Nolato

Third quarter of 2023 in brief

• Sales totaled SEK 2,340 million (2,626)
• Operating profit (EBITA) was SEK 193 million (214), excl. a non-recurring item of SEK 60 million (0)
• EBITA margin of 8.2% (8.1), excl. a non-recurring item
• Profit after tax was SEK 129 million (160), excl. a non-recurring item
• Diluted earnings per share totaled SEK 0.48 (0.59), excl. a non-recurring item
• Cash flow after investments rose to SEK 188 million (166), excl. acquisitions

“Adjusted for currency, the Group’s net sales decreased by 15% in the third quarter,” said Nolato’s President and CEO, Christer Wahlquist. “The decrease was entirely attributable to markedly lower volumes in the Integrated Solutions business area. VHP products now account for less than 5% of the Group’s total sales.”

“We are continuing to adapt total costs in order to boost profitability in all units. One of the measures we are taking is to concentrate our Chinese business, which resulted in the third quarter being impacted by a non-recurring cost of SEK 60 million at Group level,” said Christer Wahlquist. “We are also looking at how we can achieve sales synergies between Integrated Solutions and Industrial Solutions by working together to market our offering to a broader section of the value chain, thus taking on even larger contracts.”

Medical Solutions sales amounted to SEK 1,320 million (1,245); adjusted for currency, this was an increase of 1%. Operating profit (EBITA) was SEK 126 million (104), with an EBITA margin of 9.5% (8.4).

“This business area now accounts for two-thirds of Group earnings,” noted Christer Wahlquist. “Most of our market areas are continuing to expand, while sales in the surgery area, and particularly in vitro diagnostics (IVD), have declined.”

Integrated Solutions sales amounted to SEK 330 million (745); adjusted for currency and acquisition, this was a decrease of 57%. Operating profit (EBITA) was SEK 10 million (77), with an EBITA margin of 3.0% (10.3).

“The decline in sales was mainly attributable to a change in the sourcing strategy of a previously significant customer in the VHP area,” said Christer Wahlquist. “At the same time, several of our consumer electronics customers have seen reduced end-customer demand due to the economic slowdown. Our EMC business continues to perform well in a number of areas, particularly within automotive, which is offset by the telecom area due to a markedly slower 5G roll-out.”

Industrial Solutions sales amounted to SEK 691 million (638); adjusted for currency, this was an increase of 2%. Operating profit (EBITA) grew to SEK 64 million (33) and the EBITA margin to 9.3% (5.2).

“Fewer disruptions in the automotive supply chain have boosted production efficiency, which had a positive impact on the margin,” noted Christer Wahlquist. “However, we saw a decline in demand for consumer discretionary goods, which we believe will impact the fourth quarter as well due to weaker economic conditions.”

Nolato received SEK 20 million in electricity subsidies from Swedish authorities, half of which are included in Medical Solutions earnings and half in Industrial Solutions.

Cash flow after investments, excluding acquisitions, was SEK 188 million (166). The improvement in cash flow was primarily due to a more favorable change in working capital via reduced inventory and trade receivables.

Consolidated sales totaled SEK 7,294 million (8,410) for the first nine months of 2023, a decrease of 18% adjusted for currency and acquisitions. Operating profit (EBITA) decreased to SEK 584 million (745) and the EBITA margin to 8.0% (8.9), excluding a non-recurring item.

“In the near future, our focus is on improving our margins by adapting total costs in each unit and introducing strategic price increases,” said Christer Wahlquist. “Our in-depth production expertise, together with our strong customer relationships and a presence on three continents, allows us to harness business opportunities, expand our customer base and continually advance our market positions.”