CEO comments from the third quarter 2018

Dear Shareholders,

Good organic growth and continued profit gains in the elevator operations

The third quarter brought strong follow-through on the heels of the strong performance in the preceding quarter. Organic growth in consolidated net sales amounted to 5 percent for the past quarter and 9 percent for the first three quarters of the year, well in line with our financial targets. In our elevator operations, the programme of improvements continues to yield results, and the positive trend continues with another quarter in which earnings improved compared with the preceding year.

 

 

QUARTER

The third quarter of the year underscored the Group’s positive trend and growth. Over the quarter, consolidated net sales rose by 48 percent compared with the previous year, to SEK 361.1 million, and the organic sales growth over the quarter was 5 percent. EBITA before acquisition costs (EBITA*) rose by 56 percent to SEK 42.3 million. In addition to good sales growth, over the quarter, the Group’s profitability and EBITA* profit margin also improved to 11.7 percent, compared with 11.1 percent in the corresponding period last year.

 

Tailored Installations

In the installation operations, EBITA* rose by 142 percent over the third quarter to SEK 15.0 million. The installation operations are experiencing clear improvement in profitability thanks to the ongoing programme of measures for our elevator operations. As previously announced, we avoid temporary quick fixes, and instead we are implementing fundamental adjustments to the operations to achieve lasting effects. The measures are working well, and the positive trend from the beginning of 2018 has persisted with profitability continuing to improve over the quarter. Additional potential for improved profitability remains in individual units and we will continue the activities until we are fully satisfied with the profitability.

 

Products & Services

Prior to the listing of our Series B share in the spring of 2017, net sales in the product operations amounted to SEK 286 million (2016) and, in less than two years, have grown by 113 percent to SEK 608 million today (Q3 2018 rolling 12-months). In the third quarter of the year, EBITA* increased by 20 percent to SEK 32.4 million. The business area’s subsidiaries hold strong niche market positions and the companies that are acquired develop well under Sdiptech’s management.

 

 

ACQUISITIONS

 

Water and wastewater treatment

In early July, we acquired Rogaland Industri Automasjon AS, which specializes in automation systems for water and wastewater treatment. Sdiptech’s solutions play an important role in future infrastructures, and the market for water, soil and air decontamination is expected to increase as more stringent environmental regulations are introduced and the general focus on environmental issues increases.

 

Ongoing acquisition processes

Acquisition efforts continue unabated and we currently have letters of intent regarding two additional acquisitions and bid discussions in progress regarding a number of other companies.

 

 

PROSPECTS

Good sales growth and current focus on continued margin improvement and new acquisitions

Our outlook for the coming quarters remains unchanged and we perceive favourable conditions for continued profit growth, partly because our business segments continue to grow well and according to plan, and because recently acquired companies will contribute good earnings.

 

Our focus sharpens our purpose as a company

The market segments on which Sdiptech focuses enjoy a favourable underlying trend – stronger than GDP. Areas such as water, energy, transport, indoor climate and security are driven by constant demand for improvement, based on society’s pursuit of more sustainable, safe and efficient communities. As a company focusing on infrastructure, we will have a clear position in this development. For a long time, we have focused our growth efforts on these areas, and all acquisitions over the past 12 months have been made in the areas of water treatment, electricity supply, safety, transport or energy efficiency.

 

 

Sdiptech’s objective is to be a proactive player in these segments and to contribute to favourable social development.

 

In conclusion, I would like to thank our employees for their commitment and excellent work, as well as all of our shareholders for their continued support. I would also like to welcome all new shareholders to Sdiptech.