Press release
12 February 2019, 08:30

Sdiptech AB (publ) publishes year-end report for 2018

The report will be available on the company's website: www.sdiptech.com.

Continued profit growth and elevator program successfully completed

FOURTH QUARTER 2018

• Net sales increased by 27 percent to SEK 419.2 million (331.0).
• Operating profit EBITA* increased by 19 percent to SEK 56.5 million (47.5). The programme of measures for the elevator operations has been concluded with good results and acquired companies has contributed to the development of the earnings.
• Profit after financial items for remaining operations amounted to SEK 35.0 million (67.1). The preceding year included a positive net effect from the revaluation of conditional purchase considerations and goodwill of SEK 45.6 million, while for 2018, these had a negative effect of SEK 10.8 million.
• Earnings after tax for the Group amounted to SEK 25.1 million (59.6), of which SEK 22.9 million (57.9) was attributable to the Parent Company’s shareholders.
• Earnings per ordinary share for the Group, less minority interests and dividends on preference shares, amounted to SEK 0.64 (1.80).
• During the quarter, Sdiptech AB acquired two companies; Vera Klippan AB on 5 November, and Pure Water Scandinavia AB on 18 December.
• After reporting date, on 24 January, Sdiptech AB acquired all shares in RedSpeed International Ltd.

JANUARY – DECEMBER 2018

• Net sales increased by 43 percent to SEK 1,496.2 million (1,045.1).
• Operating profit EBITA* increased by 45 percent to SEK 177.2 million (122.5).
• Profit after financial items for remaining operations increased by 6 percent to SEK 126.8 million (119.4), including a net effect from revaluation of conditional purchase considerations and goodwill of a negative SEK 10.8 million (45.6).
• Earnings after tax for the Group amounted to SEK 96.3 million (94.9), of which SEK 92.1 million (91.3) was attributable to the Parent Company’s shareholders.
• Earnings per ordinary share for the Group, less minority interests and dividends in preference shares, amounted to SEK 2.58 (2.93), which included the proceeds on the divestment of InsiderLog by SEK 25.8 million.
• Cashflow from current remaining operations amounted to SEK 88.6 million (69.8).
• During the period January to December 2018, eight acquisitions were completed: Multitech Site Services Limited, Optyma Security Systems Limited, Aviolinx Communication and Services AB, Centralmontage i Nyköping AB, KSS Klimat- & Styrsystem AB, Rogaland Industri Automasjon AS, Vera Klippan AB and Pure Water Scandinavia AB. 

Comments by the CEO:

Continued profit growth and elevator program successfully completed

I can happily summarize a strong 2018 for Sdiptech. We continue to grow steadily and consolidated net sales for 2018 amounted to SEK 1,496 million, an increase of 43 percent. Organic growth in consolidated net sales amounted to 5.4 percent for 2018, in line with our financial targets.

Operating profit before acquisition expenses (EBITA*) amounted to SEK 177 million for 2018, an increase of 45 percent. For our elevator operations, the successful programme of improvement is now being concluded with good results. The fourth quarter brought a continued positive trend in the Group’s profitability and the EBITA* profit over the year amounted to 10.1 percent in the first quarter, 11.7 percent in the second quarter, 11.7 percent in the third quarter and finally 13.5 percent in the fourth quarter.

THE QUARTER

The fourth quarter of the year underscored the positive trend and growth in the Group. Consolidated net sales rose by 27 percent over the quarter to SEK 419 million compared with the preceding year, and EBITA* increased by 19 percent to SEK 56.5 million.

Tailored Installations

As a result of the programme of measures we implemented in our elevator operations, EBITA* in the installation operations rose significantly in the fourth quarter, from SEK 2.7 million to SEK 22.4 million, compared with the preceding year. As previously announced, we have avoided temporary “quick fixes” to focus instead on fundamental adjustments in the operations to achieve lasting effects. This has yielded results and the EBITA* profit margin for the quarter was 9.8 percent, compared with 1.5 percent in the preceding year.

Products & Services

The subsidiaries in the business area have strong niche market positions and acquired companies are developing well in Sdiptech's direction. As previously announced, our second business area showed very strong profitability towards the end of the preceding year. In 2018, the business area showed favourable, although more normal, profitability of 21.3 percent in the fourth quarter, compared with the high figure of 27.8 percent in the preceding year. As previously announced, a gradual normalisation is taking place towards a margin level of about 20 percent and, as planned, we were able to round off 2018 with a profit margin for the full-year of 20.6 percent.

