Thank you. Maybe you could put on slide number two. First, I would like to say welcome to our web meeting, presenting our interim report for our first nine months, together with my colleague, Niklas Enmark, Executive Vice President and CFO. If we go to slide four, we will look at the highlights for the quarter. The industrial market in Norway continued to display a stable performance during the Q3 . In Sweden and Finland, we could sense a little bit weaker sentiment in some customer segments. We continued to improve our efficiency and profit, which resulted in an increase in EBITA of 3% to 92 million SEK, compared to 89 previous year, as well as improving our cash flow.
Decentralized responsibility with increased coordination within Tools in three countries, and acquisition has been in focus for the financial year in order to improve EBITA compared to last year. The merger of Swedol and Tools will create favorable opportunities for the next fiscal year. At the same time, we're continuing to evaluate attractive acquisition opportunities in the business area, components and services, in order to strengthen our position. Slide five. As you all know, probably, in mid-November, we took a strategic important step through the offer for Swedol. Together with Tools, we're creating a stronger partner in the market. We are confident that the combination of Tools and Swedol's complementary customer focus and sales channels will help our two companies to become an even stronger and more attractive business partner for our customers, suppliers, and employees.
Together, we will be able to strengthen our product ranges, procurement channels, and logistic solutions. We will be able to increase the proportion of own brands and develop an even better service, offering a new digital solutions. I've been following Swedol for quite some time, and I'm impressed by their development since the acquisition of Golz. The merger is very logical from an industrial perspective and will create favorable opportunities to continue to generate value for our owners. The ambition is to improve the EBITA margin of the new business area to 10% over time, from today's 6.5%. We are now awaiting approval of the merger from the National Competition Authorities in Sweden and Finland, and hope to thereafter be able to complete the offer during March 2020. Slide six.
As I mentioned, the overall business situation has been quite stable, and we have increased operating profit, excluding costs from the acquisition of Swedol in the quarter, even though the revenue decreased slightly for the comparable units in local currency. The end of the Q3 was characterized by somewhat lower activity among customers, but trends varied significantly between different customer segments and product areas, with negative effect on sales of winter workwear due to the relatively mild weather. It is encouraging to see healthy revenue growth in Norway, where demand in the oil and gas sector remain favorable. It is also positive that our acquired businesses have contributed to revenue growth so far this year.
The logistic product in Norway was expanding during the late autumn to encompass more local units, and an additional extra cost of SEK 4 million was taken in the Q3 due to the expansion of the logistic function, and this had a negative impact on earnings as well. In total, for the quarter, we continued to improve our EBITA margin as well as in percentage and numbers compared to last year, due to increased gross margins and efficiency actions taken. If we turn to slide six, for the business area, tools and consumables, the sales decreased by 2% organically during the quarter. As I mentioned, we had stable demand in Norway, but weaker than normal in Sweden and Finland. In some operations, the relatively mild winter had a negative effect on sales of winter workwear.
The revenue for Tools Norway increased by 8% for comparable units, with the continued good trend in oil and gas sector. Revenue for Tools Sweden decreased by 7% during the quarter, partly due to lower activity among industrial customer and less sales, of course, of winter workwear. The revenue in Tools Finland declined by 4% during the quarter, due to lower activity among industrial customer. The business continues to focus on customer cultivation in order to capture market shares, in combination with measures to streamline operations and increase earnings. The personal protective equipment business acquired from Lindström Group contribute to revenue and earnings during the quarter. If you look at the Gigant, it's proceeding according to plan and gradually contributes to a reduction in cost and improved operating margin profit in the unit.
The group's niche companies contributed positively to group earnings performance during the quarter, although sales in these companies were negatively impacted by weaker demand for winter workwear due to the mild winter. In total, the operating profit decreased during the quarter, and we are taking action in Nordic levels and Tools in order to improve gross margins and to be more efficient. So therefore, in the quarter, we enhanced increased coordination in Tools Nordic by starting to build a Nordic organization to share resources within areas such as logistic, IT, offering, and purchasing. We go to slide seven. If we look at sales in the component and services business, it decreased by 3% during the Q3 of financial year. Momentum Industrial noted favorable revenue growth in the steel and automotive segments, while demand in pulp and paper was somewhat more restrained....
