Thank you, and good afternoon to all your participants, and thank you for being interested in the presentation on Nolato third quarter 2020. This is Christer Wahlquist speaking, CEO of Nolato Group. If we summarize the third quarter for the group, we had a good growth, excellent even, during this quarter, totaling 22% organic growth, adjusted for currency and acquisitions. The sales totally up on SEK 2.5 billion. The GW Plastics acquisition was consolidated from 1st of September, so it's one month in this quarter. During this quarter, we saw growth across all business areas. Our EBITDA operating profit rose to SEK 304 million, if we exclude the non-recurring item of SEK 17 million, giving us a margin of 12.2%. That is a strong margin for the group. Cash flow after investments, excluding acquisition, was SEK 82 million
We sustained a strong financial position, including after acquisition with an equity ratio of 40%. If you look on the graph there, where you can see the 20-year trend of Nolato Group growing. If we then turn to page three, since this is the first quarter after our acquisitions of the GW Plastics, it's sort of summarizing the key things behind that acquisition. The net sales on an annual basis is approximately SEK 1.8 billion, with a margin around 7%. GW Plastics have around 1,100 employees at seven production plants across, most of them, or five of them in North America, one in Ireland and one in China, giving the Nolato Group an excellent positioning on the three important continents. Out of the GW Plastics sales, just over four-fifths is related to medical devices, and the remainder mainly automotive industry.
We have consolidated GW Plastics from 1st of September. It contributed with 145 million SEK in sales for one month in the third quarter. Turning to page four, showing the different business area and the group figures. The three different business area create synergies across business areas with the uniqueness of the individual businesses, with, of course, in the base of the industry or business, we have using the same material technology, solution-oriented development partner, and a common production technology, giving us an advantage towards the different customer sets in the different business areas. Turning to page five, going into the Medical Solutions business area. During the third quarter, we had sales close to SEK 800 million . An EBITDA of SEK 103 million, giving us a strong margin of 12.9%. On the graph here, you see the long-term growth of the medical business area.
We've seen consecutive growth now for 20 years, targeting for global expansion. On page six of the slide deck, you will find the focus product areas within the Medical Solutions business area. These are, of course, drug deliveries, in vitro diagnostic products, endoscopy and general surgery products, cardiology, continence care, and pharma packaging, which are the most interesting areas that we operate within. Turning to page seven, summarizing up the Medical Solutions third quarter. We saw a 30% increase in sales, but if we adjust for the currency and acquisition, we saw a 12% growth, which is very strong. During the quarter, GW Plastics acquisition contributed SEK 127 million, and integration of GW Plastics is proceeding according to plan. During the quarter, we saw strong growth in our production volumes.
We see high demand in segments such as diagnostic and respiratory, which increased as a result of the COVID-19 pandemic. Our margin ended up at 12.9% due to high capacity utilization and a positive sales mix that had a beneficial effect. Of course, the acquisition affected one month on the margin. We will expand our production capacity in Switzerland. Within Integrated Solutions, we are in a mode of expanding to new market segments, and we've been doing that for some years now with good success. If we look on page nine, you will see the two different parts of the business area Integrated Solutions, and the larger portion is, of course, consumer electronics with the VHP area and the connected Wi-Fi systems, wearables, mobile phones, and so on.
We have the smaller portion of the business area called EMC and Thermal, which is shielding solutions for electromagnetic influences, and with good growth and nice margins. If we turn to page 10, looking into the figures of Integrated Solutions, we saw a strong increase in sales, 34%. If we adjust for currency acquisitions, we had an exceptional 40% growth, and it was driven by high demands within the VHP sector. We see good growth for 2020, volumes have historically fluctuated between quarters. We have also made cost reductions in the supply chain together with the customers, affecting approximately 10% of both price and cost reduction towards that segment. During the fourth quarter, we will see sales more in line with the first quarter 2020. During the quarter, EMC had solid sales, we also saw a continued low mobile phone volumes.
We had a very strong margin during the quarter of 13.8% due to the situation with high volumes. The sales in the quarter ended up at SEK 1,158 million, and an EBITDA of SEK 160 million. If we look into Industrial Solutions business area on page 11, here we are on a technology and geographical expansion journey. If we look in on page 12, the two different segments to the Industrial Solutions business area. We have the general industry, which is the largest portion, with the hygiene products, forest equipment, furniture, and so on. We have the automotive part of the business areas, which is, of course, the smaller portion of this business area. Page 13, we saw a growth for Industrial Solutions during the quarter, it turned up after adjusted for currency and acquisitions. We saw a 4% growth.
