Investment AB Latour (publ)

Good morning, and welcome to the presentation of Investment Able Approves Year-End Report for 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 or use the chat window. I will now hand over to CEO Johan Jastensson and CFO Anders Schmerz.

Thank you, Katarina. Welcome, everybody, to our Q report earnings call. I'm here together with our CFO, Anders Mørk, as mentioned. Very welcome, everybody. If we start with the first slide, our usual slide that we have, and we'd like to say then that our group structure is unchanged. We had a good end of the year despite the declining economic climate turbulence last year, as you know. Despite that, we had a record high profit for the full year and actually a record high operating margin. Order intake has slowed down somewhat in the last quarters, but mixed picture between geographies and markets. The residential segment has been hit harder in the downturn while the energy efficient sector is growing. We're well prepared to adapt if needed. I would also like to highlight that the energy efficient sector It's an important area for Latour, and we're well positioned within this segment. Our efforts in sustainability continues. We have established for all our holdings, wholly owned and listed companies, to commit to the science-based targets initiative, SPTI, with verified targets. As per today, our wholly owned businesses of size have committed and are now working with target setting. The majority of our listed holding has committed and four or, and three or, verified targets, Asavloid, Fargo, and Securitas. So congratulations to those three. And then if we go on to the next slide, you have a picture of all our 10 holdings, listed holdings. Clearly a very positive underlying growth from profit development in the last 10, you can see. We own quality companies who have the ability to grow and win market shares in both booms and recessions. Our holding development in 2020 has, in general, been good. Some of them very good. The ordering intake has weakened for most of the companies, but the picture is mixed. Net sales and profit development has been positive, and we see that the absolute majority of the companies who have reported up until today have proposed increased dividends. Acquisition has been a very active year. For example, we can mention that has analyzed acquisition of hardware and home improvement and also conducted a high level of add-on acquisitions during last year. HMS has signed an agreement to acquire Red Lion Controls in the U.S. with full support from Latour, and we will participate in the new share issues during 2024, which is part of the financing for the aforementioned . And if we go to the next slide, total reserve for the portfolio, we have increased our what has changed since we talked last time. We have increased our holdings in during the quarter, from 41.6% to 33% of the shares in the company. Apart from that, no changes in our listed portfolio. Top market ended strongly after a very volatile year. During the year, the investment portfolio value has increased to 78.8 billion SEK, an increase of 23.9%, whereas the 6RX increased 19.2%. Until Friday of last week, the portfolio value was 73.6 billion sacks, with a total return so far this year of minus 6.7, where the six dollars is minus 1.4. And if we go over, next slide, and we talk about our wholly owned operations. The wholly owned operations ended the year in a solid manner, despite the economic slowdown. Order intake has decreased in the last quarter. However, we had organic growth in the last quarter, partly given by a few large orders three times. We have set the customer purchase behavior. It's now normalized to a large extent. Our operations targeting the rest of the segment has noticed a decline in demand. Also, Kalyan's order intake has been on a lower level since a year and a half. which is the normalization effect, very strong water intake during the pandemic years of 21 and 22. However, demand for example, energy efficient products is developing. Our whole yield operations are spread over different markets and geographies, all of them not affected by a slowdown at the same time. Looking at the industrial operations as a whole, water intake in the quarter increased by 11%. organic 5% and net sales increased by 1% organic compared to a very strong last quarter of 2022. Quarterly yielded results amounted to $8.56 million, a decline of 8% compared to a record quarter last year with higher volumes, and margins amounted to 14.2%. Full year, our businesses have good cost control. On the whole year, our businesses have good cost control, protects the profit in an effective manner, changing environment. We have delivered on the very high order book that we ended the year with last year. Total growth for order intake was 5% and 13%. Operating profit total growth of 19%. to 3,807,000,000 SEK, and the EBIT mark was 14.9% for the full year. And lastly, we had a very strong cash flow generation amounting to 4.7 billion SEK last year. So in summary, it's a very strong result and yet another record year, and we are very happy and proud of this result on behalf of all team members in Latour. And if we talk a bit about acquisitions, going into the next slide. After many acquisitions during 21 and 22, we lowered the tempo. Activities are still ongoing throughout the year with a good pace, and we started 2024 with three finalized transactions. In 2023, we are going to acquire Dallaire in January, and Latour Future Solutions invested in Quantify in July. This year, 24 in January, B.S. Tableau was acquired to Latour Industries. B.S. Tableau is the German manufacturer of components for elevators, manufacturers of self-disposed fixtures for elevator cabins and a broad range of electronic components for lift operators and OEMs. OEMs mostly targeting modernization projects. Net sales is around 6 million euros. And also in January, we acquired Electron and EPAS to Bemstick. Electron is an Italian pioneer within the KNX technology and has over 25 years of experience in the development of hardware software devices for smart buildings, energy efficiency, and hospitality applications. IFAS is a German developer and manufacturer of KNX and DALI building automation devices. Together, Electro and IFAS has an estimated net sales, yearly net sales of Euro 26 million. And lastly, we acquired PDL and Condor to the NordLock Group. PDL is a NordLock distributor in the Western Canada, and Condor is a niche manufacturer of specialized components. Together, PBL and Ponder has an estimated net sales of 7 million Canadian dollars. Having said that, I would like to hand over to Anders. So over to you. Thank you.

