Ladies and gentlemen, welcome to the presentation of Indutrade AB for the Q4 report 2019. Today, I'm pleased to present Mr. Bo Annvik, CEO, and Patrik Johnson, CFO. For the first part of this call, participants will be in a listen-only mode, and afterwards there will be a question and answer session. I will now hand you over to Bo Annvik. Please begin.
Thank you, good morning, and welcome to this webcast. We start by elaborating a bit on 2019. We are happy to summarize the year with success, I would say. We have had really strong, sustainable, profitable growth, and we can also verify that our business model is still very relevant and that our strategy is value-creating. Demand on a yearly level has been, I would say, good. It's been fluctuating between the quarters. We started out well in quarter one with good organic growth, then in quarter two we had a bit weaker situation, just basically flat. Some improvement in quarter three again, and more of a flattish ending now in quarter four. I will elaborate more on quarter four, obviously, as we go further into the presentation here.
On a yearly level, we had a 2% organic growth, which is okay-ish, I would say. Even better was the EBITA margin for the year, record high for Indutrade at 12.7% versus 12.4% the year before. Also very positive has been the acquisition pace during the year. We were able to attract 15 companies to the Indutrade family and good companies. We have basically paid at the same multiples as before, and we can also talk more about that later on here. We take sustainability seriously, and we feel that sustainability is part of our DNA at Indutrade. We are very long-term oriented and, among other things in this area, we have become signatories of the UN Global Compact. We have continued to execute on our strategic initiatives. In terms of the dividend, the board proposes SEK 4.75. A good year overall.
If we then turn focus to the fourth quarter, as I said previously, we see a demand situation which is still, I would say, on a high and a good level. There is no real organic growth in the market. It obviously fluctuates a lot between our business areas and market segments and product areas, but overall, more of a flattish situation. To give you some numbers, we came in order intake wise, -1% organically, and sales were flat , ±0, basically. However, in total, our order intake was +8% and sales +9%, so very close to our group targets in terms of growth. We had a very good EBITA margin, as I said. We came in at 13% for the quarter. Last year we were at 12.8%. We had some extraordinary one-off effects helping us out here.
If we take those away, we can say that we were basically flat with last year's 12.8% underlying, which is a very good level for a quarter four and a short December month, I would say. We have also improved our cash flow. Comforting to see that. Slightly helped by IFRS 16, but also organically good improvement, I would say. However, our working capital is still on a slightly high level and we are working with that and hope to see clear improvement in this regard during 2020. We have also continued with high acquisition activity in the beginning of the year here and have now acquired several companies, and I will elaborate on those later on in the presentation here. Overall, a good start of the year and a good finish of last year. We turn page to the order intake on a group level.
As I said, aggregated, it was good, +8%, and I would say relatively stable, but with variations and a more dynamic sort of situation below the surface. We have a slightly negative book-to-bill at 0.98. It's also important to compare with last year, we had a very strong quarter four, so the benchmark is a bit difficult. If we summarize on a total 2019 level, we were up 9% and 2% organic, as I said before. If we look at the net sales, we are fairly, I would say, happy with the overall situation, +9%, and organically flat versus last year. I would say our comment is a little bit similar as on the order intake side. Predominantly the growth is structural.
It's always a little bit difficult to elaborate on the sales in an Indutrade perspective, since we have a portfolio of a lot of different companies aggregating up the total here. If we talk about markets in a geographic perspective, I would say that Norway in the Nordic arena stand out in a positive sense. I would say Denmark is a little bit flattish, and Finland is down and has been down for a while here. A bit more of base industry and less investments for expansion since some time there. Sweden also somewhat down. In the U.K., I would say we see a mixed picture. I would say Brexit uncertainty, the elections also caused some uncertainty.
Now when Brexit is more finalized, there might have been also some reduction of inventories at some companies, making sales a bit, or having some impact on the sales situation and order situation in the U.K. I would say lowest is Germany as a market, obviously impacting of the automotive industry. Since the Netherlands is a neighboring country there, I think they also have some impact on that indirectly. The Netherlands has also been a little bit weaker geographically. Again, full year was plus 9% in total and organically plus 2%. EBITDA, strong development, as I said. We improved by 11% up to an EBITDA margin of 13%, which is the best level we have been at Indutrade since the IPO in 2005. As I said briefly before, we had some support of one-offs here, primarily related to a new pension agreement in Holland.
