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2021-05-11

Lagercrantz Group: Lagercrantz Year-End Report 2020/21

Fourth quarter (1 January - 31 March 2021)

  • Net revenue totalled MSEK 1,118 (1,112).
  • Operating profit (EBITA) increased to MSEK 192 (152), equivalent to an operating margin of 17.2 percent (13.7).
  • Profit after financial items increased by 32 percent to MSEK 166 (126).
  • Profit after taxes increased to MSEK 126 (101).
  • During the quarter, five businesses were acquired (VP Metall AS, Hovicon International B.V., Oy Esari Ab, Proagria Miljø A/S and Vihab AB) with a total business volume of approx.  MSEK 200 on an annual basis.
  • In March 2021, a clarified strategic direction and a reorganisation were announced and the Group's financial goals and sustainability ambitions were defined in greater detail.
  • After the closing of the financial year, CW Lundberg AB was acquired with a business volume of approx. MSEK 185 and including subsidiaries in Sweden, Norway and Poland.

The financial year 1 April 2020 - 31 March 2021 (12 months)

  • Net revenue for the financial year amounted to MSEK 4,091 (4,180).  
  • Operating profit (EBITA) increased by 9 percent to MSEK 616 (565), equivalent to an operating margin of 15.1 percent (13.5).
  • Profit after financial items increased by 9 percent to MSEK 502 (460) and profit after taxes increased to MSEK 388 (366).
  • Cash flow from operating activities amounted to MSEK 782 (507) during the financial year.
  • Return on equity for the latest 12-month period amounted to 22 percent (23) and the equity ratio at the end of the period was 40 percent (39).
  • Earnings per share after dilution for the financial year amounted to SEK 1.91 (1.80).
  • The Board of Directors proposes a dividend of SEK 1.00 (0.67) per share.

 

Statement of the Chief Executive

"Strong year despite uncertain market conditions."

The past year

The 2020/21 financial year was a new strong year for Lagercrantz, which underlines the strength in our business concept and our governance model based on decentralisation and management by objectives. Profit after net financial items for the full year reached a new all-time high of MSEK 502, compared to MSEK 460 in the previous year. Cash flow from operating activities increased to MSEK 782 (507). This result is very gratifying as the year was so obviously dominated by Covid-19, where during spring 2020 in particular, we perceived great uncertainty regarding the effects of the pandemic. I am convinced that we stood strong in the biting wind thanks to our organisational form with autonomous locally managed companies. During the year, we have seen many examples of great responsibility and proactivity among our managers and leaders, and therefore I want to express an extra big thanks to all our employees for the fantastic efforts in difficult times during the year.  

After the uncertain spring of 2020, the second, third and fourth quarters of the financial year saw a gradual recovery with improved order intake, strengthened gross margins and restraint in terms of costs. Taken together, this resulted in stronger earnings. During the autumn, we also carried out a 3:1 share split in order to improve the liquidity in the share. We resumed acquisition activities, which were paused at the start of the pandemic and I can happily state that the end of the year was strong with an increase in profit in the final quarter of almost 30 percent and an all-time high operating margin in the fourth quarter of 17.2 percent. During the third and fourth quarters, we carried out no less than six acquisitions, which will strengthen the Group further. Early in the new 2021/22 financial year, a slightly larger transaction was made through the acquisition of the roof safety products company CW Lundberg. The acquisition adds a business volume of approximately MSEK 185 with a pro forma EBITA during 2020 of MSEK 33. In summary, our assessment is that Lagercrantz has its strongest platform ever and we are now delivering a record year for 2020/21 despite the pandemic.

Future

When I now look ahead, I am doing so with confidence. Hopefully, the vaccination programmes will mean that societies can open up and it is expected that a high willingness to invest will drive growth in the next few years. In such an external environment, I see good opportunities for many of Lagercrantz's businesses.
Ahead of the new financial year, we have adopted a programme for continued expansion, which we call "Lagercrantz towards one billion". Here, the strategic direction and the financial goals are clarified, and we are carrying out a reorganisation of the divisions and putting an increased focus on sustainability.

We confirm in the strategy work that Lagercrantz's business concept has been successful over many years and represents a strong platform for future expansion. During the past 10 years, the share has generated a return of 30 percent per year including dividends. The expansion has been financed by cash flows from the business operations and has been characterised by acquisitions with an increased proportion of niche product companies, which has contributed a higher margin content and better conditions for organic growth, particularly for exports.  

Looking ahead, the intention is to continue building a strong B2B Tech Group with leading businesses in different niches. By achieving the financial goals for 5 years, the objective is to build a Group with SEK 1 billion in profit within five years. The financial goals are ambitious with earnings growth (EBT) in excess of 15 percent annually over a business cycle, a return on equity of not less than 25 percent and a policy with a dividend payout ratio of 30-50 percent of the net profit. The ambition is that at least one third of growth shall be generated organically and the remainder through acquisitions of approximately 5-8 companies per year. Lagercrantz is and will continue to be a long-term owner where the Group will build long-term sustainable market positions where every business also contributes to societal benefit. 

In order to improve the potential to reach the goals, we are carrying out a reorganisation where the businesses in the Group, starting from the new 2021/22 financial year, are being divided into five divisions (compared to four previously). The new organisation clarifies the focus on attractive growth segments, which will create dynamism and clarity internally for employees, in relation to the stock market and in the acquisition market. The new structure with the divisions Electrify, Control, TecSec, Niche Products and International feels extremely exciting.

In acquisitions, we are broadening the work to cover a larger geographical area and are strengthening the divisions with increased resources. The details are provided further on in this year-end report.

In addition, "Lagercrantz towards one billion" means a greater focus on sustainability as we are convinced that there is a strong connection between sustainability and long-term value creation in the form of business and societal benefits. In recent years, we have advanced our positions in this area. Our sustainability work shall pervade the entire operations from evaluation of new businesses during acquisitions, during investments and development of existing businesses and in our conduct as a responsible owner. 

Stockholm, 11 May 2021

Jörgen Wigh
President and CEO
A phone conference will be held May 11, 2021 at 10am CET, in English.
Phone: +46 8 619 7530. PIN: 332347#
Link to presentation: 
https://www.lagercrantz.com/en/reports-and-presentations

For further information, please contact:

Jörgen Wigh, President, phone +46 8 700 66 70
Kristina Elfström Mackintosh, CFO, phone +46 8 700 66 70

Författare Cision