Tenth consecutive year of increased turnover and profits
Jörgen Zahlin, Managing Director and CEO
OEM International AB
OEM had another record year with 9 percent growth in turnover and 6 percent growth in operating profit.
The good demand of 2022 continued into the start of 2023. During the year the demand tapered within a range of segments as a result of the poor economic prognosis. Growth varies between industries and geographies and two thirds of the group’s operations had positive growth. The largest company in the group, OEM Automatic AB, which increased turnover by 15 percent, is a good example of one of the operations that has reinforced its market position during the year. The continued weakness of the Swedish Krona during the year has had a positive effect on the turnover of 5 percentage units and acquisitions by 1 percentage unit, which gave organic growth of 3 percent.
Orders were 7 percent lower than turnover was that the order stock fell from SEK 1088 million to SEK 859 million. The order backlog, which increased greatly during the pandemic, is nearing a more normal level as the flow of goods has successively normalised.
As the suppliers’ supply capacity has improved the stock could be reduced. In total, the stock has fallen by SEK 100 million during the year which has contributed to a strong cash flow, which from ongoing operations amounted to SEK 791 million. The number of employees increased by 8 percent during the year as a result of completed acquisitions and a number of investments. Marketing activities and travel have now increased and are at pre-pandemic levels. The overall increase in costs is 7 percent during the year. The gross margin has reduced slightly mainly due to the customer and product mix.
Profit before tax increased by 6 percent and reached a new record level of 770 MSEK. This was the tenth year in succession that the company increased the profits. Operating margins that have strengthened in recent years remain at higher levels and amounted to 15.2 percent (15.5).
Growth across the regions
In terms of turnover, it was a record year for all regions and there was also a record result for region Sweden and for region Denmark, Norway, the United Kingdom and eastern Central Europe. The companies generally experiTenth consecutive year of increased turnover and profits enced good demand in the first half of the year and lower demand in the second half. Approximately one third of the operations have had growth rates exceeding 10 percent. Most of the operations have maintained or improved their profitability and four-fifths of the operations have an operating margin exceeding 10 percent.
Sweden, which is the largest region, increased turnover by 8 percent while order intake fell by 2 percent. The operation that developed most strongly was Telfa, which increased its turnover by 19 percent. OEM Automatic, Svenska Batteripoolen and Agolux increased turnover by 15 percent. A weaker gross margin meant that operating profit for the region (EBITA) fell by 11 percent.
The region Finland, the Baltic States and China increased turnover by 5 percent, while order intake fell by 2 percent. OEM Electronics had the strongest development with 15 percent growth, followed by Elektro Elco and Akkupojat, which increased their turnovers by 8 percent and 6 percent respectively. Due to increased costs, operating profit (EBITA) for the region decreased by 4 percent.
For region Denmark, Norway, United Kingdom and eastern Central Europe, turnover increased by 15 percent and order intake by 6 percent. The operations in Slovakia and Hungary increased their turnover by 33 and 23 percent respectively and in Norway and Ireland they increased by 17 and 16 percent respectively. The growth, together with a general increased focus on profitability, means that operating profit for the region (EBITA) increased by 30 percent.
Acquisitions
A number of companies were discussed during the year and a total of three acquisitions were made with a combined annual turnover of approximately SEK 200 million. Ingemar Liljenberg AB, which sells customised cast, stamped and machined components for the engineering and electronics industry, was acquired in December. The company has an annual turnover of SEK 62 million and a business model that fits well with OEM. Lagermetall AB, which markets plain bearings and bronze and has annual sales of SEK 104 million, was acquired in October. The company will continue to operate as a separate company, but the many similarities with Internordic create synergies that are expected to create favourable development. Danska was bought in November Unit-Pump has an annual turnover of SEK 32 million. The company complements OEM’s Danish operations and 6 OEM 2023 Creativity and loyalty have been key to our success. ” OEM 2023 7 was integrated into this company in conjunction with the accession .
Dividend
For the 2023 financial year a dividend of 1.75 SEK/share is proposed which is an increase of 17 percent compared to the normal dividend of the previous year. This is equivalent to about 40 percent of earnings per share after tax and a direct return of 1.8 percent based on OEM’s year-end share price. Since OEM was listed on the stock market in 1983, the company has always paid an improved dividend, with the exception of five years when the dividend was unchanged or 2009 when the dividend was reduced by 33 percent and the pandemic year 2020 when no dividend was paid.
Continued concerns in the world around us are creating an uncertain market situation
The challenges of the last few years based on shortages of raw materials, interruptions to the logistics chain, varia - tions in demand and cost increases were normalised in 2023, as a result of lower demand in the second half of the year. The more normalised business situation has meant that sales activities have intensified and significantly more new projects have been started which creates anticipation for the future. The political unrest in the world does mean that the market conditions are more uncertain. Last year’s many changes have taught us how to handle many unexpected situations. The organisation has however shown proof of fantastic adaptability and a passion for serving the customers. Creativity and loyalty have been key to our success. Close collabora - tion with customers and suppliers means that strategies can be adapted to serve the customers and still make the most of new business opportunities. I am proud to be part of OEM’s organi - sation and look forward to the new challenges and opportunities that the coming year will bring.
Tranås, March 2024
Jörgen Zahlin
Managing Director and CEO
OEM International AB