Measures to improve cost efficiency and customer cultivation had a positive effect on the contribution ratios and operating profit during the quarter. The operating profit rose by 18% in the quarter, and the margin was 12.5%. The focus for the business area Components and Services during this year will be continued focus on profitable growth, both organic and acquired. We turn to slide eight, the reporting period. The revenue for the group remained stable during the first nine months of the financial year compared to the preceding year. The end of the Q3 was characterized by somewhat lower activity among customers, but transpired significantly between segments and product areas as well as countries. It is nevertheless encouraging to see the healthy revenue growth in Norway. As I mentioned, the demand in oil and gas sector is particularly good.
It is also positive that our acquired businesses have contributed approximately 4% to revenue growth so far this year. Operating profit for the reporting period includes items affecting comparability of 9 million SEK of costs arising from the ongoing acquisition of Swedol. Adjusted for these items, EBITA rose by 5% for the period. Additional extra cost of approximately 12 million SEK pertaining to the expansion of the logistic function into Norway had also a negative impact on the earnings. As I mentioned, the logistic products was expanding during the late autumn and encompassed more local units. But thanks to our focus initiatives, our cash flow from operating activities strengthened during the reporting period, even when adjusted for IFRS 16 effect.
Increased coordination and shared resources within areas such as logistics, IT, offering, and purchasing are key factors, which we now strengthen through the acquisition of Swedol in the business area Tools and consumables. At the same time, we're continuing to evaluate attractive acquisition opportunities in the business area Components and Services that would further strengthen our position. If we turn to slide 10, I will hand over to Niklas.
Thank you, Ulf. As Ulf mentioned before, we have a continued strong focus on cash flow within the group. Positive to note is that over the last four quarters, we have had a positive cash flow from operations of more than SEK 300 million, adjusted for changed accounting principles. The last quarter, which is normally a strong cash flow quarter for us, we generated SEK 163 million, also adjusted for changed accounting principles. We do this via our decentralized model operations, where we have set targets and activities per subsidiary, focusing on this, for example, through renegotiation of payment terms and through optimization of systems and processes. We have been able to compensate our decreased payables through a strong development in accounts receivables from our customers.
I'm pleased to see also that we have been able to keep our inventory levels relatively stable, during the last quarter, despite the added effects of lack of winter weather, causing a difficult season to predict for some of our assortments. If you turn to page 11, you see some performance measures. As Ulf mentioned also, our profit expansion measured on EBITA level was 3% for the Q3 .
For the reporting period, EBITA increased by 5%. Our EBITA margin is gradually increasing and stood at 5.8% in the last quarter. Our internal profitability ratio, profit over working capital, was 27% for the last 12 months, measured based on EBITA. Related to our other external financial objective, our return on equity was 17%, measured on rolling 12-month basis. Our financial position is strong, with operational net liabilities of SEK 198 million, down from SEK 349 million the preceding quarter, thanks to the strong cash flow. I hand back to you, Ulf.
Thank you. We go to slide 13. As you know, market conditions vary, both up and down, but we also must adapt our operations accordingly, which is facilitated by close cooperation with our customers. But overriding focus is still concentrated on three main areas: change and improvement initiatives and tools, continued development of niche offerings in current operations, and then also acquisition-driven growth strategy with focus on niche acquisitions. If we look at the first one in tools, we are now focused on changing and improving tools by streamlining the organization in Nordic, as well as increase the number of customer visits. With the Nordic organization, we will coordinate and improve our offering, purchasing, and logistic capabilities. In the second, focus is continued development of niche offerings in current operations by improve and develop concepts to meet the demand from the primarily industrial customer.
As a third cornerstone of our strategic focus is the ambition to grow the group through acquisitions. From the start, as a separate company, our efforts have been dedicated towards a selective M&A strategy, with the purpose to support the position of TOOLS, broadening of our offering with existing businesses, and to add new interesting and profitable components to the group. If you go to slide 14, Niklas will go through some of our acquisitions.
Exactly. On page 14, you see the acquisitions we made these last three years after the spin-off from B&B TOOLS. So we have concluded 11 acquisitions with some SEK 650 million in annualized revenue, in line with our strategic focus areas. We are happy to see that the acquired units add a lot of energy to the group, also business acumen and new opportunities. We will continue with our initiatives in M&A also after the Swedol acquisition. We have a very strong financial position enabling this. In addition, we are devoting more resources now, building a good pipeline, not least in the business area, components and services, where we see we will focus more of our M&A activities going forward.