If we exclude that, we basically were even at 12.8% ish with last year. Organically, the EBITDA decreased slightly in the quarter, and was basically caused by slightly weaker organic sales. Acquisitions contributed with plus 9% in the quarter, and this is margin accretive. As we have said, the 2019 EBITDA margin reached 12.7%, which, again, is all-time high for Indutrade. If we turn to the sales situation for the business areas, you see that the graph or the diagram has bars a bit up and down, and a few more down than up. It's a bit of a mixed situation here. Perhaps good to mention that Q4 2018 was strong, so the benchmark is difficult in that sense. I would say several of the business area declined linked to the general weaker demand situation in industrial automotive companies in Europe.
Lowest sales or weakest sales was in Fluids & Mechanical Solutions, and they have a cluster of companies in the general industry. I would say they had a more difficult situation organically sales-wise in Q4. Benelux, you see, is up 9%, and that's mostly driven by our large company in the valve segment for power generation. If you exclude that, it's more a similar situation with the rest of the business area, with slightly weaker organic growth. DACH was also positive, surprisingly, I would say, because in the DACH region, obviously Germany is negative, but some of our companies had a positive support from the process industry in Switzerland, and altogether, we're able to show positive numbers in terms of sales here. The business area which stands out in a very positive way here is Flow Technology, and they are organically up 5%, very strong.
I would say that they are supported by good development in the MedTech segment and also in the marine segment. A lot of companies in the Flow Technology area had actually a very good quarter four. If we then look at the EBITDA margin development per business area, it's also a little bit of a mixed situation. Four of the areas are improving their EBITA margin, and four of them were having declining margins or weaker margins. You can see improvements in Finland, in Flow, Industrial Components. In Finland, I would say that they have been cost-conscious, and they are also supported to some extent by some of the extraordinary divestments we have done there. In Flow, it's mostly, I would say, organic development and improvements, as I said, supported by the MedTech and Marine segments. That's the same with Industrial Components, basically.
Also quite a lot of companies in the MedTech area supporting their improvement. Declining margins in business area DACH, perhaps not very surprising, mostly linked to a weaker sales situation in Germany and indirectly into Germany. In terms of Fluids & Mechanical Solutions, as I said before, they have a cluster of companies linked to the general industry in Sweden, the Nordics, and those companies had lower sales, and that had an impact on their EBITA development as well. Measurement & Sensor Technology, similar there again, quite a few companies who had weaker sales and weren't able fully to offset that, and then had a negative EBITA development due to that. Perhaps the surprising development, or the most surprising development, was in the U.K. with quite a significant margin drop. This is also reflecting that quite a lot of the companies had lower sales in the quarter.
One company really having a more severe, I would say, order intake and sales issues. They are basically in a loss situation. That's impacting more in relative terms. We will see how U.K. will develop here. I think this is hopefully not something which will continue going forward in 2020 in that strong way, but I can come back to that. If we then turn the page and look at our list over acquisitions in the year, you see it's been a very active year. I would say that we have a good situation. Indutrade is very attractive. I think the entrepreneurs really appreciate the culture, the values, and also appreciate that they can work in a decentralized situation with something they obviously enjoy, and we can support them in different ways where they want and have the support.
We basically pay at the same levels, at the same multiples as before, and we have definitely not reduced our demand in terms of buying good companies, high-quality companies. That's exactly the same as before. In quarter four, we bought, as most of you know, three companies. A Swiss company called Uniska, making high-quality glass partitions, and then a smaller company in the Netherlands, basically working with geotechnical measurement solutions. Both of those are add-ons to companies we already have in those regions. We also bought a very interesting company working with security solutions in Sweden. Growing, interesting area. We have also had some extraordinary divestments during the year, and you see those listed there as well.
