CEO's COMMENTS
Conditions favourable for business and profit growth still strong
The third quarter was also characterised by favourable conditions for business, and stronger demand in most of our geographical markets and most customer segments. Our level of activity was high, with a strong increase in sales, both organically and through acquisitions. We achieved a profit growth of 19% for the quarter, which was in line with the increase we have had earlier in the year. The operating margin also continued to increase, compared with the previous year.
The Components Business Area delivered an outstanding quarter, through both organic growth and several new acquisitions. In the Energy Business Area, our experience is that the markets are relatively stable, but the quarter showed weaker results due to lower sales and increased competition. Industrial Process and Power Solutions continue to report strong and stable sales and profit growth.
During the quarter, Patrick Klerck was appointed Business Area Manager of Components. Patrik Klerck has been a member of the management team of Components for five years and has a solid experience from the Group. At the same time Anders Claeson, Executive Vice President and former Business Area Manager of Components, was appointed acting Business Area Manager of Industrial Process, replacing Johan Dyberg, who left the Group.
Market development
From a geographical perspective, the highest rate of growth was in Finland and Denmark, while the business situation also improved from an already high level in Sweden. Demand was generally stable in Norway, and business outside the Nordic region was still good. With regard to demand in our various customer segments, we increased sales of production components to manufacturers of, for example, special vehicles, machinery, electronics, wind power and marine vessels. Demand was stable in medical technology and oil & gas, but was lower in the telecom segment.
Demand for aftermarket products for the manufacturing industry showed an upward trend, while the pace of investment in the process industry was stable. Sales of infrastructure products for the primary and regional grids in the Nordic region fell during the quarter, whereas sales of niche products in power distribution remained stable. Demand for electricity-related products from customers in building and installation continued to develop positively.
Acquisitions
Strengthening our market positions through acquisitions gives Addtech better opportunities to create long-term sustainable growth. We have maintained a high pace of acquisitions, and since the start of the financial year we have made eleven acquisitions, three of which were completed after the end of the quarter. Three acquisitions were made in Sweden, three in Denmark, two in Finland and one in each of Norway, the United Kingdom and Belgium. The acquisitions together contribute annual sales of approximately SEK 700 million. We are in ongoing discussions of acquisitions of not only independent, profitable technology companies with market-leading niche positions, but also smaller complementary acquisitions that can strengthen the market positions and profitability of our existing companies. Our strong balance sheet offers excellent scope for us to continue to acquire attractive companies.
Johan Sjö
President and CEO