26.04.2017

71% jump for Alimak

Alimak has reported a substantial increase in first quarter revenues and profits, mostly thanks to its recent major acquisitions that completed during the quarter.

Total revenues were SK776.6 million ($88.7 million) a jump of 71 percent on the same quarter last year, thanks to two months contribution from Avanti Wind Systems and one month from Facade Access Group. Organic growth compared to last year was six percent, while order intake for the period was 66 percent higher at SK942.8 million ($107.6 million)

Looking at how each sector performed: - Rental revenues edged up two percent, in spite of a nine percent loss due to the disposal of the US hoist rental business, After Sales revenues increased more than 36 percent, Industrial revenues more than quadrupled, while Construction revenues were roughly flat although order intake was 56 percent higher.

If the acquired businesses had been part of Alimak last year and for the entire quarter this year, the revenues would have increased a more modest three percent, although order intake was 26 percent higher on this pro-forma basis. Back to reality – pre-tax profits for the quarter were just over 55 percent higher at SK74.7 million ($8.5 million), while net debt leapt from SK350.6 million ($40 million) last year to SK1.9 billion ($217 million) in order to fund the major acquisitions.

Chief executive Tormod Gunleiksrud said: “In the first quarter we see the first result of a stronger and more diversified Alimak. We achieved an organic order growth of more than 14 percent, excluding acquired and divested business, as result of continued strong demand in both Construction Equipment and After Sales. Revenue increased by six percent year on year organically, with contribution from all business areas. The acquired businesses contributed significantly to group order intake and sales.”

“The acquired businesses, Avanti Wind Systems and Facade Access Group were consolidated in the business operation part of the first quarter. The integration of the businesses is progressing according to plan and we have, among many other things, initiated a review of the global supplier base. Construction Equipment continued to develop well with a strong growth in orders of more than 56 percent , consisting of solid underlying demand in all regions. Revenue was stable, but flat in comparison with the first quarter last year, mainly due to the timing of a few large projects with expected delivery in the coming quarters. Industrial Equipment is today a more dynamic and diversified business area with a stronger focus on renewable energy and trends within the building construction segment. The organic order intake declined 16 percent in the quarter but for the second quarter in a row we experienced a quarter on quarter increase.”

“We are focused on developing the after sales businesses which we believe have attractive long-term potential. Revenue in business area Rental increased with two percent despite the impact of a nine percent drop due to the divestment of the US Rental operation.”

Vertikal Comment

The two acquisitions are transformational for Alimak and look as though they might pay off in a number of ways, but are particularly attractive in that they shift the entire business to more sustainable and ongoing service, support and industrial markets, diluting the dependence on construction and rental and creating a more diversified business, although retains a strong focus on working at height and transporting people to work above or below ground level.

The challenge will of course be paying down the substantial debt that has been incurred to make this change, if the current trends continue – and the order intake levels suggest that they will – this should be very doable as long as this is a priority for the company of course.

All in all this looks like exciting times for Alimak.