Lagercrantz : Interim Report 2021/22 Q2

Second quarter (1 July - 30 September 2021)

• Net revenue increased by 31% to MSEK 1,201 (918).
  • Organically, net revenue increased by 13%.
• Operating profit (EBITA) increased to MSEK 192 (132), equivalent to an operating margin of 16.0% (14.4).
• Profit after financial items increased by 50% to MSEK 156 (104).
• Profit after taxes increased by 43% to MSEK 116 (81).
• Cash flow from operating activities increased to MSEK 113 (80).
• Return on equity was 28% (22). The equity ratio at the end of the period was 34% (40).

First six months (1 April - 30 September 2021)

• Net revenue increased by 32% to MSEK 2,502 (1,895).
  • Organically, net revenue increased by 16%.
• Operating profit (EBITA) increased by 58% to MSEK 404 (256), equivalent to an operating margin of 16.1% (13.5).
• Profit after financial items increased by 71% and amounted to MSEK 336 (197) and profit after taxes increased by 69% to MSEK 255 (151).
• Earnings per share after dilution for the moving 12-month period amounted to SEK 2.41, compared to SEK 1.91 for the 2020/21 financial year.
• Cash flow from operating activities amounted to MSEK 254 (326).
• During the first six months, three acquisitions were carried out, CW Lundberg, Libra and AC Antennas, with a total annual business volume of approx. MSEK 390.

Statement of the Chief Executive

"A very strong first six months" - this is how we would like to summarise the beginning of the split financial year 2021/22. The recovery after the pandemic has strengthened and changed over to growth where all divisions are delivering good organic growth and we also see clearly positive effects from the acquired businesses. In numerical terms, the organic sales growth for the Group was a historically high 16% and a further 19% came from acquisitions. Of the increase in the operating profit (EBITA) of MSEK 148 in total, MSEK 88, equivalent to approximately 60% came from organic improvements. While well aware of the fact that the first six months of the previous year were negatively impacted by the effects of the pandemic, this is still very gratifying and stronger than we expected.

The half-year result was thus strong where the profit (after net financial items) reached MSEK 336, an increase of just over 70% compared to the year-earlier period (197). The operating margin reached 16.1% (13.5) and both earnings per share on a moving 12-month basis and the return on equity reached new all-time-highs of SEK 2.41 per share and 28%, respectively.

It was also positive during the first six months that we implemented our starting point for growth - what we are calling "Lagercrantz towards one billion". As of April 2021 we have established a new organisation with a new divisional structure, clearer growth ambitions, both organically and via acquisitions, and a clear focus with ambitions and goals relating to sustainability. By focusing the divisions on attractive areas with underlying structural growth and declared goals for sustainability, the intention is to create clarity and ambition that attracts the acquisition market, employees, customers, suppliers and the stock market and thereby further improve the potential for growth.

It is also important to highlight the three acquisitions we carried out during the first six months. We see along the way that Lagercrantz's approach to nurturing, internationalising and further developing owner-led product companies in particular, is perceived as increasingly attractive. We are therefore proud and happy that the owners of CW Lundberg in Sweden, Libra in Norway and now most recently AC Antennas in Denmark, have chosen to let their life's work become a part of Lagercrantz. These companies generate combined annual revenue of about MSEK 390 with good profitability and the intention in all three cases is to continue developing the export side of the businesses. During the previous year, a further eight owners decided to sell to Lagercrantz in particular as they have confidence in our ownership concept involving great responsibility, clear decentralisation and management by objectives.

Ahead of the coming quarters, I am still optimistic. So far we have handled the component shortage, rising raw material and freight costs confirmed by several of the Group's companies in an exceptional way through price adjustments and creativity in finding alternative delivery routes and in certain cases alternative suppliers. Incoming orders also remain strong, which taken together, gives me great confidence about Lagercrantz's prospects both in the short and long term.

Jörgen Wigh
President and CEO

Stockholm 22 October 2021

Lagercrantz Group AB (publ)

A phone conference will be held 22 October at 10 am CET, in English.
Phone: [phone]. PIN: 332347#
Link to presentation:
https://www.lagercrantz.com/en/reports-and-presentations