ACQUISITIONS

In the fourth quarter, two acquisitions were completed in the area of water and wastewater treatment. In early November, we acquired Vera Klippan AB, a leading niche producer of large-dimension pipes and cisterns. The company’s products are used for applications including chemicals, water and sewage. Just before Christmas, we acquired Pure Water Scandinavia AB, a leading product company in the ultrapure water niche. The company’s products are used by energy companies, hospitals and laboratories, for example.

In January 2019, we acquired RedSpeed International Ltd. This company is a leading supplier in the area of traffic safety and manufactures digital cameras for speed and traffic monitoring. RedSpeed’s principal focus is on the UK market where the company holds a strong market share. The company also perceives growing interest in its products among customers outside the EU. With this acquisition, we are stepping into the area of traffic monitoring solutions, which are growing in importance as traffic flows are automated to an increasing extent.

The three acquisitions we have made in the UK over the past 12 months are all active in the relatively large domestic UK infrastructure market. In addition to the Nordic region, focused mainly on Sweden, we are now conducting targeted activities in the UK, the Benelux countries and other parts of northern Europe.

NEW MARKET-FOCUSED BUSINESS AREAS

For many reasons, infrastructure is in focus around the world. It is included in several of the UN’s Agenda 2030 sustainable development goals, is a priority for the G20 constellation and an issue uniting people across political borders. In the western world, the investment needs are considerable as infrastructure built in the 50s, 60s and 70s has grown outdated and, as consumption grows, capacity shortages are increasing. At the same time, society seeks to build more sustainable, more efficient and more secure communities, which is driving development in a positive direction.

Examples of areas we have identified as particularly important for the development of society are water, energy, communications, transport and security, and we have for a long time focused our acquisition efforts on these particular areas. Among our subsidiaries, we have now achieved the critical mass needed to organise ourselves in line with this, and three new business areas will be established as of 2019: Water & Energy, Special Infrastructure Solutions and Property Technical Services.

• Water & Energy – The areas are in focus for global welfare, constituting, among other things, two of the principal goals of the UN’s Agenda 2030. Several strong trends, including increased digitalisation and automation and a gradual introduction of stricter environmental regulations, are expected to bring market growth. Over the past 15 months, we have made six acquisitions in the business area.
• Special Infrastructure Solutions – Segments such as air and climate control, data communications, transport and security have been identified as particularly crucial to society’s long-term development. In the past 15 months, we have completed four acquisitions in the business area.
• Property Technical Services – Technical services for properties, such as elevator and roof renovation, represent Sdiptech’s origins. In the metropolitan cities to which populations and economies are being concentrated, there is a long-term need for service, repairs and property modernisation. Our subsidiaries focusing on this area apply a different business logic than that of product companies. As Sdiptech is focusing increasingly on proprietary products, we currently have no plans to expand this business area.

OUTLOOK

Our business model works well and creates a strong profit growth. In 2018, EBITA * increased by 45 percent to SEK 177 million. Our view of upcoming periods remains unchanged and we see good prospects for continued profit growth, partly because our business areas continue to grow well and as planned, and partly because newly acquired companies are expected to contribute favourable earnings.

In conclusion, I would like to thank all of our dedicated employees for their fantastic efforts in 2018. I would also like to bid a warm welcome all new shareholders having joined Sdiptech since the last report and welcome all new employees to our growing Sdiptech team.

For additional information, please contact:

Jakob Holm, VD, +46 761 61 21 91, jakob.holm@sdiptech.com

Bengt Lejdström, CFO, +46 702 74 22 00, bengt.lejdstrom@sdiptech.com

Sdiptech's common share of series B share is traded under the short name SDIP B with ISIN code SE0003756758.
Sdiptech AB's preferred shares are traded under the short name SDIP PREF with ISIN code SE0006758348.
Sdiptech AB's Certified Adviser at Nasdaq First North Stockholm is Erik Penser Bank, +468-463 83 00, certifiedadviser@penser.se. Further information is available on the company's website: www.sdiptech.com  

Sdiptech AB is a technology group with a primary focus on infrastructure segments critical to well-functioning societies and to welfare, e.g. water & sanitation, power & energy, transportation, energy efficiency and air climate. As part of our offering in urban areas, we also provide niched technical services for buildings and real-estate such as renovation of elevators and roofs. The company has approximately SEK 1,500 million in sales and is based in Stockholm.

Sdiptech AB (publ) is required to disclose this information pursuant to EU Market Use Regulation 596/2014.The company is based in Stockholm.The information was provided by the above contact persons for publication 12 February 2019 at 08:30 CET.

Attachment

• Sdiptech year-end report 2018 ENG