Some of you who follow us more closely also perhaps know that yesterday we had an extraordinary general assembly meeting and got the agreement to divest the company we own in Russia. That project is ongoing and will most likely be finalized in the next months or so. We have, as I said before, we are basically through the extraordinary divestment phase and don't see any number of projects during this year. If we look at how we have started this year already, it's again been strong in terms of acquisitions. We have finalized four acquisitions already. Happy to be able to acquire Stein Automation in Germany. Many of you know that we are a bit focused on Germany, want to grow that and see good opportunities to do that. High-quality company providing customized pallet transfer systems for assembly lines.
That's trending well, I would say, with ensuring to more assembly work in Europe and automation. We bought VarioDrive in the Amsterdam area, a motion control systems company with, I would say, great ability to customize solutions for customers. We also have acquired AVA Monitoring in the Gothenburg area in Sweden, linked to, I would say, infrastructure investments. They provide solutions for vibration measurements and are able actually to go beyond the Scandinavian market and work more internationally with, I would say, very modern, innovative technology. We also acquired a company in Norway called Søre Hellum, and they work with diamond tools and related equipment for that. That's also linked a lot to, I would say, infrastructure investments to some extent on an offshore construction and mining and so on. Great companies, great additions.
We were very happy to see them becoming part of Indutrade. By that, I leave the word over to Patrik to go over the financials in more detail.
Thank you, Bo. Diving a little bit more in detail into the numbers then. As Bo have mentioned earlier, total growth for orders and sales was +8% and +9% respectively in the quarter. For the full year, the growth was +9% for both orders and sales. Book-to-bill for the quarter was slightly negative , -2%, but for the full year, +1%. All in all, I would say no dramatic change over the year, relatively stable. Gross margins, very stable versus last year for both the quarter and year to date. Remember here the headwind that many of our Swedish trading companies have from the weak SEK, basically all through the year. They really do a good pricing job versus their customers to manage this problem.
EBITA margin improved from last year, both in the quarter and for the full year to 13% and 12.7% for the full year. Further down in the P&L, large increase also this quarter in the finance net. Roughly half of this increase now relates to IFRS 16, as you remember, surely. Half of this is due to increased debt level and slightly higher interest rates. Tax costs, they are actually down versus last year in the quarter, but that is because we had high cost last year with some closing adjustments. The tax rate this quarter is 22%, which is in line with what we have had earlier this year. No change sequentially. Earnings per share up 8% for the quarter. Actually the same also year to date. Return on capital employed at 19% compared to 21% last year.
Here also we have an effect from IFRS 16. If you exclude that, we are on the 20% level. Operational cash came in at SEK 732 million for the quarter, that's a very high level. The improvement versus last year is partly also driven then by IFRS 16. I will elaborate a little bit more on that in a few slides. Net debt EBITDA at 2.1, that's a slight increase versus last year when we had 1.7, if you exclude IFRS 16, it would be at 2.0 then. I will elaborate also on those ratios a little bit further in the coming slides. Next slide, we have an overview of the main IFRS 16 effects. Maybe the main change is the increased debt, the leasing debts coming into the balance sheet at the beginning of the year. The opening balance changed SEK 842 million.
Then finance net, basically you have an increased cost of SEK 24 million for the full year, basically SEK 5, 6 million each quarter. Depreciations, SEK 290 million for the full year, an increase. That means then that you have not a big change, relatively small change then on the EBITA, only SEK 24 million, corresponding to the finance net then, of course. EBITDA, a bigger change, SEK 290 million. That impacts then a couple of ratios, and you can do that math yourself quite simply, I assume then. Net Debt to Equity as one example then plus 12%, if you compare to a situation without IFRS 16. Moving on to the next slide and looking at the cash flow which was then at a really high level in the quarter, as you can see.
It grew then 23% up to a level of SEK 732. For the full year, we also had a high growth, 41%. Approximately half of this improvement, both for the quarter and full year, came from a higher result and a slightly better working capital development. The other half from IFRS 16. Working capital, the levels they are, even though we saw a slightly better development or impact in the cash flow, they are still on a slightly high level, and we are working with this. We hope to see a change in the coming year in the levels having a positive impact on the cash flow. You remember this probably then, but the higher level is mainly due to a higher inventory.
