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    LIFCO B   SE0015949201

LIFCO AB (PUBL)

(LIFCO B)
  Report
Delayed Quote. Delayed Nasdaq Stockholm - 12/01 11:29:51 am
246.6 SEK   +0.53%
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10/22LIFCO : Interim Report January – September 2021
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Lifco : Interim Report January - September 2020

10/22/2020 | 01:31am EST

Reporting period January - September

· Net sales declined -0.7 per cent to SEK 10,031 (10,104) million. Organically, net sales declined -7.1 per cent.
· EBITA* increased 2.6 per cent to SEK 1,920 (1,872) million.
· The EBITA margin* improved 0.6 percentage points to 19.1 (18.5) per cent.
· Profit before tax grew 6.7 per cent to SEK 1,545 (1,448) million.
· Net profit for the period grew 6.7 per cent to SEK 1,159 (1,086) million.
· Earnings per share increased 7.1 per cent till SEK 12.59 (11.76).
· Cash flow from operating activities increased 69.4 per cent to SEK 1,995 (1,178) million.
· Seven businesses were acquired during the period with total annual sales of
about SEK 700 million.

Reporting period July - September

· Net sales increased 3.1 per cent to SEK 3,311 (3,211) million. Organically, net sales declined
-0.4 per cent.
· The Dental business area was positively impacted by the continued recovery of the European dental markets which are returning to more normal levels. The Systems Solutions business area has as a whole been relatively unaffected by the pandemic. The market remains uncertain in the Demolition & Tools business area and was weaker than the previous year.
· EBITA* increased 17.3 per cent to SEK 699 (596) million.
· The EBITA margin* expanded 2.5 percentage points to 21.1 (18.6) per cent.
· Profit before tax grew 19.7 per cent to SEK 566 (473) million.
· Net profit for the period grew 19.7 per cent to SEK 425 (355) million.
· Cash flow from operating activities increased 11.2 per cent to SEK 736 (662) million.

Summary of financial performance  

NINE THIRD Rolling FULL
MONTHS QUARTER 12 YEAR
months
SEK million 2020 2019 change 2020 2019 change change 2019
Net sales 10,031 10,104 -0.7% 3,311 3,211 3.1% 13,772 -0.5% 13,845
EBITA* 1,920 1,872 2.6% 699 596 17.3% 2,571 1.9% 2,523
EBITA 19.1% 18.5% 0.6 21.1% 18.6% 2.5 18.7% 0.5 18.2%
margin*
Profit 1,545 1,448 6.7% 566 473 19.7% 2,093 4.9% 1,996
before tax
Net profit 1,159 1,086 6.7% 425 355 19.7% 1,601 4.8% 1,528
for the
period
Earnings 12.59 11.76 7.1% 4.61 3.86 19.4% 17.40 5.0% 16.57
per share
Return on 18.6% 20.9% -2.3 18.6% 20.9% -2.3 18.6% -0.9 19.5%
capital
employed
Return on 125% 122% 3.0 125% 122% 3.0 125% 17.0 108%
capital
employed
excl.
goodwill

*Before
acquisition
costs and
non
-recurring
items.

COMMENTS FROM THE CEO

Even during the third quarter, the COVID-19 pandemic has continued to affect Lifco's subsidiaries in different ways. Net sales increased 3.1 per cent during the quarter to SEK 3,311 (3,211) million, driven by acquisitions. The Dental business area was positively impacted by the continued recovery of the European dental markets which are returning to more normal levels. The Systems Solutions business area has as a whole been relatively unaffected by the pandemic. Some operations in the Systems Solutions business area have benefited from the effects of the pandemic, while others have been impacted negatively. This has depended on where the companies operate in the value chain and in which segment their customers belong. The market remains uncertain in the Demolition & Tools business area and was weaker than the previous year, particularly for more capital-intensive products.

EBITA* increased 17.3 per cent to SEK 699 (596) million and the EBITA margin* improved 2.5 percentage points to 21.1 (18.6) per cent due to acquisitions as well as low sales and marketing activities during the quarter since many subsidiaries were unable to conduct normal sales and market activities as a result of the pandemic. Earnings per share increased 19.4 per cent till SEK 4.61 (3.86) in the third quarter and cash flow increased 11.2 per cent to SEK 736 (662) million due to improved earnings and lower inventories.

During the first nine months of the year, Lifco strengthened Dental with five acquisitions: two manufacturing companies in Denmark, one in Sweden, a leading distributor in Croatia and a company developing medical record systems in Germany. For Systems Solutions, two Italian companies were acquired: Cramaro Tarpaulin Systems, a niche manufacturer of tarpaulin systems for trucks and agricultural vehicles as well as Tastitalia, which manufactures customised touch panels, displays and keypads. The acquisitions jointly had a positive impact on Lifco's earnings and financial position during the quarter.

On 27 August, Lifco issued two unsecured bonds totalling SEK 1,200 million and therefore has bonds outstanding totalling SEK 2,200 million in the MTN programme with a loan framework of SEK 3,000 million. In addition to bonds outstanding, Lifco has standard short-term credit facilities. Lifco's financial position remains solid and interest-bearing net debt amounted to 1.3 times EBITDA* at 30 September 2020, which is well in line with our target of interest-bearing net debt of a maximum of three times EBITDA* and means that Lifco possesses the financial scope to make additional acquisitions.

Per Waldemarson

President and CEO

GROUP PERFORMANCE IN JANUARY - SEPTEMBER

Net sales declined -0.7 per cent to SEK 10,031 (10,104) million, driven by the effects of the pandemic and a weaker market in the Demolition & Tools business area. Acquisitions contributed 7.4 per cent, organic growth was -7.1 per cent, while foreign exchange gains impacted sales by -1.0%. During the first nine months of the year, the German company Consys, the Italian company Cramaro Tarpaulin Systems, the Croatian company Dental Grupa, the Danish company Rönvig Dental Manufacturing, the Italian company Tastitalia, TrollDental's product portfolio and the Workplace Safety division of KiiltoClean A/S were consolidated.