Thank you, Niklas. To take slide 15, some final words here before we open up for questions. The merger of Tools and Swedol, well, together we are creating a strong partner in the market, and we're confident that this combination will, with complementary focus, a customer focus and sales channels, will help these two companies to become an even stronger and more attractive business partner. For our customers, suppliers, as well as for employees in the area of tools, workwear, personal protective equipment, and consumables. Together, we will be able to strengthen our product ranges, procurement channels, and logistic solution, and we will increase the proportion of own brands and develop an even better service offering new digital solutions. I've been following Swedol for quite some time since the Golv acquisition, and I'm impressed by their development over the past few years.
The merger is logical from an industrial perspective, and it will create stable opportunities for us to generate value for our owners. We're now awaiting approval from the merger, from the National Competition Authorities in Sweden and Finland, and we hope to conclude the acquisition in March. In conclusion, Momentum Group's operating margin has improved since the spin-off, and the group's cash flow and financial position are stronger than they have been for a long time. We have a solid foundation to carry out even further corporate acquisition after Swedol is completed. Let's open up for Q&A.
Ladies and gentlemen, if you do wish to ask a question, please press zero-one on your telephone keypad. We have a question from the line of Karl-Johan Bonnevier of DNB Markets. Please go ahead. Your line is open.
Yes, good morning. Thank you for taking my question. First of all, on components and the service area, very strong margins, obviously, in the quarter, getting up to new high levels, kind of at least when I compare historically. With the kind of outlook you now see for the operation, with a maybe a little slower development in the industrial segment, do you see those kind of margins being defendable?
Yes, I do, actually, because in components and services, almost 100% of our business is off the market. So as long as the machines are running, they need spare parts. So we could also see if you look back to the decline in September 2008, we lost around 9% in revenue at that time, so it's quite stable as long as the production is running.
Excellent. And I, I take it as a very encouraging sign that you, even though having, say, the Swedol transaction on, on the table, are talking about doing add-on acquisition also in, in the consumables and service side. I guess normally, a huge acquisition like Swedol would, would probably take all your resources for, for coordination and, and central. But you still see the opportunity to, to go after acquisitions in, in consumables and services?
Yeah, we see somewhat, of course, the strength in our presence in Finland as well as in Norway. And so yes, we do.
Do you have a, say, pipeline in all the countries for realizing that?
Hello, Karl. As I mentioned, we are building a pipeline. I think I mentioned this before as well. And of course, we have previously a lot of candidates, basically involving or coupled with Momentum Industrial, basically built on to Momentum Industrial. What we are now doing is that we are sort of more broadening the pipe, also looking for some adjacent product areas within this larger field of industrial components, so to speak. So yes, we are broadening the scope also to include other countries than sort of our core market for Momentum Industrial, which is in Sweden, basically. So that's true.
Excellent. You see that those segments in Norway and Finland are as profitable or have the same kind of opportunity as you have in Sweden?
Yes, we do. It's in both, we look at the MRO off the market business, but we also look into the OEM business too. And, looking into broadening, like EFTA, we did the acquisition in Sweden, in hydraulic pneumatics, which is a specialty. So it's still a lot of niche players out there that are good technical competence and can result in high margins.
Splendid. Looking at the tool chain, obviously, you enlarged the warehouse project in Oslo, so I guess you probably realized, say, early gains from the early part of the project that encouraged you to take the next step in that one. But if you look at, say, the strong volumes that you're now also seeing underlying in the Norwegian operation, are you seeing the earnings leverage that you would expect in Norway coming out of that?
Somewhat. We have invested. Due to the Albert E. Olsen went bankrupt, we hired a couple of salesmen and women from Albert E. Olsen . So we have invested also in resources to gain market shares, and we will see now it will level out, and we will go break even with the new volume we have generated of that. But then, of course, we also have a high strong demand in oil and gas, which is the west side. And now we also look at expand the logistic solution to be able to serve almost all Norway, actually.
Excellent. And, when you look at the cost for doing that, is it similar cost in the next couple of quarters to finalize the warehouse projects in Norway, and then maybe the gain is coming through in the next fiscal year, or how should we see it?
Yeah, we will have more cost because we're looking into widening. We're looking into expand the hub we have in Stavanger, and then also automate that, as well as we're looking into if we should serve the whole Norway from Oslo. We also need to have maybe two shift workplace. So as we build that up, of course, we will level down out in the local logistic functions. But of course, in the beginning, we will have an extra cost for building it up, and then it takes some time to ramp down the cost locally.