Thank you so much, Johan, and it's a pleasure to speak about all of our business areas. We start with BEMSIC on the first picture. And for BEMSIC, the order intake was slightly weak compared to the very strong previous quarters. And then with weaker, we mean it was only growing organically by 6%, whereas the full year had organic growth of 10%. The total growth in net sales was 6%, and that, however, was an organic decline for the quarter with minus 7%. So it was a little bit deep in net sales, but very good order intake. BAMSIC have ongoing investments in R&D leading to several product launches in 2024, and this will have a slightly negative effect on the margin, but only in the short run. The operating result was as an outcome of a little bit lower sales, 55 million for the quarter, and at the record level then for this whole year. And as Johan said, we made two acquisitions, or rather one in bringing two companies to us in January. In the short term, the market climate is a little bit uncertain, but in the long term, it's in a positive market sentiment. So very well done, Mikael and team, for the achievements during 2023. Let's go to the next business area, which is Kalyan. And as you can see, in the five-year shot, the business is now double the size than in 2020. This is more or less all because of organic growth. But as you also know, we have concluded for quite many quarters now that the water intake has been on a low level. But the growth that came before this should be in hindsight when we think about this. Customers overall for Italian has been more conservative when it comes to capital expenditures, and therefore their order intake is on a lower level. Market activities are gradually starting to increase, but as we noted before, the assessment is that net sales will continue to decrease in the short term. Net sales in the quarter was well below corresponding period last year, but still on a quite decent level, considerably higher than the present order intake. However, the lower volumes resulted in an operating profit lower than last year. Kalyan has conducted a cost-saving program to decrease fixed costs and has closed down the production facility in Denmark to consolidate the capacity for Latvia and the US instead. The full-year profit for Kalyan is the second highest so far in Kalyan's history and a good operating margin of 17.9%. Thank you very much, Henrik and team, for taking care of this situation in a very professional manner. And we go to the next business area, which is Hultafors Group. Slightly weaker development during the quarter for Hultafors, but you should bear in mind that the fourth quarter in 2022, in very many ways, was a record quarter. So the business unit personal protective equipment within Hultapås is developing very, very strong, but slightly weaker number than for the other business areas. And we also see a bit more volatility in the demand from month to month. And this is very typical for Hultapås when the business climate is a little bit more uncertain. The gross margins have been strong and contributes to a very good profitability to go together with effective cost management. So the result then for Hultapås was a little bit lower but still on a strong level for the quarter at 307 million Swedish krona. Full year has been very positive with record EBIT amounting to 1.1 billion Swedish Kronos. Very, very good. Very well done, Martin and team. And we go to the next business area, which then is Latour Industries. Here we have a mixed picture regarding order intake between the business units, but overall on a quite good level with organic growth. The market is, however, a bit hesitant, and order intake also here quite volatile between the months. Net sales grew by 7% in total and 3% organically. But as said, then with a very different picture for the different business units. Earnings and profitability as a whole is developing in the right direction and operating profit grew by 34% to 95 million SEK with an operating margin of 8.2%. And then, as you can see in the heading for this picture, this business area are building the basis for future business areas. And this means that the profitability has good prospects to grow even stronger going forward. And you can see in the five year shot that that is true as well. During the quarter, the Lyft-related companies, together with the recently acquired BAS Tableau that was acquired in January, now has formed a business unit called InnovaLyft. We're really looking forward to that going forward. All in all, very well done, Björn and your team, and also summing up to Latour Industries' best year ever. Very, very good. We go to the next business area, which is Nordlok, and the order intake is just below corresponding quarter last year, which at that point was a record high quarter. The sales, net sales, showed strong organic growth of 13%, all regions and segments then contributing positively. These high volumes are contributing to the best quarter for Nordlok ever, so the best fourth quarter, sorry for that, with an EBIT of 98 million Swedish krona, despite the negative effects from restructuring costs of about 8 million Swedish kronas. And also the full year was the best year ever for Nordlok. And in January, then Nordic Megavis acquisitions in Canada that Johan mentioned before. So very, very well done, Fredrik and your team. And also many thanks to you, Fredrik, now that you have decided to leave us for new challenges outside Latour. And you should remember, we will always be here for you. So let's go to Svegon, the last business area. Svegon had a very strong order intake that grew by 14% in the quarter, which of course is very positive. It was partly driven by a few large orders, but also with a good demand within commercial buildings overall. Sweden and the Nordics are still hit by the lower demand within the residential sector. We see relatively strong demand within sustainable solutions, HVAC systems, cooling and heating systems, service. Net sales for the quarter was organically lower than last year. And as you know, the corresponding period last year was boasted after the recovery that we had from when we had major disruptions in the supply chain during the summer 2022. And this then explaining the lower EBIT level this year compared to last year. Full year for Svegon was very, very strong, growing by 25% and with an EBIT margin of 12.8%, summing up to yet another record year. So very well done, Andreas and team, and summing up, very well done everyone in the business areas. We turn to the next page, Katarina, and we see the net asset value growing during the year by 27.5 year to 198 kronas per share. And this then could be compared to the index that grew by 19.2%. This means when we compare with the share price at December, that was 263 kronas. Sorry, my computer went down, so I lost my picture. I hope you can hear me. So I will speak without picture. Sorry for that. Yeah, we have a premium then when we compare the share price to the net asset value of 33%. And on this Friday last week, we also measured the net asset value. It had decreased a bit to 196, and the share price at the same day closed at 270, which then was a premium to the net asset value of about 42%. Also, I should mention the net debt, which decreased during the quarter from 11.7 billion Swedish krona to 10, a very large decrease. And this was because of a very, very strong operation of cash flow in the period. and partly also because strengthening of the Swedish krona that reduced our debt a little bit. So very good development on the net that now corresponds to about 7% of our investments leaving a pretty nice headroom for further acquisitions. Now Johan, I will leave back to you.