EBITA* increased 2.6 per cent to SEK 1,920 (1,872) million and the EBITA margin* improved 0.6 percentage points to 19.1 (18.5) per cent due to acquisitions as well as unusually low sales and marketing activities as a result of the pandemic. Foreign exchange gains impacted EBITA* with -1.0%. During the period, 34 (34) per cent of EBITA* was generated in EUR, 29 (27) per cent in SEK, 14 (16) per cent in NOK, 8 (3) per cent in GBP, 6 (8) per cent in DKK, 3 (6) per cent in USD and 6 (6) per cent in other currencies.

Net financial items were SEK -44 (-47) million.

Profit before tax grew 6.7 per cent to SEK 1,545 (1,448) million and net profit for the period increased 6.7 per cent to SEK 1,159 (1,086) million.

Average capital employed excluding goodwill declined by SEK 288 million during the period to SEK 2,057 million at 30 September 2020, compared with SEK 2,345 million at 31 December 2019. EBITA* relative to average capital employed excluding goodwill was at 108 per cent at year-end and increased to 125 per cent during the first nine months of the year.

The Group's net debt declined SEK 127 million from 31 December 2019 to SEK 5,425 million at 30 September 2020, of which liabilities related to put/call options and additional considerations for acquisitions amounted to SEK 1,018 (861) million. Interest-bearing net debt declined by SEK 178 million since year-end and amounted to SEK 3,862 (4,332) million at 30 September 2020.

On 27 August, Lifco issued two unsecured bonds totalling SEK 1,200 million and therefore has bonds outstanding of SEK 2,200 million in the MTN programme with a loan framework of SEK 3,000 million. In addition to bonds outstanding, Lifco has standard short-term credit facilities.

The net debt/equity ratio at 30 September 2020 was 0.6 (0.7) and net debt/EBITDA* was 1.9 (2.0) times. Interest-bearing net debt/EBITDA* was 1.3 (1.5) times. At period-end, 41 (38) per cent of the Group's interest-bearing liabilities were denominated in EUR.

Cash flow from operating activities increased 69.4 per cent during the period, to SEK 1,995 (1,178) million, mainly on the back of improved earnings and reduced working capital. Cash flow from investing activities was SEK -1,099 (-1,555) million, which was mainly attributable to acquisitions.

GROUP PERFORMANCE IN THE THIRD QUARTER

Sales increased 3.1 per cent to SEK 3,311 (3,211) million in the third quarter as the result of acquisitions. Acquisitions contributed 6.8 per cent, organic growth was -0.4 per cent, while foreign exchange gains had a negative impact of -3.3%.

EBITA* increased 17.3 per cent to SEK 699 (596) million and the EBITA margin* improved 2.5 percentage points to 21.1 (18.6) per cent due to acquisitions as well as unusually low sales and marketing activities as a result of the pandemic. Foreign exchange gains impacted EBITA* by -3.0%. During the third quarter, 35 (32) per cent of EBITA* was generated in EUR, 30 (26) per cent in SEK, 13 (15) per cent in NOK, 9 (4) per cent in GBP, 4 (8) per cent in DKK, 4 (6) per cent in USD and 5 (9) per cent in other currencies.

Net financial items were SEK -16 (-15) million.

Profit before tax grew by 19.7 per cent to SEK 566 (473) million. Net profit for the period grew 19.7 per cent to SEK 425 (355) million.

Average capital employed excluding goodwill declined by SEK 116 million to SEK 2,057 million at 30 September 2020, compared with SEK 2,173 million at 30 June 2020. EBITA* relative to average capital employed excluding goodwill increased from 114 per cent at 30 June 2020 to 125 per cent at 30 September 2020.

The Group's net debt increased during the quarter by SEK 150 million to SEK 5,425 million. At the Annual General Meeting on 24 June 2020, the dividend for the 2019 financial year was set at SEK 5.25 per share. The total dividend to shareholders for the 2019 financial year was SEK 476.9 million, and was paid on 1 July 2020. The dividend to shareholders for the 2018 financial year was paid during the second quarter of 2019.

Cash flow from operating activities increased 11.2 per cent during the third quarter to SEK 736 (662) million due to improved income and lower inventories. Cash flow from investing activities was SEK
-228 (-610) million, which was attributable to acquisitions and investments.

FINANCIAL PERFORMANCE - BUSINESS AREAS

Dental

NINE THIRD Rolling FULL
MONTHS QUARTER 12 YEAR
months
SEK 2020 2019 change 2020 2019 change change 2019
million
Net 3,077 3,256 -5.5% 1,065 1,004 6.1% 4,214 -4.1% 4,393
sales
EBITA* 632 668 -5.4% 247 203 21.7% 838 -4.1% 874
EBITA 20.5% 20.5% - 23.2% 20.2% 3.0 19.9% - 19.9%
margin*

The companies in Lifco's Dental business area are leading suppliers of consumables, equipment and technical service to dentists across Europe, and the business area also has operations in the US. Lifco sells dental technology to dentists in the Nordic countries and Germany, and develops and sells medical record systems in Denmark, Sweden and Germany. The business area also includes a number of manufacturers which produce fitting products for dentures, disinfectants, saliva ejectors, bite registration and dental impression materials, bonding agents and other consumables that are sold to dentists through distributors around the world. In recent years, Dental has through acquisitions and organic growth increased its earnings in manufacturing, dental technology and software faster than in distribution, which has had a positive impact on margin growth in the business area.

Net sales in Dental declined by -5.5 per cent to SEK 3,077 (3,256) million in the first nine months of the year as a result of the impact of the pandemic, primarily in April and May. EBITA* declined -5.4 per cent to SEK 632 (668) million for the period and the EBITA margin was 20.5 (20.5) per cent. The European dental markets have continued to recover to more normal levels during the third quarter. Profitability was positively impacted during the third quarter due to the unusually low levels of sales and marketing activities as a result of the pandemic.

