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Continued challenging operating environment

13:45 / 27 October 2022 Nolato Press release

Third quarter of 2022 in brief:

  • Sales totaled SEK 2,626 million (3,033)
  • Operating profit (EBITA) was SEK 214 million (339)
  • EBITA margin of 8.1% (11.2)
  • Profit after tax was SEK 160 million (257)
  • Diluted earnings per share were SEK 0.59 (0.95)
  • Cash flow after investments amounted to SEK 166 million (116)

“The challenging operating environment continued to impact the Group’s performance in the third quarter of 2022,” said Christer Wahlquist, Nolato President and CEO.

Medical Solutions sales totaled SEK 1,245 million (977). Adjusted for currency, this was an increase of 13%. Operating profit (EBITA) was SEK 104 million (100), with an EBITA margin of 8.4% (10.2).

“The surgery area saw good growth in the quarter, while in vitro diagnostics (IVD) volumes were low due to pandemic-related inventory adjustments,” noted Christer Wahlquist. “It has not yet been possible to fully charge on inflationary effects, which are resulting in higher manufacturing costs. Investments in capacity made in 2021 are still not being fully used and are consequently having a negative impact on the margin.”

Adjusted for currency, Integrated Solutions sales decreased by some 60% to SEK 745 million (1,519). Operating profit (EBITA) was SEK 77 million (200), with an EBITA margin of 10.3% (13.2).

“The decrease was in line with what we had previously communicated,” said Christer Wahlquist. “Demand for Vaporiser Heating Products (VHP) in Eastern Europe continues to be adversely affected following Russia’s invasion of Ukraine. Our interim report for the first quarter of this year explained that our customer in the VHP segment was assessing its sourcing strategy, and this has now led to us sharing the manufacture of new products.”

The Chinese authorities have introduced new regulatory requirements that include the manufacture of products in the Vaporiser Heating Products (VHP) area in China from October 2022. The processing of licenses has been ongoing since spring 2022. Like several other companies, Nolato has not yet received any such license. Nolato has consequently not produced any VHP products in China during the current month.

“Since the spring, we have been informed that a new form of licensing applies for VHP products, and we submitted the requested information,” said Christer Wahlquist.

Industrial Solutions sales amounted to SEK 638 million (540); adjusted for currency, this was an increase of 9%. Operating profit (EBITA) was SEK 33 million (42), with an EBITA margin of 5.2% (7.8).

“A component shortage, particularly in automotive but in other areas too, has continued to impact the demand that our customers are experiencing and has led to fluctuating production planning for Nolato,” noted Christer Wahlquist. “This has resulted in lower production efficiency, which, together with a time lag in the charging on of cost increases, has adversely affected the margin.”

Consolidated sales totaled SEK 8,410 million (8,464) for the first nine months of 2022. Operating profit (EBITA) was SEK 745 million (SEK 983 million excl. a non-recurring item), with an EBITA margin of 8.9% (11.6% excl. a non-recurring item). Diluted earnings per share were SEK 2.05 (SEK 2.70 excl. a non-recurring item). Cash flow after investments amounted to SEK 143 million (533). The financial position remains strong.

“As a global strategic partner with a large number of customers and a good financial position, we can look ahead with confidence, despite a range of external challenges,” said Christer Wahlquist.

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This information was distributed by MFN