So you would say, maybe I was a little too optimistic in my time view on that, that this is really a, a project for the later part of 2020. So when, when you see the gains coming through for it, or how should we see it?
Yes, that's absolutely correct.
Excellent. When you look at TOOLS Sweden, seems to be struggling a little bit when I look at the quarter. Is there anything particular going on there that we should be aware of? And obviously, you have the big Swedol transaction that is probably going to impact the most on that side, I guess.
Yes, it is. Of course, Swedol has very much of their revenue generated in Sweden, and very much of that is also generated through shop sales. So we will have some good combination of shop sales and the contract customers that is to success. But if we look at the revenue decline, of course, it's been very characterized by the mild winter, so clothing and winter jackets and boots is not sold at all. But also it varies from different customer segments that both in Momentum Industrial and in TOOLS Sweden, we have some struggle with the pulp and paper, which has declined in the quarter. So it's both plus and minuses.
When I look at the Swedol transaction, obviously, it's still pending, and good to see that at least in the region, authorities were quick with the clearance of it. Have you got any discussions ongoing with the Swedish and Finnish authorities where you get the indication of maybe concessions needed, or is still, say, sailing through as you hoped for?
No, we—no, no discussion, but we, of course, have made a lot of work to present the numbers, figures, and so on. So they have gotten all the material they need to make the decision. And I'm glad that the package seemed to be very well-performed due to the fact that the Norwegians, that we normally thought were going to be last and say yes, said yes very quickly. So I'm very confident that the material we have delivered will make no hesitation of saying yes.
Excellent. And, I understand if you can't comment on this as the transaction is still pending, but obviously, you have put this, margin ambition target out there to, to get, the new business up to 10% over time from, I guess, a pro forma basis of 6.5%.
Uh, yes.
What parts of it do you see being, say, quicker to close that gap? And what part of it would be, say, do you expect to be later to be able to close that gap?
Yeah, the—I can say that the figures we are based off is rolling , September 12 2019, so that's the base from the SEK 6.5. Of course, the first we will look into is the purchasing prices, supplier coordination, own brands, and that could be more quicker to implement, but then, of course, depending on what we choose to use in our assortment standardization, we also have some in our warehouse we have to take care of. So pricing and assortment is the first that goes quickest to do, but of course, then it's also a time to move it in.
Then, of course, we're looking into where we have our local sites today, and that is, of course, if we should do something there, it's depending on the contract length of the rental agreements. And then the third, we have logistics setup, which we can optimize, and that also, of course, takes some time. And then at the end, of course, we will have double the staff in some areas where we will look into how we can do some more efficiency.
When you look at optimizing the logistics setup, obviously, Swedol has more of a, say, shop-filling kind of logistics structure, and you have more direct delivery structures. Is it possible to blend those together in a good way in one unit, or you're still seeing this being separately?
Of course, it is possible to mold it together in one, but not at the time, due to the fact that as you say, that 100% of what we deliver, it's the orders come in the same day. But Swedol has shop fulfillment, which is more planned, so we have to do some analysis. But in the present structure, it's not possible to go to one setup in Sweden. But then, of course, we will look into the setup in Norway, where they have one in Kløfta, and we're building in Oslo, and then in Finland, we have in Kerava, and they don't really have one. So of course, we will look at logistics setup at Nordic level as well.
You can also do, you also have to do the calculation of the flow of different demands. As you say, shop fulfillment is one, direct delivery is one, taking home own brands from Asia is one. So we will look into the dimensions that is possible, and we can also optimize the flows, and not just one side.
But when you look at this practically, if you get the clearance as you hope for in March, and can conclude the transaction, most of the things that will get the journey going towards 10% should be in place during 2020, basically.
I mean, the plans will be done, and then it will be implemented in sequentially, of course. But we have identified in which area, and we have started to do some evaluation that we can share, and it's things that we are not allowed to share. So in the different work streams, we have come in, yeah, in different places.
Excellent! Sounds like a good hunting ground for earnings opportunities going into 2021 then, so thank you.
Yes. Yes, definitely.
Just to remind everyone, if you want to ask a question, please press zero one on your telephone keypad. There are no further questions at this time. Please go ahead, speakers.
Okay. Thank you very much for your time. Don't hesitate to take the call if you have any further questions or interest of knowing more about us. So thank you very much, and have a good day.