The dental market remains generally stable. The results of individual companies in Lifco's Dental business may in any individual quarter be influenced by significant fluctuations in exchange rates, calendar effects such as Easter, gained or lost contracts in procurements of consumables by public-sector or major private-sector customers and fluctuations in the delivery of equipment. The pandemic had a significant negative impact on the dental market during the second quarter of 2020. The effects were different in different markets, but demand in all countries decreased significantly. In June, all European dental markets recovered, and the European dental markets have continued to recover to more normal levels during the third quarter.

As of January 2020, Lifco consolidated Rönvig Dental Manufacturing A/S of Denmark. The company is a niche manufacturer of dental products. Rönvig had a turnover of around DKK 30 million in 2018 and has 17 employees. As of February 2020, Lifco also consolidated the Workplace Safety division of KiiltoClean A/S. The business is a leading niche manufacturer of eyewashes, plasters and first aid stations. The products are sold under the Plum brand and generated net sales of around DKK 79 million in 2019. The business has ten employees. As of February 2020, Lifco consolidated the Croatian company Dental Grupa, a leading distributor of equipment and consumables for dentists in Croatia. Dental Grupa recorded net sales of around HRK 66 million in 2019 and has around 40 employees. The acquisition included the majority of the shares. As of June 2020, TrollDental's product portfolio was consolidated, which had net sales of about SEK 25 million in 2019. The German company Consys was consolidated in September 2020. The company sells and maintains medical record systems to dentists in Germany. The company generated sales of about EUR 1.9 million in 2019 and has nine employees.

Demolition & Tools

NINE THIRD Rolling FULL
MONTHS QUARTER 12 YEAR
months
SEK 2020 2019 change 2020 2019 change change 2019
million
Net 2,378 2,724 -12.7% 741 901 -17.8% 3,264 -9.6% 3,610
sales
EBITA* 530 654 -19.0% 175 239 -26.8% 710 -14.9% 834
EBITA 22.3% 24.0% -1.7 23.6% 26.5% -2.9 21.8% -1.3 23.1%
margin*

The Demolition & Tools business area develops, manufactures and sells equipment for the construction and demolition industries. The Group is the world's leading supplier of demolition robots and crane attachments. The Group is also one of the leading global suppliers of excavator attachments. The business area's EBITA margin may fluctuate between quarters due to single, major special orders and changes to the product mix.

During the first nine months of the year, sales decreased -12.7 per cent to SEK 2,378 (2,724) million and EBITA* decreased -19.0 per cent to SEK 530 (654) million with an EBITA margin of 22.3 per cent (24.0). The decline in demand and profitability is a result of the remaining uncertainty in the market and a weaker market than the previous year, particularly for more capital-intensive products. The US market was weaker than European markets during the quarter.

Systems Solutions

NINE THIRD Rolling FULL
MONTHS QUARTER 12 YEAR
months
SEK 2020 2019 change 2020 2019 change change 2019
million
Net 4,576 4,124 11.0% 1,505 1,306 15.2% 6,294 7.7% 5,842
sales
EBITA* 840 617 36.1% 304 172 76.7% 1,132 24.5% 909
EBITA 18.4% 15.0% 3.4 20.2% 13.2% 7.0 18.0% 2.4 15.6%
margin*

Through its operating units, the Systems Solutions business area operates in industries offering systems solutions. Systems Solutions is divided into five divisions: Construction Materials, Contract Manufacturing, Environmental Technology, Service and Distribution (previously Interiors for Service Vehicles) and Forest.

Net sales in Systems Solutions increased 11.0 per cent to SEK 4,576 (4,124) million during the first nine months of the year primarily due to acquisitions. The Systems Solutions business area has as a whole been relatively unaffected by the pandemic. Some operations in the Systems Solutions business area have benefited from the effects of the pandemic, while others have been impacted negatively. This has depended on where the companies operate in the value chain and in which segment their customers belong.

During the first nine months of the year, EBITA* increased 36.1 per cent to SEK 840 (617) million and the EBITA margin* improved 3.4 percentage points to 18.4 (15.0) per cent. The increase in profitability is on the back of acquisitions as well as unusually low levels of sales and marketing activities as a result of the pandemic.

Sales have fallen somewhat in Construction Materials during the third quarter and the nine-month period, while earnings and profitability have increased since it was not possible to carry out sales and marketing activities as normal due to the pandemic.

Contract Manufacturing has reported positive developments to its sales and profitability during the third quarter and for the nine-month period. Many of the division's customers were relatively unaffected by the pandemic, and there are also customers which have benefited from the effects of COVID-19.

Sales and earnings decreased in Environmental Technology during the third quarter and for the nine-month period, while maintaining profitability. Companies that sell indirect products that are not part of a value chain were negatively impacted by the pandemic during the second and third quarter.

Service and Distribution has reported positive developments to its sales and profitability during the third quarter and for the nine-month period. Growth has been driven by acquisitions and partly by a positive impact to several operations as a result of the pandemic.

Forest reported a positive trend during the third quarter with increased sales and improved earnings and profitability. Sales declined during the nine-month period as a result of lower volumes in the first half of the year. While profitability for the Forest division has improved, the comparison to the preceding year is impacted by provisions of approximately SEK 15 million made during the third quarter of 2019 for restructuring due to decreased sales and projects setbacks.

The Italian company Cramaro Tarpaulin Systems was consolidated in the Service and Distribution division as of February 2020. The company is a niche manufacturer of tarpaulin systems for trucks and agricultural vehicles. The company generated net sales of around EUR 27 million in 2019 and has about 90 employees. The acquisition included the majority of the shares. The Italian company Tastitalia was consolidated in the Contract Manufacturing division as of February 2020. The company manufactures niche customer adapted touch panels, displays and keypads. Tastitalia generated net sales of about EUR 12.2 million in 2019 and has approximately 70 employees. The acquisition included the majority of the shares.

