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Indutrade AB, Sweden
COMPANY PROFILE
Indutrade AB, Sweden Profile
Indutrade AB specialises in industrial components, systems and services. It operates four business segments - Engineering and Equipment, Flow Technology, Industrial Components and Special Products – with pump activities in all four. Pumps account for 5% of the company’s overall sales and 13% of the Engineering & Equipment business area and 7% of the Flow Technology business area. Analysis
Indutrade posted net sales for fiscal 2009 of SEK6271 million, down 7% on the year earlier. Comparing like-for-like sales, revenue was down 15%, with the overall result benefiting from a 3% contribution from acquisitions and 5% from favourable currency movements. Flow Technology was the business segment that fared best during the year, followed by Special Products. This was mainly because these segments have a relatively high share of net sales in the energy and water/heating, ventilation and plumbing customer segments. Indutrade’s operating profit before amortisation of intangible assets (EBITA) was SEK594 million for the year, down 28% on a year earlier. Lower sales and a relatively higher level of overheads hurt the associated margin, which slipped to 9.5% from 12.1%. Cost reduction measures were implemented during the year with the goal of reducing overheads on a full-year basis by SEK200 million and the number of employees by 250. In the Special Products segment, net sales were up 4% on the 2008 comparator at SEK1877 million, thanks in part to a 7% contribution from acquisitions and 8% from currency movements. Lower demand mainly affected the segment’s Swedish companies, where actions were taken to adapt overheads to the anticipated demand levels. EBITA for the segment was down 14.5% at SEK288 million. In the Industrial Components segment net revenues were down 17% on the 2008 comparator or 22% when adjusted for growth and currency effects. The segment was impacted by weak demand from the automotive industry. EBITA for the segment fell 52% to SEK72 million. Indutrade acquired four companies during the year and a further two business units during fiscal 2009.
COMMENT Indutrade is continuing to pursue a growth strategy based on acquisition and decentralisation. Following a quiet period in the first half of fiscal 2009 due to the economic slowdown, the company has again picked up the pace. The company completed six acquisitions in 2009, including Dominator Pump, all of which took place in the second half of the year. The pace has quickened even further in 2010 with the company completing eight acquisitions by mid-May, including its largest ever in the shape of valves and couplings manufacturer, the Meson Group. The approach has seen the group grow considerably in recent years, expanding from 60 to more than 120 companies in the last five years with a typical Indutrade company selling in the range of SEK50 million–100 million per year. It has also seen Indutrade broaden both its geographic reach and range of target markets, as well as increase the share of companies it owns with proprietary products and manufacturing capabilities. Since 2005 the group has also pursued a strategy of increasing its presence in less cyclical sectors, such as energy, water/wastewater treatment and the environment. In the subsequent five years the share of its sales to these customer segments has risen from 11% to 40%. Another of its risk spreading strategies is that of decentralisation, which Indutrade refers to as a ‘fundamental governance principle’. ■
Key Figures (SEK million) Indutrade AB
Year ended 31.12 2009
2008
2007
2006
2005
Net Sales Of Which: Engineering & Equipment Flow Technology Industrial Components Special Products
6271
6778
5673
4516
3822
1569 1689 1163 1877
1900 1712 1401 1812
1689 1474 1219 1322
1342 1073 1031 1094
1176 966 900 805
Cost of Goods Sold
4207
4520
3826
3027
2582
Gross Profit
2064
2258
1847
1489
1240
EBITA Of Which: Engineering & Equipment Flow Technology Industrial Components Special Products
594
820
650
460
333
83 186 72 288
189 185 150 337
176 145 131 234
129 93 94 179
119 67 60 108
Operating Profit
525
760
609
436
324
Net Profit
341
510
419
300
222
Contact Details
Chair: CEO and President: Address:
June 2010
Bengt Kjell Johnny Alvarsson Raseborgsgatan 9 Box 6044, SE-164 06 Kista, Sweden
