SECOND QUARTER – STRONG QUARTER WITH HIGH DEMAND
We experienced very strong underlying demand in the second quarter, with good growth in all business areas resulting in an organic increase in sales of 10 percent. The shortage of components has been handled in exemplary manner by our companies and is judged to have had only a limited impact on the Group’s overall capacity to deliver to customers during the period. The market situation, combined with continued good cost control and well-handled price increases from suppliers gave record high margins and gave an EBITA growth of 39 percent for the quarter. It is very satisfying to see our business model demonstrate its strength. Our entrepreneurial companies, which operate in close proximity to the market and maintain strong relationships with suppliers, have again shown their resilience, continuing to foster optimum conditions for sustained profitable growth.
Most key customer segments and geographies showed heightened demand, partly intensified by the prevailing shortages of components and prolonged lead times, causing stockpiling for contingencies. Sales of input components to manufacturing companies in special vehicles and the mechanical industry were fundamentally strong, even when taking the less challenging comparison figures into account. The market situation was also highly favourable in the forest and sawmill industry, wind power and electronics, while infrastructure products for rebuilding and expanding national and regional grids, as well as medical technology products, were stable at attractive levels. The marine sector remained weak, while sales of electricity-related products to construction and installation customers developed positively.
From a geographical perspective, the market situation was strongest in Sweden and Finland, stable at a high level in Denmark, while the pace of business was slightly lower in Norway, although the sequential trend was positive. For our companies operating outside the Nordic region, market conditions improved further during the quarter.
Acquisition activity remains at a high level in all business areas. Five acquisitions were made in the second quarter, with two more being completed after the end of the period. Since the beginning of the financial year, a total of 11 companies have been acquired, adding total annual sales of approximately SEK 840 million and bringing some 240 new employees into the Group. Several of the acquisitions have a clear sustainability profile and we continue to expand outside the Nordic region, in line with our acquisition strategy. With our financial strength and attractive acquisition pipeline, we perceive favourable opportunities for maintaining a good acquisition rate. Many privately owned companies want to sell to Addtech to maintain their decentralised responsibility while receiving development support from an active, long-term owner and gaining access to relevant networks.
During the quarter, our order backlog was further strengthened. We expect continued strong underlying demand to stabilise at high levels as supply chains normalise. We also estimate that our cost base will increase in the upcoming quarters as our companies’ sales promotion activities increase. Looking ahead, it is also uncertain how any further supply chain disruptions may affect our companies.
As of 1 October, we have sharpened our organisation. By adapting the operations and further strengthening the network between the companies, we generate conditions to derive optimum benefit from future growth opportunities. Recent years’ increased focus on sustainable technological solutions, combined with a high acquisition rate, has afforded us a strong position with major growth opportunities, both in the Nordic region and internationally. Although the new organisation still comprises five business areas, their niche strategies have been sharpened to enhance clarity, both internally as well as towards the acquisition and capital markets, and to seize future growth potential more effectively, both organically and through acquisitions.
President and CEO