in Certus Technologies Holding B.V. The acquisition is the Group’s first business entity in the Netherlands.
FIRST NINE MONTHS 2021
Net sales increased by 32.8% to SEK 1,969.8 million (1,483.7). In total for the Group, organic sales growth was 8.4%, excluding currency effects.
Operating profit EBITA* increased by 44.4% to SEK 355.9 million (246.4), corresponding to an EBITA* margin of 18.1% (16.6). Organic EBITA* growth for the Group was -4.5%, excluding currency effects.
Operating profit (EBIT) increased by 20.7% and amounted to SEK 281.7 million (233.4). Included in the operating profit are high acquisition costs for major acquisitions in the UK and associated stamp duty. In addition, capital loss related to divestments amounted SEK 20 million.
Earnings after tax for the Group amounted to SEK 199.9 million (177.3), of which SEK 199.2 million (175.4) was attributable to the Parent Company’s shareholders.
Cash flow from current operations amounted to SEK 141.9 million (296.5), corresponding to a cash conversion of 50% (99). Due to high profits and postponements of tax in 2020, more tax was paid than normal during the period. In addition, an increased amount of accounts receivables due to good sales and inventory was built to prevent material shortage.
Earnings per ordinary share (average number), less minority interests and dividends on preference shares amounted to SEK 5.40 (5.20). After dilution, earnings per shares amounted to SEK 5.35 Kr (5.16). Last year's earnings included a capital gain of SEK 0.84 per share from previous divestments.
During the period January to September, Sdiptech acquired Rolec Services Ltd, One Stop Europe (Rolec), Ficon Oy and Wake Power Distribution Ltd (IDE Systems).
During the first nine months, divestments of Tello Service Partner as well as the Swedish and Austrian elevator businesses were completed. All units belonged to the Property Technical Services segment.
On March 9, Sdiptech carried out a directed share issue that contributed approx. SEK 464 million to equity after issuance costs.
COMMENTS BY THE CEO
INCREASED ACQUISITION GOAL, NEW MARKETS AND SOLID INCREASE OF SALES DESPITE SEVERAL UNCERTAINTIES IN THE WORLD
Sdiptech's overall goal is to increase profits through both organic growth and acquisitions. During the first nine months of the year, we have increased the pace and despite tough comparative figures, EBITA* rose by a total of 44.4 percent. The multi-year trend of increased profitability continues and our EBITA* margin has risen from 16.6 to 18.1 percent.
THE QUARTER – Strong sales increase in a quarter with high comparative figures We are proud to present another good quarter for Sdiptech. During the third quarter, our business units experienced a continued good demand, corresponding to sales growth of 25.3 percent, of which 3.6 percent was organically excluding currency effects. To some extent, revenues have been affected by delayed deliveries following disruptions in supply chains, and the situation is still somewhat difficult, even though our business units are working fantastically to obtain deliveries to customers. The problem is to some extent broader than just our own supply of goods, as our customers sometimes pause their placed orders because they in turn lack other deliveries.
In terms of profit development, we would like to start by recalling some key effects from the pandemic last year. Sdiptech showed an extraordinarily high profitability during the third quarter of 2020, which led to an organic profit increase of an exceptional 18.6 percent, compared with -13.5 percent this year. The background to the high profitability in 2020 was partly extra revenue volumes when we delivered to catch up with orders that had been paused during the first months of the pandemic, and partly extra low costs that remained from measures from the beginning of the pandemic. This phenomenon is particularly evident with exceptional comparative figures for the companies in the Special Infrastructure Solutions business area.
With large fluctuations from one extreme situation to another, it is justified to see what the development looked like from a time before the pandemic struck, until today. During the period from 1 January 2020 to 30 September 2021, we had an average organic sales growth around 6 percent and an average organic profit growth around 7 percent, which is perfectly in line with our financial targets.
ACQUISITIONS – High quality and group additions In early September, IDE Systems, which specialises in temporary electricity and electricity usage monitoring systems in the UK, was acquired. IDE has over 20 years of experience in designing and manufacturing electricity distribution solutions and focuses on delivering equipment for temporary electricity, including charging stations with temporary electricity for electric vehicles. IDE also develops an important software for energy monitoring and management tools that enables reduced energy use and thus reduced carbon dioxide emissions. IDE contributes to the Sustainable Development Goals 7.1 and 7.2.
In mid-October, after the end of the third quarter, Certus Automation was acquired, which is our first business unit in the Netherlands. The company is a global supplier of automation solutions for port and terminal logistics. The core of the products is a proprietary software and image recognition system. The products automate the identification, registration and positioning of containers and vehicles for increased efficiency, safety and reduced emissions. Certus contributes to Sustainable Development Goals 8.8 and 9.4.
OUTLOOK – Ready for a higher acquisition target With new geographic markets, a number of growing segments in infrastructure, and a strong and experienced organisation, we were able to raise our acquisition target from SEK 90 million in acquired profit growth to SEK 120–150 million, in the quarter. The target applies from 2021 we are pleased to declare that we have reached our new target, including the divestments that were conducted this spring.
Over the past year, we have carried out pilot work in new geographies to evaluate how our methodology and working methods can operate effectively in new markets. After analyses of thousands of companies and conversations with hundreds of entrepreneurs and acquisition advisors, we have now established ourselves in Italy, as well as completed our first acquisition in the Netherlands. Our geographical expansion is done in a controlled and thoughtful manner in accordance with how we work with all important issues concerning our development and growth.
We also conclude the divestments within Property Technical Services by moving the two remaining business units to Special Infrastructure Solutions. This means that we now have two business areas instead of the previous three in the Group.
Our acquisition methodology is based on well-developed structural capital and careful analyses, and thanks to this, we have in recent years been able to welcome some of the best companies within their niches. After many years’ focus on infrastructure, we are increasingly experiencing that the acquisitions add complementary technology and customer segments to existing business units, and the group is to a larger extent able to operate as a cohesive group. An example of this is that we already, two quarters after the acquisition of Rolec, distribute our own charging stations for electric cars via several other business units and thus reach out to new customer segments.
Finally, the situation in the world remains difficult to assess. However, we see a good and unchanged demand for our products and services, where the need for solutions that contribute to more sustainable, efficient and safe societies is strong. Our margin guidance of 19–20 percent for the full year remains.
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 on 26 October 2021 at 08.00 CEST.
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.com
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 2,500 million in sales and is based in Stockholm.