We saw a gradual increase in demand from the automotive industry during the quarter and good volumes in other segments. The margin ended up at 8.8% due to a gradual increase in volumes and cost savings implemented during the quarter.
Good afternoon. Per-Ola Holmström, CFO, commenting on page 14, group financial highlights. Sales in the quarter, SEK 2.5 billion, an increase with 22% if we exclude currency and acquisitions. The operating profit, EBITDA, was SEK 287 million. The margin is then 11.5%. Those numbers including the non-recurring SEK 17 million. In a rolling 12-month base, sales are SEK 9.1 billion. We were just about SEK 1 billion in operating profit EBITDA. The tax rate for accumulated nine months is stable, 20.1%, in line with the same period last year. Cash flow after investments, excluding the acquisition and disposals, that is SEK 82 million compared to -SEK 4 last year. The net investment, excluding acquisitions again, is SEK 112 million in the quarter compared to SEK 87 the same quarter last year. We expect investment this year to be about SEK 400 million. That is an increasing level in the second half of this year.
Looking into next year, what we see right now is an increasing level of investments. Of course, we include GW Plastics, and then we estimate investments to be between SEK 550 million and SEK 600 million during 2021. The earnings per share were 7.96. If we exclude amortization of intangible assets from acquisitions, the earnings are SEK 8.05. The difference between those two is, of course, increasing as we add depreciation or amortization from the new acquisition. If we also exclude non-recurring items in the quarter, earnings per share are SEK 8.57. The net financial liabilities, they are SEK 535 million end of the quarter. That is the financial liabilities. If we include pension and lease liabilities, the net debt is SEK 1,000,077,000. Even after the acquisition, we have a strong financial position. The equity assets ratio is 40%.
If we turn to page 15, and some comments about our current situation per business area. If we start with Medical Solutions, we have our maintained growth strategy growing faster than the market. We focus a lot on innovation, built on strong customer relationship. We have seen and see impact of the pandemic, and we are working according to plan with integration of acquisition. Within the Integrated Solutions, we have established a position in the new product areas, continued strong position within the EMC and Thermal. We have in our base, of course, the flexible production structure. Within the VHP sector, we have cost reduction throughout the supply chain together with the customers. Within Industrial Solutions, we have advanced our market positions. The cost savings is implemented, and we have an impact of the pandemic, and we are working on integration of acquisitions.
Now we're opening for questions and comments.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Erik Cassel at ABG Sundal Collier. Please go ahead. Your line is open.
Hello. Good afternoon, Christer and Per-Ola. The VHP products are continuing to drive growth. For this quarter, given that you're guiding down for Q4, is it still inventory build up? It seems like expected volumes for Q4 just shifted into Q3, and then it kind of evens out.
I think you could say that there are elements of inventory build up in Q3 adding to that, and maybe the opposite situation in Q4. Yes.
I just want to ask, you have not changed your view for normalized volumes going forward then. Is it the same as communicated earlier?
I would say that we have not given, let's say, more definite numbers. We have commented that we think we are in an interesting area with those products, and we work together with an interesting customer in this arena, and we see this as growth business. We have been clear about the fourth quarter in this report, and we have usually a good view of the next quarter coming up, and we are trying to give some guidance about that, and we have done that previously as well.
Yeah. Can we kind of expect margins in the same region as this quarter, or will that too go down once volumes go down to the 13% region? Does the new VHP products just have better margins?
The margins are similar, and the margins going forward, they are, of course, dependent on the volume situation. I would say the decrease in volume is also affecting the margin a bit down by the volume itself.
All right. Then the favorable sales mix for Medical Solutions, I assume that's still from Corona-related sales. If so, do you expect to see continued volumes from Corona devices and such, or are they kind of fading away right now?
In that sense, there are parts of the Medical Solutions which have an increased demand due to the pandemic. It's relating mostly to, of course, IVD and those kind of testing. We see continuously high volumes on those sides. On the other hand, we've seen a little bit of lower volumes on the surgical side during the pandemic due to the situation that a lot of surgery has been postponed, and we expect that to sort of come back a little bit maybe late in the fourth quarter or next year. I think those two effects will maybe even out.
