THIRD QUARTER – GOOD PROGRESS DESPITE MAJOR CYBERATTACK
The third quarter was impacted by the cyberattack that hit 80 of Addtech’s 130 companies on 30 October. Although the attack significantly impacted the efficiency of the affected companies, we increased our sales for the quarter by 12 percent, of which 5 percent was organic. As announced previously, the attack impacted EBITA for the quarter negatively by an estimated SEK 90 million in non-recurring expenses and lost revenue. Adjusted for this effect, our underlying profit growth during the quarter remained highly favourable. We can be very pleased with the fact that EBITA decreased only marginally compared with the third quarter of the preceding year.
Although the cyberattack affected the companies to a varying extent, all of them, were largely able to continue their operations by means of various alternative methods. Our employees truly demonstrated the strength inherent in Addtech’s decentralised model. The creativity and team spirit shown by the companies in being able to continue delivering to customers, despite a criminal attack of this magnitude, make me both immensely proud and grateful. The kindness and understanding shown by customers also gave us additional motivation in these efforts. Our sincerest thanks! We are convinced that we can turn this experience to our advantage, and that the attack will ultimately become a parenthesis in our history.
Demand for Addtech’s products and solutions remained good. Just as in the preceding quarter, the scenario varies between geographies and customer segments. Demand was still evening out at a high level in the engineering and special vehicle segments. We experienced stable demand for electricity-related products from building and installation customers, while sales to the telecom market were, on the whole, weaker than expected. Market segments where development remained favourable included components and solutions within energy segments (such as wind power, oil and gas), infrastructure investments and electronics, where sales increased.
Sales of our products and services for environmental improvement solutions have remained very strong. In terms of demand for new scrubber solutions projects, we discerned a sustained cautiousness among customers, and the attributable order backlog decreased during the quarter. However, based on our dialogue with customers, it is our assessment that demand will pick up again in the future.
From a geographical perspective, Finland and Norway experienced the best market conditions, while sales in Sweden and Denmark were stable. On the whole, our operations outside the Nordic region experienced a somewhat subdued market situation.
Since the beginning of the current year of operations, we have completed nine acquisitions in six different geographical markets. We continuously assess a large number of acquisition opportunities, both stand-alone companies and acquisitions supplementing our existing companies. Many privately owned companies consider Addtech as an attractive buyer as this allows them to retain decentralised responsibilities while being supported in their development by an active, long-term owner. In our view, future opportunities for maintaining a high acquisition pace remain favourable.
Over the past quarter, we continued our efforts to strengthen the connection between our sustainability work and the UN’s global sustainability goals. Over the year, we have mapped all of our business operations onto the global goals and are able to conclude that we have already positioned ourselves very well in many niches driven particularly by developments in sustainability. Such positions safeguard our opportunities for continued profitable growth while also contributing to make society more sustainable. We perceive considerable opportunities to further position ourselves in sustainability niches in the future. The framework of sustainability also includes matters of security – including the issue of cybercrime. During the quarter, we experienced very tangibly how vulnerable online business community has become – and how difficult it is to protect oneself from attacks like this. In preventing this type of crime, we are convinced that increased transparency and greater cooperation, both within the business community and with the relevant public authorities, play an important part. For this reason, we will be sharing our experiences with others in various forums.
The quarter now concluded presented both challenges and opportunities. With our strong entrepreneurial culture, combined with favourable growth opportunities in several interesting areas of development, I take a very positive view of the future. Our broad exposure, both geographically and in terms of niche markets, convinces me that we will continue to develop steadily in the future, despite a cautious economy.
President and CEO