Addtech profit rises 17% to 581 million kronor as margins improve
Key Facts
Sweden's Addtech reported a 17% rise in net profit to 581 million Swedish kronor in its fiscal second quarter, from 499 million kronor a year earlier, according to its official financial report. The results cover the period from 1 July to 30 September 2026, when sales rose and profitability improved, with acquisitions and a positive one-off item contributing to performance. Quarterly sales increased 8% to 5,907 million kronor, while business conditions varied across the group's markets and operations. Diluted earnings per share were 2.10 kronor, compared with 1.80 kronor in the corresponding quarter, according to the consolidated financial statements. Management attributed the improvement in results to factors including demand, acquisitions, a better product mix and cost-cutting measures, alongside the exceptional impact in the Safety business area.
Earnings before interest, taxes and amortization reached 987 million kronor during the quarter, compared with 844 million kronor a year earlier, according to the official business-area tables. The earnings margin rose to 16.7% from 15.5% in the corresponding period, alongside the increase in the group's quarterly sales. The result exceeded analysts' forecast of 936 million kronor, according to Investing.com, which reported the comparison between actual earnings and estimates. On the sources of sales growth, Addtech said organic growth was 2% during the fiscal second quarter. Acquisitions contributed 5% to growth, according to the group performance report, giving acquired companies a larger role than organic growth in increasing revenue during the period.
Quarterly earnings also benefited from a positive one-off impact of about 55 million kronor in the Safety business area, according to the chief executive's commentary on the results. The company said this supported earnings before interest, taxes and amortization, the measure that exceeded analysts' forecasts during the period. The item was linked to a realignment of operations at one of the business area's subsidiaries, among the changes discussed in the business-area performance report. According to the report, the accounting treatment included "the write-off of liabilities related to contingent acquisition consideration," contributing to the positive earnings impact. The company also incurred restructuring costs related to these steps, while the group's broader performance benefited from an improved product mix and cost-cutting measures.
In its assessment of demand, management linked market strength to continued high levels of investment in "electrical infrastructure, electrification, defence and data centres," according to the chief executive's commentary. Electrification stood out, with sales rising 31% to 1,078 million kronor in the fiscal second quarter, compared with 822 million kronor in the corresponding period. Geographically, the company described the business environment as good in Finland and Denmark in its assessment of market conditions for group companies. It said the environment remained weak in Norway and Sweden, reflecting differing demand conditions within the Nordic region itself. Outside that region, business conditions were generally strong for group companies, according to the assessment in the report. Construction and installation activity remained weak, while performance in other activities varied, despite support from investment in electricity, defence and data centres.
On liquidity, cash flow from operating activities fell to 717 million kronor in the fiscal second quarter, from 859 million kronor in the corresponding period, according to the consolidated financial statements. The decline in operating cash flow coincided with an increase in net profit, moving in the opposite direction to earnings growth during the period. At the end of the period, group net debt stood at 6,230 million kronor, compared with 5,411 million kronor in the corresponding period a year earlier, according to the other financial information disclosure. The net debt figures exclude pension liabilities, according to the definition Addtech used in presenting its financial position. After the quarter ended, the group acquired 82% of the shares in Britain's Mechanical Power Transmission on 2 October and added it to the Industry business area, according to its disclosure of events after the reporting period.
For the coming quarters, management sees improving markets and demand supporting performance, according to the chief executive's commentary accompanying the quarterly results. Cost inflation risks remain among the factors the group is monitoring in its assessment of future business conditions. It also pointed to risks of supply chain disruptions, alongside potential pressure from rising costs. Management described the outlook as "still uncertain," while maintaining its positive assessment of the support that improving demand provides to performance. Addtech is scheduled to publish its next interim report on 2 February 2027, covering the period from 1 April to 31 December 2026, according to the company's official financial calendar.