Good morning, and welcome to the presentation of Investment AB Latour's interim report for the first quarter 2023. The first part of the presentation will be in listen-only mode, and we then open up for questions. To be able to ask a question, dial star 5 on your telephone keypad. I will now hand over to CEO Johan Hjertonsson and CFO Anders Mörck.
Thank you, Katarina. Once again, welcome to the presentation of our Q1 results 2023. I'm here together with our CFO, Anders Mörck. We can go to the first slide here. As usual, this is our group structure. We can report that it's unchanged during Q1. Some comments overall on the quarter, we've had a very, very good first quarter despite the ongoing global turbulences. There's continuing and high pressure on our organization to handle the challenges such as cost inflations and disturbances in supply chains. I really would like to say that all levels in the organization are working hard, and we're handling the challenges very well.
We are keeping a high service level to customers and have the ability to deliver on a high order book, resulting in high volumes in the quarter and a strong organic growth in net sales. This is the best quarter so far for Latour's wholly-owned industrial operations, and we're very proud of that. We go into the next slide, and we would like to comment on our listed portfolio. As you can see, there is no changes within the listed portfolio in the quarter. However, during the quarter, Latour has participated in the rights issues of Alimak after the Alimak because of the acquisition of Tractel in November last year. We have also participated in the right issue of CTEK in both companies with our pro rata share.
The long-term underlying development for the holdings in our listed portfolio is strong. I really would like to point out that the long-term trend in increased earnings in our listed holdings is intact. So far, five companies have communicated the Q1 results, and we're very proud to report all of them strong and some of them very, very strong. The stock market has started the year in a positive note as you know, and our investment portfolio has increased by almost 15% compared to SIXRX that has increased about 9%. Until yesterday, the portfolio value was SEK 74.2 billion, and the total returns amounts to 15.2% so far this year compared to SIXRX until yesterday of 11.3%.
I'd like to comment on the next slide. I'd like to comment on our industrial operations, our wholly owned business. As I said, a very good first quarter. A continued good underlying demand in most markets, I would like to point out. We see no real slowdown so far. We have a high order intake, +8%, although organic, it's a decline in numbers of 4% when you look at the industrial operations as a whole. It's important to point out that the decline is explained by the exception of the strong order intake for Caljan last year. All other businesses are growing organically this year, also compared to a strong last year.
Organically, the order intake is very strong if you adjust for the exceptionally high order intake in Caljan last year. There was, Caljan's business is quite project-oriented. There were some very large projects that came in Q1 last year. The supply chain issues remain, but the situation is slightly better than a few months ago, and our delivery capacity is good today, I would like to say, and in some operations, very good, actually. Therefore, you see a very strong increase in top line of almost 1/3, 27% up on the top line, and organically, it's an increase of 13%, adjusted for currency and compared like to like operations.
As I said, the high volumes are to some extent driven by the high order book at the end of the year that we have been able to deliver on in the first quarter. It's a very strong order book. It's still very high, and we were very close to a book-to-bill on 1, as you can see. We have a still a very strong order book for the remaining of the year. The general cost inflation is a topic we all talk about right now. It's affecting all businesses, but good cost control combined with the implemented price increases protects the profit in an effective manner.
As you can see, actually the gross margins and the EBIT margins are increasing, so we have, so to speak, over-delivered on that, if one can use that expression. The quarterly result is growing by almost 50% to SEK 989 million, close to SEK 1 billion in the quarter. With a margin of 15.5% compared to a margin of 13.3% in Q1 last year. We're very happy and very proud on behalf of all our team members in our wholly owned operations. I would like to sincerely, I know many of you are listening on this call. I'd like to say a very big thank you. Very well, very well done, and I'm very proud to be part of this team.
If we go into the next slide and talk about the acquisitions as we usually do. After a very high activity of acquisitions in 2022, we have temporarily lowered the pace. One reason for that is that we had a very high activity level and a high volume of M&A cases last year that we are digesting and integrating into our organization. Don't be wrong, M&A is a very important part of our growth agenda in our wholly owned business, and we have a high level of activity following up loads of deals and have many interesting projects coming up further on. We closed the acquisition of Dalair to Swegon.
We announced that at the end of last year, but it was finalized in January, so actually in this quarter. Dalair is a UK-based manufacturer of bespoke air handling units, AHUs. The company is one of the AHU market leaders in the UK, and net sales of about GBP 70 million. Having said that, I hand over to Anders Mörck to run through the respective business areas and also some more things on top of that. Anders, over to you, please.
