Interim report January–March 2024

> Net sales decreased by 17% to SEK 950.6 million (1,146.4). Compared with the year-earlier period, sales were affected by lower prices and continued inventory adjustments by customers. In USD, net sales decreased 17%. For comparable units, net sales decreased 24% in both SEK and USD.
> Order intake decreased 6% to SEK 970 million (1,030). The decrease in USD was 5%. Order intake for comparable units decreased 14% in both SEK and USD. However, compared with the three most recent quarters order intake increased and book to bill ended positively on 1.02.
> EBITA decreased to SEK 142.6 million (183.7), representing an EBITA margin of 15.0% (16.0).
> Cash flow from operating activities was SEK 92.9 million (201.9). 
> Operating profit was SEK 127.4 million (172.6).
> Profit after tax was SEK 89.8 million (125.0).
> Earnings per share before and after dilution was SEK 0.48 (0.67).
 
SIGNIFICANT EVENTS DURING AND AFTER THE QUARTER
> The Board of Directors proposes a dividend of SEK 1.10 (1.10) per share to be paid in May.
> Tim Benjamin was appointed to replace Anders Forsén as new CFO. Tim will take up his new duties in October at the latest.
> On 11 April, 100 per cent of shares were acquired in Cumatrix BV, in Lommel, Belgium. 
 
MESSAGE FROM THE CEO
Progress in a brightening market
 
During the first quarter, we noted a weak, but distinct, increase in order intake after the flat development over the past two quarters, which followed on from several quarters of decline linked to a weaker economy and inventory adjustments across several customer levels. All segments, with the exception of East, noted positive trends, where North America has increased sequentially over the past four quarters, while Europe and Nordic improved following a weak fourth quarter of 2023. The German market remains soft, and we are yet to witness a turnaround in China.
 
Net sales were in line with order intake in previous quarters and as order intake grows, the book to bill has now risen just above one again. Profitability also remains at a healthy level where cost savings in purchasing and logistics offset lower prices to customers compared with the first quarter of 2023. Prices from factories in Asia were stable during the quarter but capacity utilisation increased slightly, and raw material prices have begun to rise, which will probably lead to an increase in prices as we move forward. We can also see an increase in freight costs from Asia, which is an indication that the economic situation has strengthened somewhat.
 
Some areas were particularly strong during the quarter. We increased our focus in Aerospace to secure new customers and business in several markets. Defence developed favourably and we are striving to expand our strong base in the Nordic region to more countries in Europe and North America. In Automotive, we can see a strong performance for our sales to heavy vehicles also linked to our presence in new, high-tech product areas such as intelligent camera solutions instead of traditional rear view mirrors. We also noted that inventory adjustments by our customers and their customers are coming to an end, and customers who have not placed orders for several quarters have now returned. Furthermore, we can see higher activity by many customers and the number of contracts won for new articles has increased by 20 per cent year-on-year.
 
However, we do not expect a rapid rebound in the market but rather a gradual improvement. Assuming the continuing overall improvement in the global economy, the conditions are right for a strong second half of the year. Profitability remains healthy with strong cash flow and we are well prepared to continue to capture market share as demand accelerates.
 
In terms of acquisitions, we acquired a small company in Belgium, Cumatrix BV, after the end of the period. During the quarter, our pipeline of acquisitions grew further, and we are involved in a number of concrete discussions. We believe the M&A climate has improved but it is always difficult to reliably predict when these transactions can be finalised.
 
Lastly, I am pleased to conclude our recruitment process for a new CFO and happy to welcome Tim Benjamin to the NCAB Group. Tim has a solid global background, is business-oriented and has M&A experience. Tim will begin in October at the latest. I would also like to take this opportunity to extend my deep gratitude to Anders Forsén, who has been instrumental in NCAB’s strong performance for the past 16 years.

“We can see higher activity by many customers and the number of contracts won for new articles has increased”

Peter Kruk
President and CEO, NCAB Group AB