Svedbergs

”Our exciting journey continues with profitable growth in focus – organically and through acquisitions. Q3 is once again a strong quarter with increasing volume and good profitability despite the market.”

Third quarter

• Net sales amounted to SEK 512.3 M (432.0), an increase of 18.6 percent. Organic growth was -1.4 percent
• EBITA amounted to SEK 71.3 M (59.0), corresponding to a margin of 13.9 percent (13.7)
• EBIT amounted to SEK 67.4 M (56.7), corresponding to a margin of 13.2 percent (13.1)
• Strong development in the UK contributed to a revised additional purchase price, a one-time cost of SEK -13.0 M (-)
• Profit before tax amounted to SEK 37.4 M (43.4)
• Earnings per share amounted to SEK 0.53 (0.92)
• Free cash flow amounted to SEK -2.4 M (29.2)
  

First nine months

• Net sales amounted to SEK 1,646.4 M (1,363.5), an increase of 20.7 percent. Organic growth was -2.4 percent
• EBITA amounted to SEK 230.7 M (180.6), corresponding to a margin of 14.0 percent (13.2)
• EBIT amounted to SEK 218.7 M (169.0), corresponding to a margin of 13.3 percent (12.4)
• Strong development in the UK contributed to a revised additional purchase price, a one-time cost of SEK -13.0 M (-)
• Profit before tax amounted to SEK 158.1 M (136.6)
• Earnings per share amounted to SEK 2.31 (2.93)
• Free cash flow amounted to SEK 51.0 M (118.7)
  

CEO comments

Stable development in a challenging market
Our exciting journey continues with profitable growth in focus, organically and through acquisitions. Q3 is once again a strong quarter with increasing volume and good profitability despite the market. The fact is that compared to the full year of 2019, we have grown by just over 25 percent per year, while increasing our EBITA margin from just under 10 percent to 14 percent - and the journey continues. Behind the development is the acquisition of Thebalux, continued strong development for Roper Rhodes and focused work with cost control and price adjustments.

Revenue for the quarter amounted to SEK 512 million (432), representing an increase of nearly 20 percent compared to the previous year. In addition to the acquisition of Thebalux, growth was strengthened by increased sales volumes for Roper Rhodes in the UK. Currency effects contributed -2 percent to the revenue increase. Organic growth was -1 percent.

Gross profit increased to SEK 236 million (193), corresponding to a gross margin of 46.0 percent (44.8). The EBITA result amounted to SEK 71 million (59), corresponding to an EBITA margin of 13.9 percent (13.7). This development was driven by the acquisition of Thebalux, strengthened performance at Roper Rhodes, and a strong focus on cost control and continued strategic initiatives to attract new customers.

Free cash flow during the quarter amounted to SEK -2 million (29). The change compared to the previous year was mainly due to changes in working capital.

Stable sales and improved results for Roper Rhodes
Regarding the performance of individual brands, the picture is largely the same as in the previous quarter. Roper Rhodes continues to strengthen its position in a weak UK market. Sales in the quarter amounted to SEK 289 million, which was in line with the previous year, while the EBITA margin improved to 19.1 percent (16.7). This development was driven by a strong product offering, a strong focus on sales, and price adjustments made in July.

We are also pleased to state that Roper Rhodes is on track to reach the full earn-out payment. Despite a declining market and global uncertainties, Roper Rhodes has grown organically and delivered strong results. The final assessment will be made by the end of December 2024, with payment expected in early Q1 2025.

Some seasonal variation affects Thebalux
The revenue for Thebalux in the quarter was SEK 94 million, with an EBITA margin of 19.5 percent. There are no comparative figures for the previous year, but sales and results were slightly lower than in Q1 and Q2 of 2024. The decrease was mainly due to seasonal effects and a shorter, unplanned production shutdown.

Demand for our products in the Netherlands is strong, and with that in mind, we decided during the quarter to invest in the Primabad production facility in Veghel. This investment, which will increase production capacity and shorten lead times, is an important step toward our overall goal of continuing to grow and gain market share in the Dutch market. Implementation of the production facility is expected to begin in the summer of 2025. Additionally, the implementation of Thebalux’s new production equipment, which started last quarter, is progressing and expected to be operational in early 2025. I am proud of our performance in the weaker Dutch market.

Continued challenges in the Nordic region
The Svedbergs brand continues to face challenging market conditions, driven by a sharp slowdown in the project market and generally weak demand in Sweden and Finland. Additionally, results were impacted by increased costs related to the commissioning of new production equipment at the Dalstorp facility.

Market conditions are tough, and we continue to adapt the business accordingly. Our focus is on controlling costs while working hard to win business in a weak market.

Despite the weak market, sales for Macro Design and Cassøe were better compared to the same quarter last year. Both companies improved their EBITA margins, thanks to a strong focus on customer interaction, sales efforts, and operational efficiency. Additionally, Cassøe launched a new lighting range during the quarter as part of ongoing efforts to enhance the product offering.

Sustainability as an increasingly important competitive factor
During the quarter, we continued our focused work in sustainability. Key elements include reducing greenhouse gas emissions and increasing transparency regarding the carbon footprint of individual products. This work is largely integrated into the ongoing development of our various products. Customer interest is growing, and we are seeing that our sustainability efforts are strengthening our competitiveness. This is especially evident in larger procurement processes, where sustainability factors are becoming increasingly important. During the quarter, we also submitted our commitment letter to the Science Based Targets initiative (SBTi).

Focus ahead
Overall, the developments during the quarter clearly demonstrate the strength of being present in multiple geographical markets and utilizing various sales channels, as well as the advantages this brings in terms of risk diversification. Our focus remains on continued market penetration and sales, while we are, according to plan, implementing our long-term strategy, where the acquisition of profitable companies plays an important role.