A YEAR OF POSITIVE SURPRISES
The 2016/17 financial year initially seemed to be an intermediary year for Mellby Gård AB, but a strong second half meant positive numbers for the year as a whole. MD Johan Andersson is looking back at an eventful year that provides much anticipation for the future.
Low oil prices are having an impact on the entire world economy. One of Mellby Gård’s subsidiaries, Roxtec, which makes sealing systems for cables, has been hard hit by the cut in investments from the oil industry. However, the loss of earnings is compensated by a number of group companies with higher than expected performances in the second half of the year.
“Revenue from our subsidiaries and associated companies reached over 6 billion SEK, an overall growth of 7 percent. Profit (EBITDA) increased by just over 100 million SEK to 1,276 million SEK. The EBITDA-margin thus landed at 21 percent,” says Johan Andersson, MD at Mellby Gård AB.
Johan Andersson expects the result to improve further in the current year, but is also highlighting some uncertainties.
“We live in times of political uncertainties and with an artificially low interest rate level, which does not give full justice to the Swedish currency. We have strengthened the group’s service companies during the year, which is primarily where I think we will see growth in coming years,” says Johan Andersson.
He points to, among others, Cale Access AB, which has transformed from being a manufacturer of parking meters to becoming a full service provider in smart parking solutions using mobile services.
“Cale increases its profit, shows solid growth, and has strengthened its position in several markets. Not least in Asia, Cale has succeeded in taking a strong foothold and taking market share thanks to being focused on the users and their rapidly changing habits,” says John Andersson.
Another company showing positive numbers is Smarteyes, which nearly doubled profits and continues to grow. Growth in Sweden has stagnated, but Johan Andersson does not rule out the establishment of new stores.
“For the first time, the company achieved positive results in Germany and they have corrected previous issues on the Danish market. The product range has been expanded to better match the customers’ increasingly diverse needs and desires, but the simplicity and transparency in offer and price remain a constant,” says Johan Andersson.
Among the associated companies, Johan Andersson points out KappAhl as an example of a company with very positive progress.
“They have increased profits and are approaching two-digit profitability. One success during the year is the children’s range Newbie, which will be launched as a stand-alone concept in England,” says Johan Andersson.
However, there are also businesses in the group who have had a rough year. Söderberg & Haak, which sells agricultural and industrial equipment, has had falling revenues in the wake of the increasingly tough conditions for the farmers of Sweden. With new brands and a new business model, they hope to be able to reverse the trend within a couple of years.
“We have taken ownership in a large number of our dealers. By doing so, we can cut costs and improve our margins, all while moving closer to our end-customers,” says Johan Andersson.
As mentioned above, Roxtec has also been severely affected by the crisis among its customers. Oil rigs, which previously have been an important customer segment for Roxtec’s world leading cable sealing system, are reducing their investments as a natural consequence of the continued low oil prices. At the same time, revenue is increasing in other segments, which provides hope for better development in the future.
A subsidiary that has been successful in retaining good profitability, albeit challenging market conditions, is Feralco, one of the largest makers of water treatment chemicals in Europe.
The year has also brought new additions to the group and increased ownership in several companies.
“Our big new addition is educational company AcadeMedia, where we took advantage of our option and increased our ownership to over 20 percent. We have also secured a rights issue and will potentially thereby increase our ownership further,” says Johan Andersson.
Education is a topic Johan Andersson is particularly passionate about, not least the preschool activities.
“A well-developed preschool system is extremely important from an equality perspective; it is a prerequisite for both parents to be able to work. In Sweden we have a fundamentally good system where parents’ financial situation doesn’t matter. However, the limitation on profits is a threat to diversity and many well-functioning operations,” says Johan Andersson.
In April, AcadeMedia acquired the German preschool business Stepke and thereby expanded its German operations by ten preschools, of which three are mobile preschools. In addition, there were five preschool acquisitions in Sweden and four in Norway.
Another addition during the year is fashion chain Dea Axelssons, which has been amalgamated with clothing chain Flash under a common structure and with joint administration in company Lund Fashion AB.
“The new setup works very well. We have cut costs at the same time as sales are starting to take off,” says Johan Andersson.
Mellby Gård has also increased its ownership in staffing company StudentConsulting and now owns 46.5 percent, of the company. The business is doing well and is expanding its operations within recruitment and supply teacher management.
Another area in which Mellby Gård is progressing is funeral operations, which has changed name to Klarahill during the year.
“We have a strong foothold in Småland, Malmö and Stockholm and continue to search for new funeral homes to acquire. All in order to achieve synergies and to strengthen the offer to customers,” says Johan Andersson.
Overall, Johan Andersson is very pleased with the year that has been.
“It is with great satisfaction that I see how well our companies are developing and progressing. The future is still bright!”