ACQUISITIONS

Lifco made the following acquisitions in the first nine months of the year:

Consolidated Acquisitions Business area Net sales Employees
from month
January Rönvig Dental Dental DKK 30m 17
Manufacturing
February Workplace Dental DKK 79m 10
Safety
February Dental Grupa Dental HRK 66m 40
February Cramaro Systems Solutions EUR 27m 90
Tarpaulin
Systems
June TrollDental's Dental SEK 25m -
product
portfolio
September Tastitalia Systems Solutions EUR 12.2m 70
September Consys Dental EUR 1.9m 9

Further information on the acquisitions is provided on page 18. The figures for net sales and number of employees refer to estimated annual net sales and the number of employees at the acquisition date.Taken together, the acquisitions will have a positive impact on Lifco's results and financial position in the current year.

OTHER FINANCIAL INFORMATION

Employees

The average number of employees was 5,461 (5,241) in the first nine months of the year. At the end of the period, the number of employees was 5,423 (5,370). Acquisitions added around 240 employees.

Events after the end of the reporting period

Lifco continues to monitor the effects of the COVID-19 pandemic. No significant events for the Group occurred after the end of the reporting period.

Related party transactions

No significant transactions with related parties took place during the period.

Risks and uncertainties

The risk factors which have the biggest impact for Lifco are global macroeconomic factors, the competitive situation as well as structural changes in the market and general levels of economic activity. Lifco is also exposed to financial risks such as currency risks, interest rate risks, credit and counterparty risks. Lifco operates in a large number of industries that have been affected to varying degrees by the COVID-19 pandemic. The Dental business area was positively impacted during the third quarter by the continued recovery of the European dental markets back to more normal levels. The Systems Solutions business area has as a whole been relatively unaffected by the pandemic. Some operations in the Systems Solutions business area have benefited from the effects of the pandemic, while others have been impacted negatively. This has depended on where the companies operate in the value chain and in which segment their customers belong. The market remains uncertain in the Demolition & Tools business area and was weaker than the previous year, particularly for more capital-intensive products.The Parent Company is affected by the above risks and uncertainties in its capacity as owner of the subsidiary companies. For further information on Lifco's risks and risk management, see the 2019 Annual Report.

Accounting policies

The Group's interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. In respect of the Parent Company, the report has been prepared in accordance with the Annual Accounts Act and Recommendation RFR 2 Financial Reporting for Legal Entities of the Swedish Financial Reporting Board. The accounting policies have been applied in accordance with those which are presented in the 2019 Annual Report and should be read in conjunction with these. In many countries, Lifco's companies have received state aid from short-time work schemes and other aid which has reduced personnel costs for the second and third quarters.

DECLARATION OF THE BOARD OF DIRECTORS

The Board of Directors and Chief Executive Officer warrant and declare that this nine-month report gives a true and fair view of the Parent Company's and Group's operations, financial positions and results, and that it describes significant risks and uncertainties faced by the Parent Company and the companies included in the Group.

Enköping, 22 October 2020

 
Carl BennetChairman of Ulrika DellbyDirector Dan FrohmDirector
the Board
Erik Gabrielson Ulf GrunanderDirector Annika Espander Jansson
Director Director
Anders Johan SternVice Caroline af
LorentzsonDirector, Chairman UgglasDirector
employee representative
Axel WachtmeisterDirector Per Peter
WaldemarsonPresident WibergDirector,employee
and CEO, Director representative

AUDITOR'S REPORT

Lifco AB (publ) reg.no 556465-3185

Introduction

We have reviewed the condensed interim financial information (interim report) of Lifco AB as of 30 September 2020 and the nine-month period then ended. The Board of Directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed on the basis of a review does not provide the same level of assurance as a conclusion expressed on the basis of an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.

Enköping, 22 October 2020

PricewaterhouseCoopers AB

Eric Salander                                                                    Tomas Hilmarsson
Authorised Public Accountant                                           Authorised Public Accountant

Auditor in Charge

FINANCIAL CALENDAR

The 2020 year-end report and the report for the fourth quarter will be published on 1 February 2021.

The annual report for 2020 will be published the week starting 15 March 2021.

The report for the first quarter 2021 will be published on 23 April.

The report for the second quarter 2021 will be published on 16 July.

The report for the third quarter 2021 will be published on 22 October.

ANNUAL GENERAL MEETING 2021

The Annual General Meeting of Lifco AB will be held on Friday, 23 April 2021, at 11 a.m. CEST, at Bonnierhuset, Torsgatan 21, Stockholm. Shareholders wishing to raise an issue for discussion at the AGM may do so by submitting their proposal to the Chairman of Lifco by e-mail: ir@lifco.se or by post to: Lifco AB, Attn: Bolagsstämmoärenden, Verkmästaregatan 1, SE-745 85 Enköping, Sweden. To ensure their inclusion in the notice and thus on the agenda for the AGM, proposals must be received by the Company no later than 5 March 2021.

THE NOMINATION COMMITTEE

Prior to the Annual General Meeting 2021, the Nomination Committee consists of Carl Bennet, Carl Bennet AB, Per Colleen, the Fourth Swedish National Pension Fund (AP4), Hans Hedström, Carnegie Fonder, Marianne Nilsson, Swedbank Robur Fonder and Javiera Ragnartz, SEB Fonder & Liv. Carl Bennet is Chairman of the Nomination Committee.

Shareholders wishing to submit proposals to the Nomination Committee for the 2021 AGM may do so by sending an e-mail to ir@lifco.se or writing to: Lifco, Attn: Valberedningen, Verkmästaregatan 1, SE-745 85 Enköping, Sweden.

FURTHER INFORMATION

Media and investor relations: Åse Lindskog, ir@lifco.se, telephone: +46 730 24 48 72.