All right. Thank you. A last one for me. The production expansion in Switzerland, what kind of capacity increase could we be seeing in relation to current levels?
We are looking at expanding maybe 10%-15% of floor space.
All right. Thank you. That's all for me.
Thank you.
Thank you. The next question is from the line of Carl Magnus Tronn of Nordea. Please go ahead. Your line is open.
Hi, it's Carl. I am from Nordea. I have a couple of questions. Firstly, could you please repeat your comment on the 10% cost reductions? You mentioned something on the pricing as well. Is it that your customer have told you to lower the price per unit, and you by that push down your production cost by 10%? What do you mean by that?
Yes. In our value proposition to our customers, we have something that we call cost out method. We are constantly looking for ways to drive away cost from the total. In this case, we have been able to drive away approximately 10% of cost, and in this case, we will also decrease the price for the customer by 10%, approximately.
Okay. Would we see a lag effect there impacting margins for Q4?
That effect of the supply chain reduced costs, we don't see will have any margin effects. The margins would be similar after that. Margins are more, as I commented earlier, a volume effect, if any.
Okay, perfect. That will come in in Q4, right?
Start of Q4, I guess, or the 10% cost reduction that is.
Yeah.
Okay, perfect. Also I wonder, have you seen any sort of sequential recovery within the surgical area, or what do you see there?
Not really. I would not say. The surgical situation is more like it was in the second quarter.
Okay. Perfect. Also could you, Per-Ola, maybe please give some guidance on the margins from the consolidated volumes from the GW Plastics?
We have commented the margins going forward and how we look upon them, especially going into next year. It has been only one month, and as you have seen, the volumes and sales were very much in line with what we have commented earlier. We didn't see any major changes in the expectations from the margins either. Slightly on the lower side, I would say, that we had the situation. Volumes were a bit behind and margins as well.
Okay.
Everything is going according to plan when it comes to the integration, and it's a positive feeling and a positive situation with GW Plastics.
Okay, perfect. I just wonder, you are both taking out cost in the supply chain similar to the fact that you're guiding down Q4. Maybe it's speculations, but could it be that the underlying volumes are quite soft for your customer and that they want to gain market shares by pricing themselves lower than competitors?
I think it should be seen in a bigger picture, and of course, as I said, in our value proposition to customers, it's always to try to create win-win situation by driving away cost. I would rather see it in that line.
Is it the first time in your partnership with the customer that you have lowered your price?
No.
Okay. It's nothing new.
No.
Okay, perfect. Thank you.
Thank you.
Thank you. There is one further question in the queue so far. Just as a reminder to participants, if you do wish to ask a question, please dial zero one on your telephone keypads now. The next question in the queues comes from the line of Nikhil Hassan of Carnegie. Please go ahead. Your line is open.
All right. Thanks. I was wondering about the GW Plastics and how they were impacted by COVID-19. They have quite a high surgical exposure, I believe, and also a slight automotive exposure. They are still at a run rate of about SEK 1.75 billion in revenue. If you can say something about how they are developing right now.
That is correct that they are exposed in surgical and automotive. Those segments are affected by the COVID-19 situation. That has some sort of an impact. It was, of course, something that we knew ahead of time before we made the acquisition. It's in our plans.
Yeah, exactly. The surgical side should maybe have a more normalized revenue level. It's maybe subdued right now. Any thoughts about that?
I didn't really catch the question, but I try to answer what I thought you asked. Yes, the surgical volumes are a little bit lower at the moment, affecting, not dramatically, but to some extent.
Okay. Fair enough. I was also just wondering about this cost reduction measures that you have done. Why did you do it right now?
It was an opportunity we saw, and we constantly working on it, and we got some good effects, and then it happened.
Okay. How should we think about the base? Did you have any impact from this in Q3 already?
This is something that started in the later part of third quarter.
Okay. Just simply put everything else equal, we should assume 10% revenue reduction based on the current run rates going forward?
Yes. Correct.
Okay, great. That's it for me.
Thank you.
Thank you. Okay, no further questions coming through. I'll hand back to our speakers for the closing comments.
Thank you for your interest in Nolato and the presentation of our third quarter, and I wish you a great weekend later today. Thank you.
This now concludes the conference. Thank you all very much for attending. You may now disconnect your lines.