1 April 2011-31 March 2012
The Board of Directors and the CEO of Addtech AB (publ.), company ID number 556302-9726, hereby submit the annual accounts and consolidated financial statements for the 2011/2012 financial year.
Market trend during the year
The year's good development of both sales and earnings is a combination of sound organic growth and implemented acquisitions, which developed well in the Group.
On the whole, demand was good for our operations during the first half of the year. Organic growth was also healthy during the second half, despite several customers being more cautious in their order forecasts. Demand in our product and market areas continued to develop positively.
The market is more fragmented than in the past and we are seeing substantial variations between different geographic markets, customer segments and product niches. Demand from Nordic healthcare was stable at a high level throughout the financial year. In the market for production components for Nordic manufacturing companies, a certain degree of restraint towards the end of the year mostly affected the Group's operations in Sweden and Denmark. The Group's companies in Norway, Finland and markets outside the Nordics continued to perform well.
The business has developed extensively in recent years, partly thanks to the increase in contacts and cooperation between the Group's subsidiaries. In parallel, a large number of newly acquired companies have been added, which also contributed to the need for change in our operations and offering. As a result of these developments we implemented a small-scale reorganisation in the Group, effective as of 1 April 2012. The reorganisation comprised moving a number of companies between our four business areas and creating two new business units. The reorganisation did not affect the Life Science business area. See also Note 5 Segment reporting. As of the first quarter of the 2012/2013 financial year, reporting for the Group will be according to this new structure.
Development per quarter
- First quarter. The financial year started with ever stronger demand from Nordic manufacturing companies, while the business situation in Nordic healthcare was stable. Sales in the quarter rose by 22 percent. In terms of geographic markets, sales in our Swedish operations levelled off to a good position. Our Finnish and Norwegian operations enjoyed ever greater demand, while our sales in Denmark did not improve at the same rate as in other markets. The Group's companies that operate in markets outside the Nordics continued to perform well. Demand for production components from Nordic manufacturing companies was good, which above all benefited Components and Industrial Solutions, our more industry-oriented business areas. In the energy-related market segment, the picture was patchier in the first quarter. The market for the Life Science business area remained stable, although with slightly lower volumes than before.
- Second quarter. During the second quarter demand continued to improve, yielding a 20 percent increase in sales in this quarter. Half the increase was through acquisition. Demand for power transmission products to the energy sector was high, and the business situation for industrial battery solutions was positive. The Energy & Equipment business area achieved its highest sales and profit ever. The Industrial Solutions business area also enjoyed strong demand for production components and automation solutions. Towards the end of the second quarter, however, heightened unease about the market was noticeable among several customers in Nordic industry. For the Components business area, this resulted in slightly subdued demand and certain customers postponed some delivery plans. For the Life Science business area, demand remained robust for diagnostic equipment, laboratory equipment and measuring and analysis instruments.
- Third quarter. During the third quarter the positive growth continued and sales rose by 15 percent. Unease regarding the market in the Nordic manufacturing industry prevailed and demand continued to be somewhat subdued. The weaker market situation above all affected our operations in Components - primarily in Sweden and Denmark - while our operations in Norway and Finland continued to develop well. The business situation in above all the Swedish market was also slightly hesitant for Industrial Solutions. The development in markets outside the Nordic countries, however, remained favourable. Energy & Equipment achieved a strong quarter and a 35 percent rise in sales through both organic and acquired growth. Demand for niche products in electrical power distribution and for electrical safety products and electrical installation materials remained robust. The market for Life Science remained stable for diagnostic and laboratory equipment, while demand for measuring and analysis instruments for the process industry further improved.
- Fourth quarter. The year ended with a fourth quarter in which sales rose by 15 percent. For Components, demand was stable on the whole during the fourth quarter, even though the caution from previous quarters persisted - especially in the Swedish and Danish markets. Energy & Equipment reported yet another strong quarter, with sales growth of 32 percent; this was largely driven by acquisitions in the business area. Energy & Equipment also experienced a slightly more cautious market, and growth in demand was more subdued than earlier in the year. Looking at individual segments, niche products in electrical power distribution, electrical safety products and electrical installation materials continued their positive development at a high level. The Industrial Solutions business area retained its stable development during the final quarter of the year in all geographic markets. Good development was noted in above all these customer segments: the vehicle industry, medical technology, automation solutions and machine components. For Life Science the market situation remained as positive as in previous quarters for diagnostic and laboratory equipment. The business situation for measuring and analysis instruments to the Nordic process industry which had grown stronger earlier in the year, now displayed a degree of caution in certain customer segments.
Key events during the year
To sum up, the 2011/2012 financial year was a positive year for growth in both sales and earnings. The year was characterised by good organic growth and several successful acquisitions that have developed well in the Group. All business areas strengthened their positions in various markets and reported a positive earnings trend, but the market is more fragmented than in the past.
Financially speaking, the Group's position was robust during the year, maintaining a high equity ratio and a low net debt/equity ratio. We have surpassed, and have also increased, our profitability goal for P/WC. As a result, the Group generated strong cash flow from operations during the year, which has been used for investments in existing operations and acquisitions of new companies. The Group is thereby very well-equipped for further expansion of its business.
The focus in several areas during the year was to implement acquisitions and invest in existing operations to enhance the Group's market position in selected segments and niches. The Group is very well-equipped for further expansion of its business.