Lagercrantz : Interim Report 2019/20 Q1

1 April - 30 June 2019

• Net revenue increased by 7 percent to MSEK 1,015 (948). Organically, net revenue increased by 3 percent.
• Operating profit (EBITA) increased by 15 percent to MSEK 130 (113), equivalent to an operating margin of 12.8 percent (11.9).
• Profit after financial items increased by 14 percent to MSEK 105 (92).
• Profit after taxes amounted to MSEK 82 (76). Earnings per share before and after dilution amounted to SEK 5.14 for the moving 12-month period (SEK 5.05 for the 2018/19 financial year).
• Cash flow from operating activities amounted to MSEK 112.
• Return on equity was 22 percent (22). The equity ratio at the end of the period was 40 percent.
• During the period, the acquisition of Dorotea Mekaniska AB (DMAB) was completed. The acquisition is expected to add annual sales of about MSEK 75 with good profitability. After the period, the acquisition of G9 in Denmark was completed. G9 is expected to add annual sales of about MSEK 50 with good profitability.
• The Annual General Meeting will be held on 27 August 2019 at 4.00 p.m. at IVA's Conference Centre in Stockholm.
• The Board of Directors in the notice convening the Annual General Meeting intends to propose a dividend of SEK 2.50 (2.00) per share.

STATEMENT OF THE CHIEF EXECUTIVE

The Group's positive development continued during Q1 2019/20. Net revenue increased by 7 percent to MSEK 1,015 and operating profit (EBITA) increased by 15 percent to MSEK 130, with a positive contribution from all divisions. The operating margin (EBITA) rose to 12.8 percent (11.9). The increased sales volumes, particularly in terms of exports, together with the operational improvements in several businesses contributed to the positive result. The latest new acquisitions, Schmitztechnik in January and Dorotea Mekaniska in April, have also developed according to plan and made a positive contribution to the quarter's results and profitability. After the end of the period, we also completed the acquisition of G9 Denmark, which will add MSEK 50 to annual business volume. These acquisitions are all good examples of niche highly profitable product companies, which is in line with our acquisition strategy. Today, proprietary products account for just over 55 percent of sales, with a target set of 75 percent within a few years.

All in all, I am therefore still positive about the Group's potential. Although organic sales growth was 3 percent in the quarter, which is lower than last year's 7 percent, this is partly explained by Easter with fewer sales days and lower activity in April, but also by fewer project deals and slightly lower growth rates in June. We have a strong business concept and good conditions for growth, not least on exports due to our increasing share of own products, and a limited risk with business units in many different product areas and geographies. It provides good opportunities that we develop decentralized in each of our subsidiaries.

Jörgen Wigh
President and CEO

Stockholm, 18 July 2019

Lagercrantz Group AB (publ)