TELECONFERENCE

Media and analysts are welcome to call in to a teleconference, where CEO Per Waldemarson and CFO Therése Hoffman will present the interim report. After the presentation, there will be an opportunity to ask questions.

Time: Thursday, 22 October at 9:00 a.m. CEST

Link to the presentation: https://tv.streamfabriken.com/lifco-q3-2020

Telephone numbers:

Sweden +46 8 505 583 52
UK +44 3333 00 90 32
US +1 833 823 05 90

LIFCO IN BRIEF

Lifco offers a safe haven for small and medium-sized businesses. Lifco's business concept is to acquire and develop market-leading niche businesses with the potential to deliver sustainable earnings growth and robust cash flows. Lifco is guided by a clear philosophy centred on long-term growth, a focus on profitability and a strongly decentralised organisation. The Group has three business areas: Dental, Demolition & Tools and Systems Solutions. At year-end, the Lifco Group consisted of 164 operating companies in 30 countries. In 2019, Lifco reported EBITA of SEK 2,523 million on net sales of SEK 13.9 billion. The EBITA margin was 18.2 per cent. Read more at www.lifco.se.

This information constitutes information that Lifco AB is required to publish
under the EU's Market Abuse Regulation. The information was submitted for
publication through the aforementioned contact person on 22 October 2020, at
7.30 a.m. CEST.
 

CONDENSED CONSOLIDATED INCOME STATEMENT

NINE MONTHS THIRD QUARTER FULL YEAR
SEK million 2020 2019 change 2020 2019 change 2019
Net sales 10,031 10,104 -0.7% 3,311 3,211 3.1% 13,845
Cost of goods -5,829 -5,845 -0.3% -1,889 -1,846 2.3% -8,033
sold
Gross profit 4,202 4,259 -1.3% 1,422 1,365 4.2% 5,812
Selling expenses -1,121 -1,160 -3.4% -346 -376 -8.0% -1,600
Administrative -1,402 -1,423 -1.5% -449 -455 -1.3% -1,928
expenses
Development -87 -123 -29.3% -32 -38 -15.8% -171
costs
Other income and -3 -58 -94.8% -13 -8 62.5% -54
expenses
Operating profit 1,589 1,495 6.3% 582 488 19.3% 2,059
Net financial -44 -47 -6.4% -16 -15 6.7% -63
items
Profit before 1,545 1,448 6.7% 566 473 19.7% 1,996
tax
Tax -386      -362 6.6% -141 -118 19.5% -468
Net profit for 1,159     1,086 6.7% 425 355 19.7% 1,528
the period
Profit
attributable to:
Parent Company 1,143 1,069 6.9% 418 351 19.1% 1,505
shareholders
Non-controlling 16 17 -5.9% 7 4 75.0% 23
interests
Earnings per 12.59 11.76 7.1% 4.61 3.86 19.4% 16.57
share before and
after dilution
for the period,
attributable to
Parent Company
shareholders
EBITA* 1,920 1,872 2.6% 699 596 17.3% 2,523
Depreciation of 270 233 15.9% 92 81 13.6% 311
tangible assets
Amortisation of 8 10 -20.0% 3 3 - 15
intangible
assets
Amortisation of 307 240 27.9% 103 86 19.8% 329
intangible
assets arising
from
acquisitions

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

NINE THIRD FULL
MONTHS QUARTER YEAR2019
SEK million 2020 2019 change 2020 2019 change
Net profit 1,159 1,086 6.7% 425 355 19.7% 1,528
for the
period
Other
comprehensive
income
Items which
can later be
reclassified
to profit or
loss:
Hedge of net          24 275% 8 13 -38.5% 6
investment 90
Translation -233 309 -175% -11 91 -112% 140
differences
Tax related -20 -5 300% -2 -3 -33.3% -1
to other
comprehensive
income
Total 996 1,414 -29.6% 420 456 -7.9% 1,673
comprehensive
income
for the
period

Comprehensive
income
attributable
to:
Parent 983 1,394 -29.5% 414 452 -8.4% 1,648
Company
shareholders
Non 13 20 -35.0% 6 4 50.0% 25
-controlling
interests
996 1,414 -29.6% 420 456 -7.9% 1,673

SEGMENT OVERVIEW

Lifco's operations are monitored and evaluated by the CEO and resources are allocated based on information from the three operating segments Dental, Demolition & Tools and Systems Solutions. The defined quantitative limits have been exceeded only by Dental and Demolition & Tools. One further operating segment, Systems Solutions, is presented. This operating segment consists of a merger of those divisions which have similar economic characteristics and which do not individually meet the defined quantitative limits. These divisions are Construction Materials, Contract Manufacturing, Environmental Technology, Service and Distribution and Forest.

NET SALES TO EXTERNAL CUSTOMERS

No sales are made between the segments.

NINE THIRD Rolling FULL
MONTHS QUARTER 12 YEAR
months
SEK 2020 2019 change 2020 2019 change change 2019
million
Dental 3,077 3,256 -5.5% 1,065 1,004 6.1% 4,214 -4.1% 4,393
Demolition 2,378 2,724 -12.7% 741 901 -17.8% 3,264 -9.6% 3,610
& Tools
Systems 4,576 4,124 11.0% 1,505 1,306 15.2% 6,294 7.7% 5,842
Solutions
Group
10,031 10,104 -0.7% 3,311 3,211 3.1% 13,772 -0.5% 13,845

Net sales by type of income:

NINE THIRD Rolling FULL
MONTHS QUARTER 12 YEAR
months
SEK million 2020 2019 change 2020 2019 change change 2019
Dental 3,077 3,256 -5.5% 1,065 1,004 6.1% 4,214 -4.1% 4,393
products
Machinery and 2,378 2,724 -12.7% 741 901 -17.8% 3,264 -9.6% 3,610
tools
Construction 852 868 -1.8% 261 267 -2.2% 1,176 -1.3% 1,192
Materials
Contract 866 716 20.9% 276 216 27.8% 1,205 14.2% 1,055
Manufacturing
Environmental 1,243 1,262 -1.5% 367 464 -20.9% 1,836 -1.0% 1,855
Technology
Service and 1,051 647 62.4% 400 210 90.5% 1,286 45.8% 882
Distribution
Forest 564 631 -10.6% 201 149 34.9% 791 -7.8% 858
Group 10,031 10,104 -0.7% 3,311 3,211 3.1% 13,772 -0.5% 13,845

EBITA

A breakdown of results by segment is made up to and including EBITA. EBITA is reconciled to profit before tax in accordance with the following table:

[][]
NINE THIRD Rolling FULL
MONTHS QUARTER 12 YEAR
months
SEK million 2020 2019 change 2020 2019 change change 2019
Dental 632 668 -5.4% 247 203 21.7% 838 -4.1% 874
Demolition & 530 654 -19.0% 175 239 -26.8% 710 -14.9% 834
Tools
Systems 840 617 36.1% 304 172 76.7% 1,132 24.5% 909
Solutions
Central Group -82 -67 22.4% -27 -18 50.0% -109 16.0% -94
functions
EBITA before 1,920 1,872 2.6% 699 596 17.3% 2,571 1.9% 2,523
acquisition
costs
Acquisition -24 -81 -70.4% -14 -22 -36.4% -22 -72.2% -79
costs[1]
Non-recurring - -56 -100% - - - - -100% -56
items[2]
EBITA 1,896 1,735 9.3% 685 574 19.3% 2,549 6.7% 2,388
Amortisation of -307 -240      -103 -86 19.8% -396 20.4% -329
intangibleassets 27.9%
arising from
acquisitions
Net financial -44 -47 -6.4% -16 -15 6.7% -60 -4.8% -63
items
Profit before 1,545 1,448 6.7% 566 473 19.7% 2,093 4.9% 1,996
tax

[1] Of which, change in put/call options and additional considerations for the current year, SEK -8 (-59) million.

[2] Pertaining to costs in connection with management change.

CONDENSED CONSOLIDATED BALANCE SHEET

SEK million 30 Sep 202030 Sep 201931 Dec 2019
ASSETS
Intangible assets 11,933 10,969 11,209
Tangible assets 1,514 1,358 1,503
Financial assets 183 196 182
Inventories 1,920 2,193 1,997
Accounts receivable 1,733 1,722 1,584
Current receivables 476 506 374
Cash and cash equivalents 865 456 729
TOTAL ASSETS 18,624 17,400 17,578

EQUITY AND LIABILITIES
Equity 8,482 7,717 7,972
Non-current interest-bearing 2,689 597 1,674
liabilities incl. pension
provisions
Other non-current liabilities 2,185 1,871 1,986
and provisions
Current interest-bearing 2,583 4,679 3,691
liabilities
Accounts payable 825 788 680
Other current liabilities 1,860 1,748 1,575
TOTAL EQUITY AND LIABILITIES 18,624 17,400 17,578

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to Parent Company shareholders

SEK million 30 Sep 202030 Sep 201931 Dec 2019
Opening equity 7,915 6,685 6,685
Comprehensive income for the period 983 1,394 1,648
Dividend -477 -418 -418
Closing equity 8,421 7,661 7,915

Equity attributable to:
Parent Company shareholders 8,421 7,661 7,915
Non-controlling interests 61 56 57
8,482 7,717 7,972

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

NINE MONTHS THIRD QUARTER FULL YEAR
SEK million 2020 2019 2020 2019 2019
Operating activities
Operating profit 1,589 1,495 582 488 2,059
Non-cash items 593 542 208 181 705
Interest and financial -44 -47 -16 -15 -63
items, net
Tax paid -429 -404 -92 -111 -571
Cash flow before changes 1,709 1,586 682 543 2,130
in working capital
Changes in working
capital
Inventories 142 -332 105 -19 -94
Current receivables -46 -61 -58 118 137
Current liabilities 190 -15 7 20 -183
Cash flow from operating 1,995 1,178 736 662 1,990
activities
Business acquisitions -918 -1,359 -140 -544 -1,781
and sales, net
Net investment in -165 -172 -84 -50 -243
tangible assets
Net investment in -16 -24 -4 -16 -32
intangible assets
Cash flow from investing -1,099 -1,555 -228 -610 -2,056
activities
Borrowings/repayment of -203 858 61 40 863
borrowings, net
Dividends paid -514 -487 -477 - -490
Cash flow from financing -717 371 -416 40 373
activities

Cash flow for the period 179 -6 92 92 307
Cash and cash 729 405 781 340 405
equivalents at beginning
of period
Translation differences -43 57 -8 24 17
Cash and cash 865 456 865 456 729
equivalents at end of
period

ACQUISITIONS IN 2020

Seven businesses were consolidated in the first nine months of the year. The acquisitions refer to TrollDental's product portfolio and the Workplace Safety division of KiiltoClean A/S, all shares in the Germany company Consys and the Danish company Rönvig Dental Manufacturing A/S as well as the majority of the Croatian company Dental Grupa and the Italian businesses Cramaro Tarpaulin Systems and Tastitalia.

The purchase price allocation includes all acquisitions made during the first nine months of the year.

Acquisition-related expenses of SEK 16 million are included in administrative expenses in the consolidated income statement for the first nine months of the year. If consolidation had taken place on 1 January 2020, the Group's net sales would have been positively impacted by about SEK 110 million and earnings by about SEK 30 million.