We had an inventory buildup during 2018 mainly, where our companies had to increase inventories to ensure the delivery service and stock availability for the customers. Moving on to elaborating a little bit on Earnings Per Share. Quarter four Earnings Per Share grew 8% to SEK 3.29. Full year Earnings Per Share increased also with 8% down to SEK 12.26. The improvement comes from mainly the higher EBITA, but it's partly offset then by increased amortizations of intangibles and higher financing costs. This is, of course, mainly connected to the higher acquisition pace. If you look at Earnings Per Share on a more long-term perspective, the three and five-year average have been +17% and 12% respectively, so very high annual growth rates. Debt situation. The interest-bearing net debt end of the year increased quite much to SEK 6.1 billion versus the SEK 3.9 end of 2018.
The main driver is, as you well know, IFRS 16, and approximately half of the increase relates to this. The other half is mostly related to the increased borrowing to finance the higher acquisition pace. Net Debt equity ratio increased to 85% versus 63% last year. This ratio would have been approximately 73% if you exclude IFRS 16. This level is slightly higher than last year, but if you look again then at the longer time period, it is not a high level. The balance sheet and our financial strength, I would say, are still strong, solid. By that, I say thank you and leave it back to Bo.
Thank you, Patrik. We will spend some time on sustainability. We think sustainability is very important, and we also feel that sustainability is a clear business opportunity for our companies. We have been quite active, I would say, in this area the last year. I think it's also important to underline that sustainability is part of our DNA, our culture, and something our companies have worked with for a long time, even if they perhaps don't call it sustainability in the form we are right now. We have become signatories of the UN Global Compact, and we have worked on group level with our materiality analysis, so we have a clear view on that. Perhaps more importantly, we have had workshops with all our MDs in terms of sustainability during the last year. Our approach has been that we should optimize each company's sustainability agenda.
They have also had their Materiality Analysis done, and based on that, they have set KPIs in their companies and start to measure progress. There is also quite a lot of support and different types of toolkits and so on they can use in this area. Based on this and based on our history, we subjectively would feel that we would come out fairly well in different sustainability assessments. However, we haven't really been that well-positioned in some of those assessments, which is a bit frustrating. If we turn page now, we have instead of only working with optimizing each individual company, we have also now all agreed on some group, I would say, KPIs that every company needs to measure and report from this year and onwards, and you can see those KPIs on the slide.
Three of them are more, I would say, social people related, and two of them are more environmental. Apart from this, there are individual KPIs for every individual company, I would say, as well. We are making progress. We are taking this very seriously, and we hope to be able to perhaps communicate and come across in a better way in different types of studies regarding sustainability going forward. In a market situation with fluctuations, it's important to try to provide stability, and here I think Indutrade is outstanding. With our diversified structure, with our decentralized business model, we have agile companies. They are very flexible, and it's really part of our culture that the MDs and the management teams take action, take responsibility, and if they are behind plan, behind last year, we don't really have to ask for any mitigation.
It's natural for them to work with that by themselves. That works very well, and we also have interest in a lot of different market segments, a lot of different product areas and geographies. The geographical scope have, in recent years, been broader as well as the segment spread. Even if general industry is a bit down, even if automotive is a bit down, there are other segments which are improving, increasing, and summing all of it up, it usually provides more of a stable situation than a, I would say, an ordinary industrial company. If we look at our financial targets and the outcome for 2019, I would say that we can be proud and satisfied. We have basically reached our target in all aspects. Growth is important. We have a target to grow at least 10% per year.
We have reported a 9% growth. If we exclude the extraordinary divestments we made during the year, we are actually underlying at 10%, which is comforting and good. We are a bit above in terms of EBITA margin, which we have already spoken about, and in terms of return on capital employed, we report 19%. If we exclude the effects of IFRS 16, we are basically at 20%. Again, in line with target, as Patrik elaborated on before here, our financial position is solid and strong. Last on this page here, you see that there is a proposed dividend payout ratio at 39% of net profit. The dividend is proposed to be SEK 4.75. Last year was SEK 4.5, and an increase with 5.5%. The board has also taken the decision to change the dividend target.
