Strong first quarter in troubled times

Jörgen Zahlin

Sales and earnings both reached a new all-time high in the first quarter of 2020. The growth rate is on a par with the second half of the previous year and demand has been generally good.

Net sales rose 5% compared with the first quarter of 2019, with acquisitions and currency movements accounting for 1 and 2 percentage points respectively. This means that 2% organic growth was achieved in the period. Incoming orders were also strong, with an increase of 16%, of which 6 % relates to a large one-off business that extends over two years.

The operating margin (EBITA) stood at just over 12%, which is on a par with the previous year period. The gross margin expanded by 0.4 percentage points, due primarily to the weaker Swedish krona.

Growth across the regions

A breakdown of growth in our regions clearly shows that Sweden is maintaining its good performance with 3% growth. Elektro Elco and ATC Tape Converting achieved growth of just over 20%, while OEM Motor, Telfa and Batteripoolen delivered growth in excess of 10%.

All in all, the quarter has been strong for region Finland, the Baltic states and China which reported growth of 9%, largely due to a healthy performance by Rauheat and OEM Finland.

Our third region achieved growth of 6%, which is primarily growth via acquisition. The operations in Hungary, Norway, Denmark and Poland have reported good growth, while other markets have declined.

COVID-19 – impact on the OEM Group

We are all greatly affected by the Corona crisis and work is under way across all our entities to cut costs and prepare for a significant decline in demand. Although sales figures for March were good for most of the operations, it is obvious that we are heading into a period with a complete change in market conditions. We must make the health of our employees a top priority and we are following the directives and recommendations of the Public Health Agency of Sweden and of the governments of the respective countries to contain the spread of COVID-19 to the greatest extent possible.

Seize the opportunities that arise

How we get through this crisis depends greatly on how we enter the crisis. We aim to retain as much as possible of our organisation, our customers and our suppliers. We will have to expect changes. Our size and strong financial position mean we are well placed to cope with the current situation, and also seize business opportunities.

 

Jörgen Zahlin

Managing Director and Chief Executive Officer