Strong sales and continued profitability

Tranås 20 October 2022

Demand remained strong in the third quarter, resulting in a 29 percent increase in turnover, which is a historically high increase for a single quarter. Reduced supply problems from subcontractors have had a positive impact on turnover. The impact on net sales from acquisitions and exchange rate movements was 7 percentage points and 6 percentage points respectively, resulting in organic growth of 16%.

Order intake was also relatively strong, increasing by 12 percent but falling short of turnover by 9 percent, due to customers not placing long-term orders to the same extent as earlier in the year.

Operating profit (EBITA) rose by 18 percent in the quarter and the EBITA margin was 15.6 percent (17.0), which is positively affected by the increase in turnover and negatively by the deterioration in gross margin.

Growth across the regions

The quarter has been characterized by continued good demand, high price levels and positive currency effects, resulting in good growth figures in virtually all businesses.

Demand in Region Sweden was strong, generating organic growth of 15 percent. OEM Motor, ATC Tape Converting had the strongest development, followed by the Swedish Battery Pool and OEM Electronics.

The Finland, Baltics and China region experienced organic growth of 22 percent in the quarter and continues to be the region with the strongest demand. OEM Automatic followed by Motor/Bearings and Akkupojat are the entities with the strongest development.

The Denmark, Norway, British Isles and Eastern Central Europe region enjoyed good demand in the third quarter, with organic growth of 10 percent. The strongest growth was experienced in the operations in Norway, the Czech Republic and Poland, together with the newly acquired company Demesne in Ireland.

 

At the start of a market downturn

Business conditions have been favourable during the first nine months of the year, with good demand, increased prices and a weakening Swedish krona, which together have produced growth figures not seen since before the turn of the millennium. However, the market situation is changing as a result of rising inflation and soaring energy prices. We can see the signals through, among other things, gradually improving delivery capacity of subcontractors and an order backlog that decreased in the quarter, which is the first time since the pandemic year 2020.

Every market situation has its challenges and OEM's role is to provide optimal service to customers and work to capture new market shares based on current conditions. I have great confidence in the ability of our employees to continue to strengthen the Group's position in the market.

 

Jörgen Zahlin

Managing Director and Chief Executive Officer