FIRST QUARTER – A very good start to the new year
The market was very strong during the first quarter and the organic increase in sales amounted to 11 percent. A combination of continued high acquisition rate, good cost control and our companies having handled price increases from suppliers well has resulted in an earnings growth of 31 percent with favourable margins. As a result of the strong market situation, all business areas enjoyed good development over the quarter, even when taking generally favourable comparisons into account.
Demand was very strong in most customer segments and geographies. Demand is partly strengthened by the current situation with global component shortages and extended lead times, leading many customers to build safety stocks as a consequence. The high growth also comes with some challenges, in the form of a strained supply chain, and higher prices for raw materials and transportation. Sales of input components to manufacturing companies in special vehicles and the mechanical industry increased sharply and have now returned to pre-pandemic levels. The market situation remained favourable in wind power and electronics, while the situation was stable in infrastructure products for rebuilding and expanding national and regional grids, as well as for medical technology products. Demand for aftermarket products for the manufacturing industry rose and the rate of investment in the forest and sawmill industries remained strong. The marine sector remained weak, while we saw a positive development in electricity-related products from building and installation customers.
From a geographical perspective, the market situation in Sweden, Denmark and Finland was highly favourable and we also observed a positive trend in Norway. Our operations outside the Nordic region, which were impacted hardest during the pandemic, generally experienced a significantly better market situation during the quarter.
During the beginning of the financial year, acquisition activity was high in all business areas. During the quarter we completed four acquisitions, adding total annual sales of approximately SEK 300 million. Following the end of the quarter, we have signed agreements for four more acquisitions, three of which have been completed. With a strong balance sheet and an attractive pipeline of ongoing projects, we perceive favourable opportunities for continuing to maintain a good acquisition pace also in the future.
We leave the first quarter with a very good order backlog and we generally expect demand to persist, but to settle at a high level as the global supply chains stabilise. We also estimate that cost levels will gradually rise as the level of activity among companies increases. Our decentralised model, where the companies' drive and proximity to customers and suppliers is absolutely crucial, and the fact that we hold very good positions in structurally driven areas of development, make me feel highly confident that Addtech will continue to generate profitable growth over the rest of the financial year.
President and CEO