Thank you, and welcome everybody to the presentation of the third quarter 2019 for Nolato. On page two in the presentation, we sum up the third quarter for the group. We ended up with sales just below SEK 2 billion. That is adjusted for currency, a decrease by 5% for the group. We saw in the quarter a continued positive performance by Medical Solutions, a normalized inventory situation at Integrated Solutions, and stable volumes for Industrial Solutions. The operating profit rose to SEK 238 million. That is, of course, built up by positive earnings performance by all business areas. The margin, strong at 12%. If we exclude the non-recurring items, it was 11.2%. The cash flow after investment was negative by SEK 4 million in comparison to SEK 68 million in the last third quarter. Continued a solid financial position. Now I'm turning to page three.
Just sum up the group with the three different business areas and the split between them. In this quarter, we of course have a good performance across the board, turning to page four, going into the Medical Solutions, where we had the sales of SEK 602 million in the quarter. You also see the graph of the long-term global expansion and the growth of the medical business areas. Turning to page five. During the third quarter, the Medical Solutions had a 3% increase in sales. If we adjust for the currency effect, it was unchanged sales situation. In comparison, last year contained high sales of development work and production equipment, as we previously have explained. The fourth quarter growth is expected to be affected by a strong competitive quarter, as also previously explained. The margin ended up at 13.1%.
It sustained healthy margins within the business area, and we see strong product activities within the auto-injector, the insulin products, and incontinence products. As I said earlier, the sales ended up at SEK 602 million, and the profit on the EBITA level was SEK 80 million, giving then the margin of 13.1%. The Medical Solutions on page six, it's divided into two different segments. We call them medical device and the pharma packaging segment of the business area, in which the medical device is the largest portion of the business area. If we then jump into Integrated Solutions business area, on page seven, you can see the historical sales volumes for this business area in a volatile history built up of the mobile phones. Some years ago, then we entered into the new market areas within the business area, creating growth over the last period of time.
Turning to page eight. During third quarter, Integrated Solutions had a 3% decrease in sales, we adjust for the currency effect, we had a negative growth of 12%. We see that the inventory situation within the business area has normalized and stabilized. The heating device, part of the VHP, delivered new product variants in the quarter. We also saw in the quarter a weak growth for the EMC, positive growth for the mobile phone performance. The margin, we had a strong margin of 13.5%, built up by high production efficiency, good capacity utilization, and of course, some currency effects. As previously also informed, we have acquired a U.S.-based company called Ja-Bar during this period. The sales ended up at SEK 862 million for the quarter, and the EBITA was SEK 116. If we turn to page nine, there is some information about the Ja-Bar company that we have acquired.
The company is based in New Jersey in the U.S. Approximately 70 people employed and annual sales around SEK 150 million with good profitability. The company has a broad customer base with over 500 clients in different sectors, and we see that this company is very strong together with our EMC business, creating possibilities for new customers and also a geographical expansion with a footprint in the U.S. On page 10, you will see the two different parts to the business area Integrated Solutions with the consumer electronics, with mobile phones, VHP business, and different connected or electronically devices in different aspects. We also have the EMC thermal
Which is shielding solutions for networks, equipment, connected things in the car industry and other industrial components that we shield the electromagnetic influences between different components. The Ja-Bar acquisition will be part of the EMC thermal part of the business area. Turning to page 11, coming into the Industrial Solutions business area. Also on this, we present a 20-year graph of our sales, the sales in this quarter ended up at SEK 512 million. We go into page 12. We saw a 4% increase in sales, if we adjust that by currency, ended up at 3% increase. We saw stable volumes during the quarter, we ended up at the EBITA margin of 8.6%, should be compared to the 7.1% during third quarter 2018. We have an impact of unsatisfactory efficiency at one of our production facility.
