Record sales and earnings

Tranås 26 April 2022

Demand was strong in the fourth quarter of 2021 and remained high in the first quarter of this year. In combination with good delivery capabilities, this resulted in a 23% increase in sales. The impact on net sales from acquisitions and exchange rate movements was 7 percentage points and 4 percentage points respectively, resulting in organic growth of 12%.

Incoming orders also remained strong and rose 27%, exceeding sales by 16%.  As delivery times from manufacturers become increasingly longer, customers are placing longer orders than normal in order to secure supplies for the future.

Operating profit (EBITA) rose 35% in the quarter and the EBITA margin expanded to 16.7% (15.2%). The strong performance was due to increased sales and an improved gross margin.

The war in Ukraine has had limited impact on OEM to date. OEM has a few customers in the affected region with minimal sales activity. Deliveries to the customers that it had in Russia have been halted. A number of OEM's large customers, however, have customers of their own in the region and this will result in a decline in demand. Given OEM's total sales, this is not expected to impact its sales to any great extent.

 

Acquisition of company in Ireland

The Irish company Demesne Electrical was acquired in early January 2022. It had a turnover of approximately SEK 205 million and an operating profit of around SEK 26 million in 2021. The company is a leading distributor of electrical components and uses several of the same suppliers as other OEM companies. The acquired business is an excellent complement to the Group and has grown well during the first quarter.

Growth across the regions

The combination of strong demand, price increases and positive currency movements has generally resulted in robust growth and improved gross margin. Growth was strongest in Region Denmark, Norway, the British Isles and East Central Europe, and in Region Finland, the Baltic states and China, with organic growth reaching 20% and 18% respectively. Organic growth in Region Sweden reached 8%.

Although OEM's operations have managed to maintain good delivery capabilities so far, they will continue to face issues with delivery capacity and this is reflected in the ever-growing order book.

 

Market situation remains uncertain

The current geopolitical tensions, shortage of raw materials and significant price increases are causing uncertainty about the future. OEM has a history of strengthening market positions and market share during troubled times. The creativity and commitment of our employees are key to the positive performance of the Group which allows it grow stronger over time.

 

Jörgen Zahlin

Managing Director and Chief Executive Officer