We have had 30%-60% for some years, since 2014, and now we are changing towards 30%-50%. This is not dramatic. Since the Indutrade IPO 2005, Indutrade has never had a dividend above 50%, and now we have always and will continue to have an, I would say, very active agenda in terms of acquisition growth. Now we just want to have a more of a stringent scope between 30% and 50%. It's perhaps simpler, easier to judge the Indutrade dividend going forward. Again, it's not changing dramatically in any way from before. If we look at the key takeaways from the presentation here. Good year 2019 with record high profitability. We are satisfied and proud about that. There's been a fairly good demand level, but it has flattened out towards, I would say, mostly towards the end of the year.
If we should give some sort of guidance going forward, I would say it's a little bit difficult to guide in January, early February. There is a lot of customers usually trying to shut down in terms of accepting deliveries in December, they want to take their inventories down. Then in January, there is always some level of inventory buildup again. Right now it's a little bit difficult to judge what is underlying demand and what is perhaps inventory buildup. I would say the general industry, the automotive industry, there is a weaker demand, but we also see segments with improving demand and increasing demand. I would say we are fairly optimistic about Q1 organically, but it's difficult to judge, I would say. Continuing to talk about the takeaways, we are stable in terms of earnings quarter by quarter by quarter.
I actually think quarter four is a little bit demanding based on when December is short and we came in a great way, very happy about that. We have continued with the high pace of acquisitions, and you see signs of a strong start also in 2020 here. We are diversified, which we have underlined, and I think we have a natural hedge in more difficult business situations by this diversified portfolio. The culture and the values and the agility and flexibility we have is obviously very strong as well. All in all, a good and stable platform for continued sustainable profitable growth going forward. With that, I open up for a Q&A here.
Thank you. Ladies and gentlemen, if you do have a question for the speakers, please press 01 on your telephone keypad. Once again, if you do have any questions for our speakers, it's 01 on your telephone keypad. There will be a brief pause while any questions are being registered. Our first question comes from the line of Oskar Vikström from ABG. Please go ahead. Your line is now open.
Hello. Thank you. I have a question regarding the organic EBITDA. You say that it's down 1% year-over-year. Does this include this positive around SEK 10 million impact from the pensions?
Yes, it does. The short answer.
Ex this pension situation, it would be around two and a half, 3% negative?
Yeah. Roughly.
All right. Thank you. In terms of Benelux, obviously the recovery in the valves company is a positive development. Then you mentioned that excluding this growth would be weaker. Does that mean you say that growth ex the valves company is negative or flat-ish? What should we assume there?
I think slightly negative organically for Benelux without the larger company there.
All right. Thank you. I was a bit curious about the U.K. Obviously it seems that the overall market is tough, you mentioned you have one company that showed a larger negative impact than others. Is this a company-specific situation or is that also just a reflection of the current landscape in the region?
I would say that's more a company-specific situation. Excluding that, the situation is not as gloomy as we presented in Q4 for the U.K. I don't know also if there potentially, towards the end of the quarter, was some Brexit effect in the sense that quite a lot of companies built some safety stock linked earlier to Brexit, and now they are potentially using some of that stock for their deliveries and have had basically lower purchases perhaps linked to that. Difficult to say what type of impact that is, I think there's been some of that impact in the U.K. towards the end of the year.
Understood. In terms of this struggling company, how are you addressing this situation?
We are addressing that by a change of leadership, and there is a new MD in place since the 6th of January. There is an agenda in terms of all kinds of, I would say, activities to improve that situation. We will probably live with a weaker situation also in quarter one, but from quarter two and onwards, I think that specific company will have a better development.
All right. Yeah, thank you. That's all from me. Thanks.
Thanks.
Thank you. Ladies and gentlemen, once again, if you do have any questions for our speakers, it's 01 on your telephone keypad. Since we have no more questions registered, I'll hand back to our speakers for any closing comments.
We thank you for participating and listening and say thank you for today.
This now concludes our conference. Thank you all for attending. You may now disconnect.