Tel: +46 8 703 03 00 Fax: +46 8 752 79 39 Web: www.indutrade.se Pump Industry Analyst
5
Indutrade AB, Sweden Profile
Indutrade AB specialises in industrial components, systems and services. It operates four business segments - Engineering and Equipment, Flow Technology, Industrial Components and Special Products – with pump activities in all four. Pumps account for 5% of the company’s overall sales and 13% of the Engineering & Equipment business area and 7% of the Flow Technology business area. Analysis
Indutrade posted net sales for fiscal 2009 of SEK6271 million, down 7% on the year earlier. Comparing like-for-like sales, revenue was down 15%, with the overall result benefiting from a 3% contribution from acquisitions and 5% from favourable currency movements. Flow Technology was the business segment that fared best during the year, followed by Special Products. This was mainly because these segments have a relatively high share of net sales in the energy and water/heating, ventilation and plumbing customer segments. Indutrade’s operating profit before amortisation of intangible assets (EBITA) was SEK594 million for the year, down 28% on a year earlier. Lower sales and a relatively higher level of overheads hurt the associated margin, which slipped to 9.5% from 12.1%. Cost reduction measures were implemented during the year with the goal of reducing overheads on a full-year basis by SEK200 million and the number of employees by 250. In the Special Products segment, net sales were up 4% on the 2008 comparator at SEK1877 million, thanks in part to a 7% contribution from acquisitions and 8% from currency movements. Lower demand mainly affected the segment’s Swedish companies, where actions were taken to adapt overheads to the anticipated demand levels. EBITA for the segment was down 14.5% at SEK288 million. In the Industrial Components segment net revenues were down 17% on the 2008 comparator or 22% when adjusted for growth and currency effects. The segment was impacted by weak demand from the automotive industry. EBITA for the segment fell 52% to SEK72 million. Indutrade acquired four companies during the year and a further two business units during fiscal 2009.
COMMENT Indutrade is continuing to pursue a growth strategy based on acquisition and decentralisation. Following a quiet period in the first half of fiscal 2009 due to the economic slowdown, the company has again picked up the pace. The company completed six acquisitions in 2009, including Dominator Pump, all of which took place in the second half of the year. The pace has quickened even further in 2010 with the company completing eight acquisitions by mid-May, including its largest ever in the shape of valves and couplings manufacturer, the Meson Group. The approach has seen the group grow considerably in recent years, expanding from 60 to more than 120 companies in the last five years with a typical Indutrade company selling in the range of SEK50 million–100 million per year. It has also seen Indutrade broaden both its geographic reach and range of target markets, as well as increase the share of companies it owns with proprietary products and manufacturing capabilities. Since 2005 the group has also pursued a strategy of increasing its presence in less cyclical sectors, such as energy, water/wastewater treatment and the environment. In the subsequent five years the share of its sales to these customer segments has risen from 11% to 40%. Another of its risk spreading strategies is that of decentralisation, which Indutrade refers to as a ‘fundamental governance principle’. ■
Key Figures (SEK million) Indutrade AB
Year ended 31.12 2009
2008
2007
2006
2005
Net Sales Of Which: Engineering & Equipment Flow Technology Industrial Components Special Products
6271
6778
5673
4516
3822
1569 1689 1163 1877
1900 1712 1401 1812
1689 1474 1219 1322
1342 1073 1031 1094
1176 966 900 805
Cost of Goods Sold
4207
4520
3826
3027
2582
Gross Profit
2064
2258
1847
1489
1240
EBITA Of Which: Engineering & Equipment Flow Technology Industrial Components Special Products
594
820
650
460
333
83 186 72 288
189 185 150 337
176 145 131 234
129 93 94 179
119 67 60 108
Operating Profit
525
760
609
436
324
Net Profit
341
510
419
300
222
Contact Details
Chair: CEO and President: Address:
June 2010
Bengt Kjell Johnny Alvarsson Raseborgsgatan 9 Box 6044, SE-164 06 Kista, Sweden
Tel: +46 8 703 03 00 Fax: +46 8 752 79 39 Web: www.indutrade.se Pump Industry Analyst
5