Lifco (LIFCO) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 increased by 7.4% to SEK 6,282 million, and for Jan–Sep 2024 by 5.5% to SEK 19,013 million, with acquisitions as the main driver and organic sales declining 2% over nine months.

• EBITA grew 3.2% in Q3 and 2.7% for the nine months, but margins declined to 22.3% in Q3 and 22.5% for Jan–Sep, mainly due to weakness in Demolition & Tools.

• Net profit for Q3 was SEK 757 million, up 0.5% year-over-year; nine-month net profit declined 1.9% to SEK 2,372 million, mainly due to higher interest expenses.

• Lifco continues to focus on niche market leadership, decentralized management, and long-term profit growth.

• Seven businesses were consolidated, adding SEK 1,350 million in annual sales, with further acquisitions expected in Q4.

Financial highlights

• Operating cash flow in Q3 was SEK 1,210 million, down 15.6% year-over-year; nine-month cash flow nearly flat at SEK 2,931 million.

• Earnings per share for Q3 was SEK 1.64, up 0.6%; nine-month EPS was SEK 5.14, down 1.7%.

• Return on capital employed for the period was 21.1%, down from 22.9% last year; return on capital employed excluding goodwill was 128%.

• Net debt/EBITDA at 1.8x as of September 2024, within the target range; interest-bearing net debt/EBITDA at 1.2x.

• SEK 1.7 billion in revenue added from acquisitions during the year.

Outlook and guidance

• Lifco targets annual organic EBITA growth above GDP in relevant markets, with acquisitions to supplement growth.

• Net debt/EBITDA is expected to remain within the 2-3x range; dividend payout policy is 30-50% of net profit.

• Consolidation of three additional companies is expected in Q4, further strengthening Dental, Demolition & Tools, and Systems Solutions.

• No improvement seen in demolition tools market; visibility for coming quarters remains low.

• Management continues to focus on defending and improving profits despite challenging conditions.