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21 July 2022, 08:00
Sdiptech AB (publ) publishes interim report for the second quarter (April - June) 2022
The report is available on the company's website: www.sdiptech.se
INCREASED DEMAND, STRONG CASH FLOW AND CONTINUED MARGIN EXPANSION
SECOND QUARTER 2022
FIRST SIX MONTHS 2022
EVENTS AFTER REPORTING DATE
COMMENTS BY THE CEO
The second quarter showed EBITA* growth of 33 percent and good demand. Organically, most units grew strongly, while a few units were hampered by obstacles that are considered temporary. The recently acquired units all performed strongly and it is pleasing to see that the restrictions that previously affected some units have now eased. Inflation in society affects profitability, but the Group's units are continuously working to adjust their pricing accordingly. Overall, the EBITA* margin increased to 18.9 percent.
Demand from our customers continues to be good. Our products meet critical infrastructure needs, which provides solid demand regardless of the economic situation. The Group shows stable sales growth, 27 percent compared to the previous year, driven by both acquisitions and organic growth in most units. It is worth mentioning that the Group's container port automation unit has now resumed its deliveries to Asia, following the effects of previous restrictions, and is showing a strong quarter.
However, two of our larger units in the UK show a weaker quarter compared to the previous year. One, our EV equipment unit, saw a weakening towards the end of the period due to the market uncertainty that precedes the ongoing change in the UK regulatory framework for EV chargers. The other, which delivers transport cooling solutions, experienced difficulties in delivering ordered products, due to vehicle shortages among customers. Both units' temporary reduced development is considered transient.
The increase in component, raw material and logistics costs in the quarter exceeded our own price increases. For this reason, margins in comparable units have temporarily decreased and organic EBITA* growth amounted to -12 percent, excluding currency effects. Although the impact of increased costs was particularly high in the quarter, we see no reason for concern for the future. Some price increases can be made immediately while others are contractual and take a little longer to implement. Work on price increases continues in order to, as in the past, achieve full compensation for increased costs.
The Group's profitability continues to increase and the EBITA* margin amounted to 18.9 percent (18.1). The margin increase is primarily driven by newly acquired units.
Cash flow continues to be strong, corresponding to a cash flow generation of 87 percent (26). This is even though the building of stock of raw material continues, in order to ensure delivery capacity in the event of possible disruptions in supply chains.
Our acquisition strategy is based on quality over quantity. This is long-term correct, and it builds profitability and long-term strength rather than short-term growth. With our focus on infrastructure, the acquisitions are increasingly adding complementary technology and customer segments.
During the period, Resource Data Management ("RDM") was acquired, which is a specialized product supplier in the field of control and control of cooling. The company has built up a globally strong position in the grocery trade in the UK, USA and Asia. RDM expands Sdiptech's existing refrigeration business and meets UN Sustainability Development Goals 2.4, 6.5, 7.3 and 12.3.
In the period, E-l-m Kragelund A/S ("ELM"), which develops and manufactures tools for forklifts, was also acquired. Customers are forklift manufacturers and distributors in Europe and the USA. ELM adds new interesting customers to Sdiptech's existing operations in transport, logistics and warehousing. The company meets UN Global Goals 8.2, 8.8, 9.4, 12.2 and 12.5. ELM is also the Group's first acquisition in Denmark.
We are naturally not satisfied with a negative organic key figure in the quarter, but the underlying development for the Group is considerably better than the figure indicates. As mentioned above, a few units are hampered by obstacles we deem to be temporary, while demand continues to grow.
Our order intake is good, and we estimate that the impact of material shortages will be gradually reduced during the second half of the year. We feel comfortable delivering postponed volumes over time as well as fully compensating for increased costs through price increases.
As in the last interim report, our acquisition pipeline is particularly strong after a long period of processing of new markets. As we have already achieved SEK 125 million in acquired EBITA for 2022, we see good opportunities to exceed our annual acquisition target of SEK 120–150 million, without compromising our strong focus on quality over quantity.
By way of conclusion, I would like to extend a big thank you to all dedicated employees for your commitment and strong efforts.
President and CEO
For further information, please contact:
Bengt Lejdström, CFO, +46 702 74 22 00, email@example.com
Sdiptech AB (publ) is required to disclose this information pursuant to EU Market Use Regulation 596/2014. The information was provided by the above contact persons for publication on 21 July 2022 at 08.00 CEST.
Sdiptech’s common shares of series B are traded on Nasdaq Stockholm under the short name SDIP B with ISIN code SE0003756758. Sdiptech’s preferred shares are traded under the short name SDIP PREF with ISIN code SE0006758348. Further information is available on the company's website: www.sdiptech.se
Sdiptech is a technology group that acquires and develops market-leading niche operations that contribute to creating more sustainable, efficient and safe societies. Sdiptech has approximately SEK 3,000 million in sales and is based in Stockholm.