Okay. Thank you very much, Johan. We start with the first business area, which is Bemsiq, and I think that you should take a look at the chart to the left of the picture, where you can see the long-term development of Bemsiq, just as a teaser of what's going on and what could be happening in the future. This quarter was another strong quarter for Bemsiq. We've continued strong underlying demand in this growing market. The total growth was 39%, of which 20% were organic. Both business areas, building automation and metering were growing, and so were all the different geographies as well. Lack of components is still an issue for Bemsiq, but the situation has stabilized in the first quarter, and Bemsiq is monitoring this very, very well.
As you can see, the profit development is impressive, this goes for both the companies that has been with us for a while and the newly acquired ones. Very well done, Mikael and team. We go to the next page, which would be Caljan. Also here, you can take a look on the five-year chart, and you can note that the business is double the size now than it was in 2020. In this case, this is more or less all organic growth. This is important to understand now when we conclude that Caljan has a little bit of a lower order intake. Yeah, it's good to know that fact.
The customers are now a little bit more conservative when it comes to capital expenditures. Therefore, the order intake, as of now is on a lower level. Due to that, the strong order backlog that Caljan has and that we have talked about before is now reducing, but there is still a lot to go. Delivering on this order backlog, net sales grew by 22% the first quarter, organically then, to SEK 461 million. It's both in the product sales that we are growing, but also in the aftermarket. This resulted in a very strong result for Caljan, an increase of 50%, with an operating margin of 15.7%. Very well done, Henrik and team as well. We go to Hultafors Group.
Hultafors continued to grow its net sales by 13% in the quarter, and the organic growth was 7%. As you can read in the report, the growth is strongest in the business area that we call PPE, and that is personal protection equipment. On top of the growth in net sales and effective cost management and the stabilized freight cost and the stabilized material costs, those factors in combination contributes to the strong profit development. All in all, the operating profit increased by 18% to SEK 296 million and a strong margin of 16.3%. Very well done, Martin and team as well. We go to Latour Industries.
Here we are. Latour Industries has had a good underlying demand with organic growth in order intake of 10%, which is very good. Strong net sales as well, growing by 24% in total, including acquisitions. When it comes to organic growth, it's 11%. Earnings and profitability as a whole is developing very well in the right direction for Latour Industries. Operating profit grew by 55% to SEK 73 million, which is a very strong figure and very well done so far. As you can read in the heading of this picture, we are building the basis for future business areas within Latour Industries. This means that the profitability has good prospects to grow much stronger when they are growing. Today, of course, we take a lot of investments in the future.
The acquisition agenda for Latour Industries continues, both, looking for new add-ons to existing platforms or finding new platforms, of course. As said before, very well done, Björn and team as well. Let's go for Nord-Lock. I'm really glad to summarize Nord-Lock's best quarter ever. Order intake increased during the quarter in all regions and in all segments. Net sales grew by 18% in total and organically by 10%, with the best growth, for this period was in Americas, followed by Asia-Pacific at this, gladly coming back. All in all, this gave an all-time high pro-operating profit of SEK 129 million with an operating margin of not 77%, but 27%. Sorry.
Also note that Nord-Lock has introduced a new organization which has been very well-received internally and with the purpose to strengthen the customer focus even more and make the organization more effective. All in all, very well done, Fredrik and team. Finally, Swegon. Swegon can then summarize a really, really strong quarter with very strong net sales that grew by amazing 42%, of which 18% were organic growth. That is also amazing for a company of this size. Overall, a stable order intake. However, a weak development in the residential segment, which is the smaller part of Swegon. The strong growth in net sales is to some extent driven by the high order backlog that we have had when we came into 2023. Most regions are reporting good growth, especially Sweden and North America.
Also here, we can say that all acquisitions that we made last year, including the one that we did the first days of 2023, are performing very well, and that's very good. All in all, operating profit for the quarter more than doubled to impressive SEK 301 million, with a margin of 13.9%. That is Swegon's by far strongest start to a year ever. We have high hopes for the future for the strong growth going forward for Swegon, especially in the long term, considering the nice position that this company has when it comes to energy efficiency in buildings, and you know the need for that, everyone. Very well done, Andreas and team. Finally, we go to the net asset value.
You can see that the net asset value increased by 17% during the quarter to 186 SEK per share. To some extent, this is explained by the recovery in the stock markets, major part is because of the underlying profitability in our businesses. The share price at the end of March was 211 SEK, this means that it was a premium of 13% at that point. That is actually the same level it was yesterday when it also was 13%, and the share price was 210. Our net debt has increased during the quarter due to the acquisitions of Alimak, SETEC and Doler. Besides that, the operational cash flow was very strong in the period.