Acquired net assets

Net assets, SEK million Carrying Value Fair
amount adjustment value
Trademarks, customer relationships, licences 16 666 682
Tangible assets 57 - 57
Inventories, accounts receivable and other receivables 206 -4 202
Accounts payable and other liabilities -243 -155 -398
Cash and cash equivalents 164 - 164
Net assets 200 507 707
Goodwill - 506 506
Total net assets 200 1,013 1,213

Effect on cash flow, SEK million
Consideration 1,213
Consideration not paid -176
Cash and cash equivalents in acquired -164
companies                                      
Consideration paid relating to acquisitions from 45
previous years
Total cash flow 918
effect                                                 

FINANCIAL INSTRUMENTS

[]
SEK million 30 Sep 202030 Sep 201931 Dec 2019
Financial assets at
amortised cost
Accounts receivable 1,733 1,722 1,584
Other non-current 12 19 9
financial receivables
Cash and cash 865 456 729
equivalents
Total 2,610 2,197 2,322
Liabilities at fair
value through profit or
loss
Other liabilities[1] 1,018 861 916
Financial liabilities at
amortised cost
Interest-bearing 5,227 5,237 5,325
borrowings
Accounts payable 825 788 680
Total 7,070 6,886 6,921

[1] Other liabilities classified as financial instruments refer to mandatory put/call options related to non-controlling interests and additional considerations.

The carrying amount is the same as the fair value. Financial instruments at fair value are classified into different levels depending on how fair value is determined. All financial instruments at fair value in the Lifco Group have been classified as level 3, i.e. non-observable inputs. The fair value of short-term borrowings is equal to the carrying amount, as the discount effect is insignificant.

KEY PERFORMANCE INDICATORS

ROLLING TWELVE MONTHS TO 202030 DEC 201931DEC 201930 DEC
Net sales, SEK million 13,772 13,845 13,558
Change in net sales, % -0.5 15.8 13.4
EBITA*, SEK million 2,571 2,523 2,542
EBITA margin*, % 18.7 18.2 18.7
EBITDA*, SEK million 2,932 2,849 2,822
EBITDA margin*, % 21.3 20.6 20.8
Capital employed, SEK million 13,831 12,925 12,153
Capital employed excl. goodwill and 2,057 2,345 2,092
other intangible assets, SEK million
Return on capital employed, % 18.6 19.5 20.9
Return on capital employed excl. 125 108 122
goodwill, %
Return on equity, % 19.3 20.3 21.3
Net debt, SEK million 5,425 5,552 5,681
Net debt/equity ratio, times 0.6 0.7 0.7
Net debt/EBITDA* 1.9 1.9 2.0
Interest-bearing net debt, SEK 3,862 4,040 4,332
million
Interest-bearing net debt/EBITDA*, 1.3 1.4 1.5
times
Equity/assets ratio, % 45.5 45.4 44.4
Number of shares, thousand 90,843 90,843 90,843
Average number of employees 5,461 5,255 5,241

CONDENSED PARENT COMPANY INCOME STATEMENT

[][]
NINE MONTHS THIRD QUARTER FULL YEAR
SEK million 2020 2019 2020 2019 2019
Administrative expenses -78 -130 -27 -18 -162
Other operating income[1] 0 0 0 0 139
Operating profit -78 -130 -27 -18 -23
Financial net items[2] 930 810 43 45 837
Profit after financial items 852 680 16 27 814
Appropriations 7 - - - -30
Tax -13 16 -4 -2 -6
Net profit for the period 846 696 12 25 778

[1] Invoicing of Group-wide services.

[2] Net financial items include SEK 771 (758) million in dividends received during the nine-month period.

CONDENSED PARENT COMPANY BALANCE SHEET

SEK million 30 Sep 202030 Sep 201931 Dec 2019
ASSETS
Tangible assets - 0 0
Financial assets 4,994 5,027 4,872
Current receivables 6,165 4,859 5,226
Cash and cash equivalents 332 144 379
TOTAL ASSETS 11,491 10,030 10,477

EQUITY AND LIABILITIES
Equity 3,640 3,189 3,271
Untaxed reserves 65 70 72
Provisions 14 - -
Non-current interest-bearing liabilities 2,136 - 1,004
Current interest-bearing liabilities 2,381 4,628 3,670
Current non-interest-bearing liabilities 3,255 2,143 2,460
TOTAL EQUITY AND LIABILITIES 11,491 10,030 10,477
Pledged assets - - -
Contingent liabilities 201 80 46

DEFINITIONS AND OBJECTIVES

Return on equity Net profit for the period divided by
average equity.
Return on capital employed EBITA before acquisition costs and non
-recurring items divided by capital
employed.
Return on capital employed excluding EBITA before acquisition costs and non
goodwill and other intangible assets -recurring items divided by capital
employed excluding goodwill and other
intangible assets.
EBITA EBITA is a measure which Lifco considers
relevant for investors who wish to
understand the earnings generated after
investments in tangible and intangible
assets requiring reinvestment but before
investments in intangible assets
attributable to acquisitions. Lifco
defines earnings before interest, tax
and amortisation (EBITA) as operating
profit before amortisation and
impairment of intangible assets arising
from acquisitions. In its financial
reports, Lifco excludes acquisition
costs and non-recurring items. This is
indicated by an asterisk.
EBITA margin EBITA divided by net sales.
EBITDA EBITDA is a measure which Lifco
considers relevant for investors who
wish to understand the earnings
generated before investments in non
-current assets. Lifco defines earnings
before interest, tax, depreciation and
amortisation (EBITDA) as operating
profit before depreciation, amortisation
and impairment of tangible and
intangible assets. In its financial
reports, Lifco excludes acquisition
costs and non-recurring items. This is
indicated by an asterisk.
EBITDA margin EBITDA divided by net sales.
Net debt/equity ratio Net debt divided by equity.
Net debt Lifco uses the alternative KPI net debt.
Lifco considers that this is a useful
additional KPI which allows users of the
financial reports to assess the Group's
ability to pay dividends, make strategic
investments and meet its financial
obligations. Lifco defines the KPI as
follows: current and non-current
liabilities to credit institutions,
bonds, interest-bearing pension
provisions, liabilities related to
put/call options and additional
considerations relating to acquisitions
as well as lease liabilities less cash
and cash equivalents.