Implemented and ongoing measures have gradual impact on the margin. On page 13, you will see a split of the business area within the two major segments. The general industry, containing of general industrial companies where we create solutions, and the automotive part, working with the Scandinavian automotive market, both heavy vehicles and also car industries. Page 14 summarizes the consolidated group numbers. Net sales at almost SEK 2 billion, actually exactly the same number as last year's Q3. If we exclude currency effects, we had a negative growth of 5% coming from the business area integrated. The margin increased to a very strong 12%, compared to 10.4% last year. If we exclude the non-recurring items last year, that number was 11.2%, leading to increased profit levels at all levels.
The operating profit EBITA was SEK 238 million, compared to SEK 222, excluding SEK 17 million in non-recurring items, which was a divestment of a company within the group which we sold last year. The tax rate was in line with accumulated six months, 20%. Cash flow after investments, that was minus SEK 4 million for the quarter compared to minus SEK 68 million if we exclude the divestment last year. During both these quarters, we did see a working capital need that was actually almost SEK 200 million during this quarter. Mainly an increase of accounts receivables because of high sales numbers in the end of this quarter. The net investments was SEK 87 million in the quarter, below last year's same quarter of SEK 107 million. We expect around SEK 400 million for the full year 2019, and maybe even some SEK millions below that number.
The equity assets ratio is 47% and net financial assets SEK 186 million if we exclude pension liabilities and lease liabilities, giving us a strong, continued, solid financial position. The summary of lease effects can be seen on the slide package on the last page. The effects are similar to the one in previous quarters. Turning to page 15 and the current situation by business area. If we start with Medical Solutions, we have a maintained growth strategy, a lot of focus on innovation and very strong customer relationships in the background. On the Integrated Solutions business area, we have established a position in the new product areas. We see overall a continued strong position within EMC and of course, on the background, a flexible production structure within this business area. In Industrial Solutions, we have advanced our market positions.
We have efficiency measures taken, and we see gradually having an effect. We can see some indications of a slowdown in the economy, but still stable volumes. Now we are open for questions and answer session.
We have a question from the line of Carl Ragnerstam from Nordea. Carl, please go ahead. Your line is open for your question.
Hi, it's Carl from Nordea. Can you hear me?
Yes. Sorry about the delay there.
No problem. I have a couple of questions. First of all, regarding the heat-not-burn segment. You started to deliver the new devices during the quarter. How should we look at Q4 as a sequential comparison in terms of inventory levels, et cetera? Should we expect an inventory build-up? What do you see there?
We have earlier commented that we think the customer can do a better planning than initially when it comes to launches into new markets and launches of new products. We don't really see the inventory build-up effect that we have seen previously coming from those new products. That is the same view we had after Q2, and we have the same view now as well, and we don't see that there has been an inventory build-up in this quarter, and we don't expect any major effects of that in Q4 either.
Okay. Also, given your guidance after Q2 on Medical Solutions, I thought Q3 should be the main challenging quarter for you. It looks like Q4 will meet tough comparisons as well as you have commented. To me, they look fairly normal. My question is, can you see any slowdown for any consumer segment or across customer segments? Should we expect you to face tough comparisons going into 2020 as well? The comparison seems quite similar to Q4.
I think we have commented that previously and said that during the second half of 2019, we had a tough comparison. I think you should see that, and we have not seen any slowdown in any specific segment or product groups.
Okay. If I look at numbers specifically, it looks like Q3 is the tough comparison, but it might be Q4 as well as you said, but it sounds a little bit strange.
I think you could also say that maybe we expected Q3 comparison to be a bit more tough, so to say. It ended up as it did, and I think having said that, I think we have to see the two quarters during the second half of 2019 together, so to say. Now we ended up maybe a bit better for the Q3, but still we have the same view of the second half of 2019.
Okay. Finally, you mentioned that you saw EMC softness during the end of the quarter. Do you have any view what's behind that? Should we expect a slowdown in going into Q4 as well?
Our estimation of the slowdown is due to a possible delay of the rollout of the 5G in mostly China and investments coming from that.
