Alimak positivity continues

Swedish international hoist, mastclimber and face access company Alimak has reported a strong third quarter.

Year to date
Revenues for the nine months to the end of September were SK 5.26 billion ($475 million) up 69.2 percent on the same period last year. Mostly due to the acquisition of Tractel. Pre-tax profits increased more than 60 percent to Sk395 ($35.6 million)

The individual divisions were as follows:
Construction: Sk1.31 billion ($118.1 million) + 36% with and EBIT of Sk239 ($21.6 million) +40 %
Façade: Sk1.5 billion ($134.2 million) + 60% EBIT (profit before interest and depreciation) more than tripled to Sk95 million ($8.6 million)
Height Safety & Productivity Solutions: Sk1.06 billion ($95.7 million) – new division - EBIT Sk205 million ($18.5 million)
Industrial: Sk982 million ($88.6 million) +22% EBIT Sk227 million ($20.5 million) +54%
Wind: Sk508 million ($45.8 million) +23% EBIT Sk96 (8.7 million) +67%

Third quarter
Total revenues for the third quarter were Sk1.7 billion ($156.1 million) +58% with a Pre-tax profit increased 93% to Sk189 million ($17 million).
Façade: Sk507 million ($45.8 million) + 55% EBIT more than doubled to Sk40 million ($3.6 million)
Construction: Sk440 million ($39.7 million) + 25% with and EBIT of Sk82 million ($7.4 million) + 25 %
Height Safety & Productivity Solutions: Sk326 million ($29.4 million) – EBIT Sk51 million ($4.6 million)
Industrial: Sk331 million ($29.9 million) +20% EBIT Sk73 million ($6.6 million) +44%
Wind: Sk169 million ($15 million)+18% EBIT Sk33 million ($2.98 millon) +47%

Chief executive Ole Kristian Jødahl said: “The positive momentum continues, and we report another solid quarter, despite an overall challenging environment. The strong earnings and cash flow in the first nine months of the year has enabled us to deleverage and that we are now back to our targeted net debt/EBITDA of under x2.5.
Construction showed impressive sales and earnings performance in the quarter, despite the stagnant market situation, and demonstrates that our strategic initiatives and organisation are effective and that we are focusing on the right things. Our global market presence, attractive product portfolio, and a strong rental and service business further creates resilience for the division, and we continue to see opportunities ahead.
In Wind, we have seen a remarkable turnaround in the past year, with gradual improvement quarter by quarter. The performance in the third quarter further confirms this development. A continued good market in the US, active price management and a strong global service market contributed to the results.
Activity in Industrial continued to be good in most markets. Quarterly order intake was at the same level as last year. Revenue growth was strong, which contributed to a significant margin increase. With the leadership of Jens Holmberg, who joined as executive vice president of the division in September.
In Facade Access, we see continued impact of higher interest rates resulting in projects being put on hold or delayed. However, we see our market position being strengthened by the combined offering and engineering capabilities resulting from the Tractel acquisition. The service segment contributed positively to the quarter, and we see significant growth opportunities going forward.
In Height Safety and Productivity Solutions, order intake and revenue continued to develop well. The margin decrease in the quarter is due to seasonality and change in management fee allocation. We are satisfied with the year to date performance. We are increasing our investments in sales, marketing, and product development and see good potential for cross selling of height safety and productivity solutions together with our other divisions.”

Vertikal Comment

It is slightly challenging to compare this year with last year at Alimak, given the impact of the Tractel acquisition and merger, which has produced a completely different company than the pre-deal Alimak. The company does though appear to be making what is a substantial and quite diverse merger work, and the early signs are that it will be transformative over the longer term.

The company does now have significant diversity and in some of the divisions a strong position in markets that have a high threshold of entry. The fact that a substantial portion of its revenues and profit now comes from service and maintenance is not only a financial bonus in terms of margins and protection from major cyclical downturns, but also helps keep out new entrants that do not have the historic customer base for such business.

So far it all looks quite positive. Hopefully the company will keep doing what it is in order to further reduce its leverage, rather than going out looking for another big acquisition before it is ready.

All very positive so far.