Finally, the net debt corresponds to about 9% of the market value of our investments, still on a reasonably low level. Now giving back to Johan . Thank you very much.
Okay. Thank you, Anders. I'd like to comment on our financial targets, our performance in relationship to our financial targets. As you can see, the targets that we updated the beginning of this year, annual growth of more than 10%, operating margin above 15%, and return on operating capital above 15%. Those are our new financial targets. How are we doing compared to those targets? If we take rolling 12 months, during the last 12 months, growth has been 23.7%, almost one-fourth. The EBIT margin is 14.7% rolling 12 months, and the return on operating capital is 16.3%.
As you can see, the margin in Q1 now of this year was 15.5%, so within the target range. Very strong performance. We're very proud as a team once again. Going into commenting our international growth agenda. As you can see, a very large part, a lion part of our business is done in Europe, but we are, however, increasing our presence also in America and in Asia-Pacific. As you can see, there is a big future potential if we look forward a couple of years to grow with the same strategy and positioning and industries that we are in already.
We have the strong financial, you know, backing, to grow with sustainability in all aspects, to invest in our people, and to build new holdings, going forward. We have a clear ambition to grow, as you know, and we're truly delivering on the growth targets. The future is bright. Most of the things are still undone. We have still a lot to do going forward, and that's why we show this map in that sense. That concludes the presentation part from myself and Anders Mörck, and we will open up for a Q&A.
If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from David Johansson from Nordea. Please go ahead.
Hi there, and good morning. Thank you for taking my questions. I'd like to start off with a question on Swegon, which delivered a very strong margin development. You also comment that order intake is somewhat weaker in this quarter, especially within residential. What could you say about the order intake for Swegon on a group level, and what would it look like if you excluded the residential business from this? Maybe you could also comment on the underlying drivers for the very strong margin. Also, is there an effect of increased utilization given the strong backlog for this business? Thank you.
Okay. Three questions in one. Thank you, David. We'll try and answer those. I'll give a first stab at it, and then we'll add, ask Anders to complement and, or adjust, my questions there. On the growth, trajectory of Swegon, we're very happy with the growth, as you can understand. I think it's important to point out that, you know, at a first glance, you might say that Swegon is quite, you know, exposed to the construction and, you know, building market. I think it's important to, in your analysis to step down one level and dig a little bit deeper.
I would say Swegon is very nicely positioned within that segment because Swegon's main business is to ventilate, and by doing that, by saving energy with heat exchangers and so on, where Swegon has, you know, among the best products in the industry to do that. Because of the pandemic, there is a generally large increase in the air quality in workplaces around the globe. With the energy prices that we have right now, there is also a high focus on saving energy, which Swegon's products are highly contributing to. I would say within that industry, Swegon is very nicely positioned for growth going forward. That's why you see that nice growth in Swegon.
It's kind of not, it's not a one-to-one relationship on the kind of building construction industry indexes. Margin-wise, we're very happy that Swegon has worked a lot with its, you know, pricing and price management and product mix, and has improved nicely its gross margins. Also, as you can see, as a full effect, the EBIT margin. Your third question, I would say yes, there is a volume effect of capacity utilization of the Swegon factories. When the volume is nice and high, the productivity and efficiency in the Swegon factories are very strong. That's how I would like to describe that, and I'm sure maybe Anders, you want to add to that or?
No, I think you made a good description, Johan. As well, maybe I can just clarify that the residential part of Swegon, I would say, is around 10% to a bit smaller of total Swegon.
Yes.
If that is a good guiding for you.
Yeah. Very minor impact, the residential part.
Okay. thank you. That's great. I'd like to follow up with a question then. given the high growth pace, when do you think the very strong growth here will normalize for this business after you have delivered on your backlog? Thank you.
Anders, would you like to start on that?
Yeah. Normal, we don't look into the future and give a forecast for what we see. So far, we have seen a very stable climate, we still had organic growth in order intake the first quarter, and that is important to understand. If that would be split up then in different business areas within Swegon, there is only decline in residential.
Got it.
So far, we have not seen. Another thing that you should note is that since the order intake last year was not delivered, so to say, it's quite natural that we have book-to-bill less than 1, especially for Swegon, going forward, and of course, especially for Caljan as well.
Yes.
