Jörgen Zahlin, Managing Director & CEO
In the fourth quarter, sales were up 2.5 percent, which is on a par with the third quarter but well below the first half of the year. The slowdown in economic activity has continued to impact demand, and organic revenue growth was negative in the second half of the year, which is the first time for any one quarter since 2013. Foreign exchange movements and acquisitions positively impacted revenue growth by 2.5 percentage points and 2 percentage points, respectively, resulting in negative 2% organic growth.
Order intake was on par with the previous year, but was 7 percent lower than sales. This is due to more normalized delivery times, which in turn means that the build-up of order backlog that took place in the years after the outbreak of the pandemic has now gradually normalized. The order backlog is still at a higher level than before the pandemic.
Operating profit (EBITA) fell 4 percent and the EBITA margin stood at 14.0 percent (14.9). The decrease is due to a higher cost base and a slightly lower gross margin. The 2023 full-year EBITA margin was 15.8 percent (16.1) and remains historically high.
Overall, for the full year 2023, sales increased by 9 percent and EBITA by 6 percent, giving an EBITA margin of 15.8 percent (16.1), which remains a historically high level. This is the tenth year in a row that OEM has increased earnings before tax.
Three businesses were acquired during the quarter, with combined sales revenues of SEK 197 million. The companies are highly complementary to OEM’s existing operations. The two Swedish companies, Lagermetall AB and Ingemar Liljenberg AB, will continue to be run as separate businesses, while the Danish company Unit Pump has been integrated into OEM Automatic Klitsø’s business.
Growth across the regions
Lower demand levels throughout the autumn have generally translated into lower rates of growth. Variations across different sectors and geographic areas are wider than before.
Region Sweden saw a 3 percent increase in sales, impacted positively by foreign exchange movements and acquisitions by 2 percentage points and 3 percentage points, respectively, leading to negative 2 percentage point organic growth. The strongest growth in the fourth quarter was delivered by Batteripoolen, the Group’s largest company OEM Automatic, and Nexa Trading.
Region Finland, the Baltic states and China reported a noticeable decline in demand in the quarter and a 6 percent decrease in sales, with foreign exchange having a positive impact of 4 percentage points, leading to negative 10 percentage point organic growth. Although Akkupojat and OEM Electronics reported two-figure growth rates, they are the only Finnish operations with growth during this period.
Region Denmark, Norway, the British Isles and East Central Europe reported a 9 percent rise in sales, boosted 4 percentage points by foreign exchange movements and 1 percentage point by acquisitions, giving growth of 4% on an organic basis. The majority of the operations reported growth, with the strongest performance coming from OEM Automatic Hungary, Slovakia and Norway.
Market situation
The good demand at the beginning of the year gradually slowed down as a result of the uncertain global situation.
OEM’s business model, which is based on chasing market share, often benefits from weakened market conditions. The commitment and innovative spirit of its employees enable OEM to constantly identify new business opportunities, which results in greater market share. 2023 marked another consecutive year of record performance and I look forward to 2024 and the new opportunities it brings.