Okay. You expect them to burn, as it's speaking, Q4 as well or to be slow?
Yes, it possibly could affect Q4 as well.
Okay, thanks.
Thank you.
Thank you. Our next question comes from the line of Mikael Lassen of Carnegie. Please go ahead.
Yes. Hello. Couple of questions. First of all, can you clarify the non-recurring positive effect now in Q3 of SEK 16 million?
The non-recurring effect came from last year's Q3, and that was the sale of a subsidiary and had a negative effect of Q3 last year of SEK 17 million. One, seven.
Okay. You didn't have anything this year?
No.
Okay.
That's right.
What I thought. It was a bit difficult to understand that initially. Great. The second one was about the inventory build-up late in Q3. In what area did you see that? Was it across the board, or was it in some specific segment?
It was all over the company, actually, and maybe with some additional increase in the business area Integrated Solutions in combination with the new products in VHP segment.
Okay. The other segment, Industrial Medical, had more sort of a normal seasonal pattern in Q3 regarding this late volume and deliveries?
That's right. Okay, thanks.
Thank you. Our next question comes from the line of Kiran Joshi of Stock Views. Please go ahead.
Hi. That's Kiran Joshi of Stock Views, but I'll let that go. Just two questions to you both. I think at your capital markets day, you discussed that your customer within VHP was finding a bottleneck within regulatory approval when entering new markets. Have you seen any developments there and any sorts of progress on your VHP customer gaining access to new markets?
I think the rollout of this into new markets is according to plan, and for better information, I think it's better to look at the actors or the big players in this field and see how they are progressing.
Okay. Maybe if I can touch again on the working capital. I think in the notes you mentioned that, as was the case last year, increased sales at the end of the quarter are driving working capital requirements. We've seen that rise in accounts receivable. Is this some sort of seasonality within your business, and is there any reason why we see this build up in inventory or sales late in the third quarter?
I think it's maybe two reasons behind it. One is a bit of a seasonality coming from mainly the Industrial business area and, to some extent, from the Medical business area, where we see a vacation effect during the summer, doing that most of the sales in this third quarter happens in the last part of the quarter, doing that with our terms of days outstanding, that we increase the accounts receivables mainly at the end of the quarter. Then maybe with some effects from the VHP segment as well, in the end of the quarter. Those are the two main effects. Yes, there is a seasonality effect in this quarter.
The VHP part was more a one-off with the release of the new product. Is that right? The Industrial Medical is coming back from the summer. Okay, great.
Yes.
Thanks very much.
That's right.
Thank you. Our next question comes from the line of Oskar Wickström of ABG Sundal Collier. Please go ahead.
Thank you. Sorry, I got disconnected just before the question was about to start. I heard that you touched on this, but I got in a bit late. Just the Medical Solutions, I'm a bit curious there because, basically you're talking about these difficult comps, and it seems to me that Q3 would be the most difficult quarter, and still you remained flat. Are you repeating guidance then for H2 as a whole? Or how do you view that? I'm sorry if you have to repeat yourself.
Yes, that's correct. I think we might have seen the Q3 coming out a bit better than expected, but we still keep our guidance for the second half of 2019.
Yeah. It's just strange because Q4 doesn't appear to be that challenging of a comparable. Could you just elaborate a bit on Q4 last year and refresh our minds?
We did see a high activity from projects and also from some equipment sold, doing that part of the sales was high also in the fourth quarter. Our remark about the second half this year is there also for the fourth quarter, even if we might have thought that the third quarter was a bit more challenging. Yeah.
All right, cool. All right, well, thank you. I just wanted to clarify that, so thanks a lot.
Yeah.
Just to remind everyone, if you would like to ask a question, please press zero one on your telephone keypads. You may withdraw your question by pressing zero two to cancel, and there will be a further pause while questions are being registered. There are no further questions at this time. Please go ahead, speakers.
Thank you for listening to the presentation of the third quarter and all those nice questions. Thank you very much, and have a nice afternoon.