Thank you. That's very clear. One last question from me on M&A. You have commented that you will reduce the acquisition pace this year after maybe a few years of higher activity, I would say. Does this mean you have paused new acquisitions completely? Over the last year, the M&A pace has resulted in about 10 new companies per year. What can you tell us about your aims for this year and how you view the, I guess, current balancing act between new acquisitions and the current leverage position from here? Thank you.
Thank you, David, for asking that question because that gives me the opportunity to put a little bit more meat on my comment on the pause in the temporary slowdown in the M&A agenda. That was not meant to be like a forecast for the whole year on M&A. It was more the quarter I was, you know, commenting on. I think we will have a nice pace in the second half of the year this year. It's very natural also that we, you know, we're very long term. We wanna make sure that all the companies and fantastic businesses that we have acquired are well-received and well-integrated into the Latour companies.
When it comes to leverage, I would say we have good firepower and ability to drive acquisition agenda. So the financial or the balance sheet is not the reasoning for any slowdown in that sense
Okay. Thank you. That was all my questions.
Thank you, David. Great questions. Thanks.
Thanks, David.
The next question comes from Rasmus Engberg from Handelsbanken. Please go ahead.
Yes. Hi, guys. Just back to the last question. Essentially, your comment about slowing acquisition, is that a backward-looking comment, relating to Q1 and perhaps maybe Q2 rather than something to do with the rest of the year?
I would say you got it exactly correct, Rasmus.
Okay.
Exactly that.
Very good. Very good. When we're on this subject, what is your sort of thinking around, where you can be in terms of financial leverage?
Yeah. I think, we'll start with Anders, and then I ask Anders.
Yeah. Yeah. I think it's well communicated what our internal liability limit is, and that would be 2.5x rolling 12 EBITDA in the wholly owned operations and 10% of the listed portfolio.
Mm-hmm.
That would put us in place right now to invest around SEK 2.5 billion-SEK 3 billion more. That's when you consider the development last year with the cash flow, as you know, we tied up a lot of operating capital in working capital. That is, of course, something that should normalize now. We have an EBITDA which is growing and getting close to SEK 4 billion, so we should have a really nice effect on the cash flow going forward.
Yeah.
That is how Latour has worked during the year, that we have been self-generating the normal growth, you can say, for acquisitions for a long, long time. For sometimes we have made larger acquisitions. Then the investment room for investment has been a little bit tight, but we have never had the reason to say no, actually, if you look on how it has been in the history.
Very good. Well, how do you think, how do you sort of look at what's going on with prices for potential acquisitions? Has it come up or down in the last quarter, or is it basically unchanged? What was your take on that?
Yeah, I can comment on that. I think it's, how should I say? If we go back, five, six quarters, it was really on the peak. I think it's more normalizing and becoming more, it's a more kind of prudent and normal discussion with potential sellers, today. I think it's... It has come down, over the last year, and more. I would say, that is not, you know, any more an issue for driving the M&A agenda going forward.
Very good. Thank you guys.
Thank you, Rasmus.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad.
Okay.
We have another question coming in, Johan, from the queue.
Okay.
The next question comes from Linus Sigurdson from DNB Markets. Please go ahead.
Hi. Thank you for taking my question. just briefly, on the organic growth and order intake, excluding Caljan, is there any particular business area that's driving this organic growth?
Thank you Linus for your question. It's a good question. As you pointed out in the report, we're very happy with the organic order intake growth across the line, except for those exceptions that we mentioned in Caljan. I would say all of those five areas are growing in a nice way, actually. They're all great, if I can say it like that.
Right. That's very clear. Thank you.
Yeah. Linus, while you're online there, I'd like to a little bit go back to David's question of course, on our exposure to the construction and building market. We touched about that when we discussed Swegon. I'd like to remind the audience as well, if you look across our listed portfolio and so on, we are... The same comments is true for many companies where we are invested. For instance, you could take Fagerhult, which is within lighting, which is also very much benefiting from, you know, the high energy prices and the increased focus on great indoor, you know, working environment.
I think it's important that to really analyze and understand in which sub-segments we are active and located in the value chain to before, you know, drawing any conclusions on our construction building connection and exposure. Just wanted to add that for the clarity, even that you did not ask that question, Linus, but I took it on your caller, so thanks.
Yes. Thank you for that color.
Okay. We have no further questions, Johan.
Okay.
Not on the line.
Okay. I would like to thank you all for participating and listening in to the call. Thank you also all for very good questions. Those of you that asked questions. Having said that, looking forward to meet you all again, when we present the Q2 results later this year. Thanks everybody.