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Challenging operating environment continues

14:00 / 8 February 2023 Nolato Press release

Fourth quarter 2022
• Sales totaled SEK 2,364 million (3,146)
• Operating profit (EBITA) was SEK 163 million (336)
• EBITA margin of 6.9% (10.7)
• Profit after tax was SEK 105 million (271), excl. non-recurring items
• Diluted earnings per share were SEK 0.39 (1.01), excl. non-recurring items
• Cash flow after investments amounted to SEK −188 million (−87)

The Group’s sales decreased by 34% in the fourth quarter, mainly as a result of reduced VHP production volumes in Integrated Solutions, due to Russia’s invasion of Ukraine and a change in the customer’s sourcing strategy. Sales were also adversely affected by the halt in VHP operations from the start of the fourth quarter until 5 December as a result of licensing in China.

“The challenging external factors, with lower volumes and general cost inflation, have resulted in lower margins,” said Christer Wahlquist, President and CEO of Nolato. “We have also seen a continued component shortage, particularly in automotive, which has impacted the demand our customers are experiencing. This has led to lower production efficiency. Intensified efforts were therefore made in the quarter to boost the efficiency of internal processes, reduce total costs, and pass on cost increases in materials, labor and energy to customers.”

Medical Solutions sales amounted to SEK 1,312 million (1,063); adjusted for currency, this was an increase of 9%. Operating profit (EBITA) was SEK 126 million (112), with an EBITA margin of 9.6% (10.5).

“The combination of a change in the sales mix, with a greater proportion from the surgery area and a lower proportion from IVD, had a negative impact on the margin,” noted Christer Wahlquist. “Previous investments in capacity are still not being fully used and are consequently having a negative impact on the margin.”

Integrated Solutions sales amounted to SEK 407 million (1,476); adjusted for currency, this was a decrease of some 78%. Operating profit (EBITA) was SEK 25 million (192), with an EBITA margin of 6.1% (13.0).

“Demand for VHP products has been adversely impacted by the situation in Eastern Europe and by dual-sourcing effects,” said Christer Wahlquist. “Volumes in the first quarter of 2023 are also expected to remain at similar levels as in the fourth quarter of 2022. The EMC business is continuing to perform well, however.”

Industrial Solutions sales amounted to SEK 651 million (609); adjusted for currency, this was a decrease of 2%. Operating profit (EBITA) decreased to SEK 18 million (38) and the EBITA margin to 2.8% (6.2).

“Disruptions to the supply chain at the start of the quarter had an impact, leading to lower volumes, primarily in automotive, while the charging on of cost increases made a positive contribution to sales,” said Christer Wahlquist. “Demand for products supplied to areas in the consumer discretionary sector was slightly lower, and this is expected to continue in 2023, due to worse economic conditions and more restrained consumer spending.”

“We are intensifying efforts to further reduce our total costs and boost efficiency to improve our margins,” said Christer Wahlquist. “Meanwhile, our diversified customer portfolio and good financial position allow us to continue to focus on advancing our position as a global strategic partner with production on three continents.”

Full year 2022
• Sales totaled SEK 10,774 million (11,610)
• Operating profit (EBITA) was SEK 908 million (1,319 excl. non-recurring items)
• Diluted earnings per share were SEK 2.44 (3.70), excl. non-recurring items
• Cash flow after investments amounted to SEK 8 million (446)
• The equity/assets ratio was 54% (47) and net financial liabilities were SEK 708 million (51)

At the Annual General Meeting, the Board of Directors and the President and CEO will propose an unchanged dividend of SEK 1.90 per share (1.90), which corresponds to SEK 512 million (512). The pay-out ratio is 78% (51), excluding non-recurring items. The dividend yield was 3.5% on the share price as of December 31, 2022.

Annual General Meeting
The Annual General Meeting will be held on May 3, 2023. The Nomination Committee proposes the re-election of the Chairman of the Board and other Board members.

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This information was distributed by MFN