29 April 2022, 08:00
Sdiptech AB (publisher) publishes an interim report for the first quarter (January – March) 2022
The report is available on the company’s website: www.sdiptech.se
GOOD DEMAND, STRENGTHENED MARGINS AND AN EXTRA STRONG ACQUISITION PIPELINE
FIRST QUARTER 2022
- Net sales increased by 19% to SEK 783.7 million (658.3). In total for the Group, organic sales growth was 13.3%, including a currency effect of 5.1%.
- Operating profit EBITA* increased by 25% to SEK 144.9 million (116.1), corresponding to an EBITA* margin of 18.5% (17.6). The organic growth of the Group’s EBITA* was 4.0%, including a currency effect of 5.2%.
- The operating profit, EBIT, increased by 34% and amounted to SEK 121.9 million (90.7).
- Group profit after tax amounted to SEK 76.1 million (64.2) during the period, of which 76.1 million (62.7) is attributable to shareholders of the parent company.
- Cash flow from operating activities amounted to SEK 114.5 million (39.4), corresponding to a cash conversion of 73% (67).
- Earnings per ordinary share (average number), less minority interests and preferred share dividends, amounted to SEK 2.04 (1.74). After dilution, earnings per ordinary share amount to SEK 2.03 (1.72).
- On January 31, Sdiptech acquired all the shares of Agrosistemi Srl. The acquisition is the Group’s first business unit in Italy.
- On March 25, Sdiptech acquired 91% of the shares of Temperature Electronics Ltd and TEL UK Ltd. The acquisition is the Group’s tenth business unit in the UK.
- On March 8, management subscribed for 216,100 newly issued Sdiptech Class B shares, which constituted the exercise of the long-term incentive program with Series 2018/2022 warrants. The issuance implies that the company received SEK 14.5 million in equity. The total number of class B shares outstanding after the issue amounts to 33,580,027.
- The Water & Energy business area changes its name to Resource Efficiency from January 2022. This is due to the addition of bioeconomy and waste management to the former water and sanitation areas as well as electricity and energy.
EVENTS AFTER REPORT DATE
- No significant event is noted
Demand for Sdiptech’s products remains strong and organic sales growth, excluding currency effects, was 8.2% during the quarter. Our view of continued margin strengthening in 2022 remains unchanged, although purchasing costs increased more than expected during the quarter. Sdiptech’s acquisition pipeline is stronger than normal, giving us the opportunity to hit this year’s acquisition target sooner.
The start of 2022 will always be associated with the Russian invasion of Ukraine and our hearts go out to all those affected. The geopolitical situation creates new challenges for all of us to manage, the consequences of which are of course difficult to assess at the present time. For Sdiptech, however, direct business exposure to Russia and Ukraine is negligible. Other than that, we don’t see a significant impact on demand.
Demand from our customers remains strong and the Group recorded organic sales growth of +8.2%, excluding currency effects. This is despite the fact that we are experiencing delivery delays due to material shortages. Our products meet critical needs within infrastructure, ensuring strong demand regardless of economic conditions.
The increase in component, raw material and logistics costs was extraordinary during the quarter and exceeded our own price increases. For this reason, comparable unit margins temporarily declined somewhat and organic EBITA* growth amounted to -1.2%, excluding currency effects. Our work related to pricing will continue with the aim of obtaining full compensation for the increased costs, as we have done before.
The Group’s profitability continues to increase and the EBITA* margin stands at 18.5% (17.6). The enhanced margin comes from our ordinary acquisition activities as well as divestitures over the past year, fully aligned with our focus on a group of niche companies with profitable and strong market positions
At the end of January 2022, Agrosistemi was acquired, our first business unit in Italy. Agrosistemi has more than 20 years of experience in the treatment and recovery of biological sludge from municipal wastewater. Through a proprietary treatment process used to remove harmful substances from sludge and turn it into high-quality organic fertilizers, Agrosistemi contributes to United Nations Sustainable Development Goals 2.4, 9.4, 11.6 and 15.3.
During the quarter, 91% of the shares of Temperature Electronics and TEL UK were also acquired. The companies are specialized in products for the control of air flows and the evacuation of hazardous gases in laboratories. The products can reduce energy consumption by up to 85% compared to traditional products. Additionally, it ensures clean air in laboratories where personnel are exposed to potentially hazardous gases and materials. TEL contributes to UN Sustainable Development Goals 7.3, 8.8 and 9.4.
Our order intake continues to be strong, although material shortages may cause delays in deliveries and revenue. On June 30, 2022, a significant change will occur, as expected, in the rules of the UK market for electric car chargers. The rule change involves a major upgrade to our products, and our customers may be more hesitant to place orders in the second quarter. We expect any impact on sales to be temporary.
In the longer term, we feel comfortable being able to fully offset the increase in costs and our assessment is, unchanged, that the Group’s profitability should settle at a level of around 20% EBITA margin. *.
We entered the new markets of Italy and the Netherlands, strengthened our presence in the UK and the Nordic region and expanded the Resource Efficiency business area. Thanks to these investments, our portfolio of acquisitions is stronger than normal. Our financial situation is good and several projects in progress allow us to reach our annual acquisition target of 120 to 150 million SEK of EBITA acquired before the fall.
In conclusion, I would like to express a big thank you to all of our dedicated employees for their commitment and sustained efforts.
President and CEO
For more information, please contact:
Bengt Lejdström, CFO, +46 702 74 22 00, [email protected]
Sdiptech AB (publ) is required to disclose this information in accordance with EU Marketplace Regulation 596/2014. The information has been provided by the above contact persons for publication on 29 April 2022 at 08:00 CEST.
Sdiptech’s ordinary shares of series B are traded on Nasdaq Stockholm under the short name SDIP B with the ISIN code SE0003756758. Sdiptech’s preferred shares are traded under the short name SDIP PREF with the ISIN code SE0006758348. Further information is available on the company’s website: www.sdiptech.se
Sdiptech is a technology group that acquires and develops market-leading niche operations that help create more sustainable, efficient and secure societies. Sdiptech has a turnover of around SEK 3,000 million and is based in Stockholm.
Sdiptech Q1 2022 Interim Report