Earnings per share Profit after tax attributable to Parent
Company shareholders, divided by the
average number of shares outstanding.

Interest-bearing net debt Lifco uses the alternative KPI interest
-bearing net debt. Lifco considers that
this is a useful additional KPI which
allows users of the financial reports to
assess the Group's ability to pay
dividends, make strategic investments
and meet its financial obligations.
Lifco defines the KPI as follows:
current and non-current liabilities to
credit institutions, bonds as well as
interest-bearing pension provisions less
cash and cash equivalents.

Equity/assets ratio Equity divided by total assets (balance
sheet total).
Capital employed Capital employed is a measure which
Lifco uses for calculating the return on
capital employed and for measuring how
efficient the Group is. Lifco considers
that capital employed is useful in
helping users of the financial reports
to understand how the Group finances
itself. Lifco defines capital employed
as total assets less cash and cash
equivalents, interest-bearing pension
provisions and non-interest-bearing
liabilities with the exception of
liabilities related to put/call options
and additional considerations relating
to acquisitions, calculated as the
average of the last four quarters.

Capital employed excluding goodwill Capital employed excluding goodwill and
and other intangible assets other intangible assets is a measure
which Lifco uses for calculating the
return on capital employed and for
measuring how efficient the Group is.
Lifco considers that capital employed
excluding goodwill and other intangible
assets is useful in helping users of the
financial reports to understand the
impact of goodwill and other intangible
assets on that capital which requires a
return. Lifco defines capital employed
excluding goodwill and other intangible
assets as total assets less cash and
cash equivalents, interest-bearing
pension provisions, non-interest-bearing
liabilities with the exception of
liabilities related to put/call options
and additional considerations relating
to acquisitions, goodwill and other
intangible assets, calculated as the
average of the last four quarters.

RECONCILIATION OF ALTERNATIVE KEY PERFORMANCE INDICATORS

The interim report presents alternative key performance indicators for assessing the Group's performance. The primary alternative KPIs presented in this interim report are EBITA, EBITDA, net debt and capital employed. Definitions of the alternative KPIs are presented on pages 21-22.

EBITA compared with financial statements in accordance with IFRS

SEK million NINE NINE FULL YEAR2019
MONTHS2020 MONTHS2019
Operating profitAmortisation of 1,589 1,495 2,059
intangible assets arising from
acquisitions
307 240 329
EBITA 1,896 1,735 2,388
Acquisition costs and non-recurring 24 137 135
items
EBITA before acquisition costs and 1,920 1,872 2,523
non-recurring items

EBITDA compared with financial statements in accordance with IFRS

SEK million NINE MONTHS2020 NINE MONTHS2019 FULL YEAR2019
1,589
Operating profit 1,495 2,059
Depreciation of tangible 270 233 311
assets
Amortisation of intangible 8 10 15
assets
Amortisation of intangible 307 240 329
assets arising from
acquisitions
EBITDA 2,174 1,978 2,714
Acquisition costs and non 24 137 135
-recurring items
EBITDA before acquisition 2,198 2,115 2,849
costs and non-recurring items

Net debt compared with financial statements in accordance with IFRS

SEK million 30 Sep 202030 Sep 201931 Dec 2019
Non-current interest-bearing 2,287 125 1,093
liabilities including pension
provisions
Current interest-bearing 2,440 4,663 3,676
liabilities
Cash and cash equivalents -865 -456 -729
Interest-bearing net debt 3,862 4,332 4,040
Put/call options, additional 1,018 861 916
considerations
Lease liability 545 488 596
Net debt 5,425 5,681 5,552

Capital employed and capital employed excluding goodwill and other intangible assets compared with financial statements in accordance with IFRS

SEK million 30 Sep 30Jun 202031 Mar 202031 Dec 2019
2020
Total assets 18,624 18,291 19,278 17,578
Cash and cash equivalents -865 -781 -714 -729
Interest-bearing pension -45 -41 -38 -40
provisions
Non-interest-bearing -3,852 -4,174 -3,841 -3,325
liabilities
Capital employed 13,862 13,295 14,685 13,484
Goodwill and other intangible -11,933 -11,701 -12,255 -11,209
assets
Capital employed excluding 1,929 1,594 2,430 2,275
goodwill and other intangible
assets

Capital employed and capital employed excluding goodwill and other intangible assets calculated as the average of the last four quarters compared with financial statements in accordance with IFRS

SEK million Average Q32020 Q22020 Q12020 Q4
2019
Capital employed 13,831 13,862 13,295 14,685 13,484
Capital employed excluding goodwill 2,057 1,929 1,594 2,430 2,275
and other intangible assets
Total
EBITA* 2,571 699 569 652 651
Return on capital employed 18.6%
Return on capital employed excluding 125%
goodwill and other intangible assets

https://news.cision.com/lifco-ab/r/interim-report-january---september-2020,c3220457

https://mb.cision.com/Main/5431/3220457/1322220.pdf

(c) 2020 Cision. All rights reserved., source Press Releases - English

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Financials
Sales 2021 17 074 M 1 881 M 1 881 M
Net income 2021 2 236 M 246 M 246 M
Net Debt 2021 3 574 M 394 M 394 M
P/E ratio 2021 50,1x
Yield 2021 0,59%
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EV / Sales 2021 6,77x
EV / Sales 2022 6,26x
Nbr of Employees 6 171
Free-Float 48,0%
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Mean consensus OUTPERFORM
Number of Analysts 2
Last Close Price 246,60 SEK
Average target price 275,00 SEK
Spread / Average Target 11,5%
EPS Revisions
Managers and Directors
Per Waldemarson President, Chief Executive Officer & Director
Therèse Hoffman Chief Financial Officer
Carl Reinhold Adolf Bennet Chairman
Erik Henry Gabrielson Independent Director
Johan Erik Stern Vice Chairman
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